Investing In Stocks: Time Vs. Timing

“I know exactly when the right time to trade in the stock market is.”

“I guarantee you a risk-free investment, the market is so favorable right now.”

“If you wait to invest for a few months, you’ll get a much better price — the market is definitely going to fall.”

If anyone has given you advice based on the perception that they know exactly when the “right” time to invest is — they’re wrong. The concept of timing a market is at best an estimate, and at worst a complete farce — because no one can do so with certainty or with any guarantee about which way the market will go.

If you’re just starting out with your investment journey, you’re sure to come across a lot of advice about the seemingly “right” time to invest, and we want to nip this right in the bud!

Entering the stock market can be a disappointing experience unless you take stock (see what we did there?) of everything there is to know about the stock market. There are a lot of terminologies that seem alien, and there is literally too much information to consume. We absolutely get it and we’ll give you this — there is a LOT to know about investing in stocks, and it is difficult to know where to start.

The most important thing, however, is decoding this myth about timing! So stay with us as we explain this.

Timing

Our myth of the moment — is timing. This refers to getting into the stock market at the most advantageous times.

But here’s the problem — you cannot time the market, and can at best speculate about existing market conditions. A financial market is a volatile place, and even with seasoned research and advice from veteran investors, you will find that nobody can say with certainty what the best time to invest in the market might be. Even if you predict the best-suited time for your investments to take place, too many peripheral factors exist to offer you complete security.

So, if you are waiting for the “right time” to invest, you might be waiting for a long time. There will always be favorable and unfavorable elements in the stock market, and no investment is ever risk-free. The trick is to not let the highs and the lows of the stock market affect your financial portfolio and investments.

We’ve thought about this a lot at Deciml, and we’ll tell you this — the only “right time” to invest — is now. Investing now (of course, with proper research and valid options) allows you to not worry about the timing and focus instead on how much time your investments can marinate and mature over.

Time

And that brings us to the “time” of it all. Simply put — this refers to the amount of time for which you should stay invested in the stock market. The time for which you remain invested is a real concept, with tangible results. We, at Deciml, advise you to look into this one — how much time are you making your investments for? A year? Three years? Five years? It is essential to know how much you are investing, how often, and for how long.

Why? Because how else will you be able to gauge what kind of returns you are looking at?

Another important reason to know how much time you need to make investments is to benefit from the maximum effect of compounding. Remember we had said compounding is the best-kept secret about investing? This is because the longer the duration of your investments (in stock or otherwise), the more your interest will compound over time, and the larger your returns will be.

Ultimately, time is what will help multiply your wealth as you start investing more than anything else.

These concepts of time and timing are important for any young investor to know. But the former is the only one in your control. You can decide how long you want to be investing for. The latter, however, is subject to so many varying factors that influence the stock market — they are beyond your control and as such, should not hinder you from making smart investments (like simple round-up investing with Deciml) at this very moment!

So, here’s your key takeaway from this read — your time in the market matters far more than your timing for entering the market.