Well, it has to be said that the above is a leading question but you will no doubt agree that it is an easy one to answer!
Quite simply, surely, the best time to invest in equities is when the stock market is at an all-time low. The difficulty is, of course, knowing when that will be the case.
Of course, if you knew when the stock market had reached its lowest level to make your investment you are likely to become a wealthy individual over a period of time but that is also assuming that you time your decision correctly when it comes to selling your equities. You should also be aware that although the stock market may be at its lowest point there will be shares within the market that are both at an all-time low but also there will be some company’s shares that are at an all-time high at that particular point.
In reality, whilst some investment experts will claim that the reason that they have prospered when investing in the stock market is down to the timing of their investment decisions, there must surely be occasions when they get their timing wrong? After all, we are all human and everyone makes mistakes – don’t they?
It has to be said that fund managers and their teams of analysts have the investment experience and data available to have a better idea of when the time is right to invest in a particular company’s shares than the average person in the street. This is, perhaps, one of the reasons why members of the public who have a sum of money to invest but do not have investment experience utilise their services.
Not wishing to complicate matters, but when investing in equities you would be unlikely to just invest in the shares of one Individual Company as that, in itself, would be deemed to be a high-risk strategy. Therefore, if you are building a portfolio of shares it can be extremely difficult to get the timing right on every occasion without a great deal of thorough research and there is always an element of chance when making such a decision.
Furthermore, many people when investing in equities will not just invest their funds in the shares of companies in one country as they prefer to diversify their holding across other global markets. This makes the timing of knowing when to invest in equities even more complex. After all, whilst certain shares in the UK may be deemed to be at an all-time low as far as their value is concerned on a particular day, shares in a company in the same sector in say the USA may not be in a similar position.
So, as you can see, although, in general terms, the time to invest in equities is when the stock market is at its lowest point, there is a lot more to think about than that.
Scott Bryan is a financial blogger who enjoys explaining the arcane world of finance in everyday terms. Formerly a high street bank manager for over thirty years, he knows that everyone has unique requirements and so is dedicated to helping you find the right solution for you. He now works as a freelance financial writer when not consulting for Profile investment portfolio management software.