BCCT’s Financial Weekly with 10x Wealth Management (Scott Kingsley)
Coronavirus: should I start investing now?
With the need for most people to invest in order to meet their long-term financial goals a question I am constantly being asked recently is, should I invest now?
As is well published, it is impossible for any of us to time the market perfectly, so we should forget the idea of trying to ‘buy at the bottom’.
Statistics show that stock market corrections can provide an excellent opportunity to make your money go further. And even more importantly studies show that being out of the market and missing the best trading days can significantly reduce long-term returns.
|Understandably people are still cautious in entering the market right now and we must still be considerate as to where we invest. However, the global fear should not interfere with your long term goals.|
Tips for buying during volatile markets
Dollar Cost Averaging
If you’ve got more monthly disposable income now that you can’t go to out to restaurants, pubs or the cinema, use that to top up your investment portfolio regularly. For those of you already saving on a regular basis bow is the time to relook at the affordability and ask yourself the question ‘can I do more’?
Dollar cost averaging dollar simply represents the smoothing nature of investing an amount on a regular basis in fluctuating markets.
In simple terms, each amount invested buys units in the fund or funds chosen. If the price is high, fewer units will be purchased. Likewise, if the price is low, more will be purchased. Over time, this strategy should help to increase your purchasing power and give you a potentially higher average value per unit and so improve potential returns.
By applying dollar cost averaging and dripping your savings into the market over time, we remove the worries of market timing.
Hunt for quality
Buying funds or stocks simply because they are cheap is not the right thing to do. Investors should look for underlying quality before investing. Quality companies with excellent profitability and a strong capacity for cash generation tend to bounce back well from big sell-offs. If we are picking individual stocks, we must not just look at price but delve beneath the surface and ensure;
- Consistent return on capital
- Strong balance sheet
With very few of us having the time to stock pick, choosing good quality fund managers who follow this philosophy can save us not only time but make us money in the long run.
For those of you holding or generating cash now is the time to look at taking your first or further steps towards your long term ‘Financial Freedom’.
History suggests holding your nerve is likely to pay off, and for those who haven’t yet made their first investment now might be a once-in-a-lifetime opportunity to get started.
This was presented to you by: Scott Kingsley