Should I Invest Now that the Stock Market Sold Off?

September 1, 2015

stock market sold-offIn a word, yes. You should invest now. Most new investors are a bit intimidated when consider the sheer volume of wealth that trades on the world’s stock market exchanges each day. It’s common for the average person to ask how he or she should invest a small amount of money.

Regardless of the amount of money the new investor has to invest, it’s best to think long-term. Make conservative investments and don’t bother about news headlines concerning the rise and fall of Wall Street. Financial assets like stocks and bonds rise and fall with investor supply and demand.

Long-Term Investing

If you are a young investor, retirement and the golden years may seem a long time away. It’s easy to say “I will invest later, when I have more money.” Establish the good habit of saving now, and remember. Time in the market, not market timing, is one of the most essential rules of investing. Purchase quality shares instead of speculating on stock
tips.

Automate investing to take weekly or monthly decision-making out of the picture. Decide how much to invest and then plan to invest a small amount on a regular basis.

Open an Account with an Investment Manager

Despite the popular belief that only wealthy people hire investment managers, average people open accounts with global investment management companies, too. Select a brand-name investment firm that offers low-cost actively managed mutual funds that invest in top quality companies.

If you like the idea of investing in just UK businesses, select a mutual fund that limits the scope to these shares. If you want international stock market exposure, choose a fund that offers that investment feature.

After arranging an account, you may regularly invest a certain amount of money and avoid paying new investment fees each time you invest.

Open an Account with a Discount Broker-Dealer

Some new investors like the idea of buying shares instead of a mutual fund’s professionally managed stock portfolio. Discount brokers offer online accounts now, so it’s possible to select the firm and open an account completely online. A broker account allows you to purchase shares, mutual funds, or ETFs (exchange traded funds that trade on the stock markets) by paying a fee per transaction.

This choice can be more expensive for investors. A stock account may encourage you to check intraday or closing stock prices. If the market has a temporary setback, it may be tempting to sell shares at a loss.

Purchase of very low cost shares is always risky. Avoid temptation. Always purchase high quality shares with a long-term horizon. Plan to diversify the portfolio with companies’ shares in other industries.

Make a Budget

Investing is a forward-thinking plan. The investor hopes to turn his or her money from a job or inheritance into more money. The investor wants to put money to work.

In order to invest and save more money, it is important to make a budget, Start by keeping a daily money diary to record every purchase. Consider all money inflows and outflows. Cut discretionary spending to the bone. Then, identify the amount of money you want to invest each month.

Evaluate the budget each quarter. Most investors find they want to continue to cut costs in order to save more. Financial asset growth is exciting.

Investment Plan Access

Consider savings and investments as capital. Wealthy people always speak about capital in a respectful way. Capital is money reserved for investment over time.

Make investments into accounts that limit easy access to them. For instance, a savings account that locks up funds for a certain period in exchange for an attractive interest rate limits spending. An employer direct debit account transfers payroll funds to an investment account. Limiting access to a portion of earnings is an effective way to invest.