Almost every investor has delayed investing at least once. Some wait for the market to correct. Others tell themselves they'll start investing after receiving a bonus, getting a salary hike, or when the economy looks more stable.
On the surface, that sounds like a sensible plan. After all, nobody wants to invest just before the market falls. The problem is that there is always another reason to wait. If it isn't inflation, it’s interest rates. If it isn't global uncertainty, it's market valuations.
While investors wait for the "perfect" opportunity, the market keeps moving. More importantly, time keeps passing. And in investing, lost time is often more expensive than temporary market volatility.
It can feel safer not to invest. Your money is not subject to market swings, and you don’t have to worry about seeing your investments drop. However, many believe that waiting is the safer option for several reasons:
Everyone feels the pain of losing money more than the pleasure of gaining it. This makes investing appear risky, especially to first-time investors. A lot of people are afraid to see their investment go down (even for a short period of time) and decide not to invest instead of taking that first step.
Investors often think waiting a little longer will bring more clarity. They want the market to get easier to read or for the economy to turn around. But in fact financial markets are influenced by countless factors, and absolute certainty never arrives.
It’s easy to think a market correction is just around the corner. This belief leads investors to wait for prices to fall. But markets don’t move according to anyone’s expectations. “Waiting for the ‘perfect’ opportunity can mean missing out on years of potential growth.
Sometimes waiting may feel like a safe option, but it often comes with hidden costs that are easy to overlook. Here are a few points on what you are losing by waiting to invest:
The biggest advantage to investing is time. The earlier you begin, the more time your money has to compound. Wait a few years and your wealth can be diminished over the long term.
The cost of living just keeps going up while your money sits still. If your savings aren’t earning interest, they’re gradually losing value, and it’s harder to achieve your financial objectives in the future.
No one can know the right time to invest. Markets tend to turn around when investors are still on the sidelines. It is nearly always better to invest regularly rather than try to time the market.
Building an investment habit doesn't require perfect market timing or a large amount of money. Here are a few ways you can build the habit of investing without delaying.
You might think you need a lot of money to start investing. It’s not how much you start out with that matters; it’s the habit you develop getting started with a plan that suits your income and financial goals. Small, regular investments can compound over time and teach you discipline with your money.
Markets will continue to rise, fall, and recover. News headlines will continue to create uncertainty.
If you wait until everything looks good to invest, you'll keep getting delayed. Regularly investing, no matter what the market is doing in the short term, keeps your eye on the long-term financial objectives.
Instead of trying to pick investments based on market headlines or forecasts, focus on what you want to achieve. Keep your goals in mind, and it helps you stay committed and avoids unnecessary delays when planning for retirement, purchasing a home or building long-term wealth.
There is no shortage of reasons to postpone investing, but there are very few reasons to delay building long-term wealth. Markets are unpredictable, and they always will be. Time, however, is something every investor can use wisely. Instead of asking, "Is this the perfect time to invest?", consider asking a different question. "Will waiting another year help me reach my financial objectives sooner?" Most of the time, the answer is no. Sometimes the best decision that pays off over time is to begin with a good investment plan and stick with it.
