The Best Day To Invest may Not be Now
Most personal finance blogs would advise you to start investing today, which is certainly the best piece of advice in most cases.
However, your investment decisions must be based on other factors including your personal goals, current financial status, and so on. You cannot start investing simply because your broker informed ‘buy this, it’s a good stock’, or ‘market is not at it’s peak, this is probably the best time to invest’, or ‘This stock will certainly skyrocket’.
Before we believe in all these things and start investing, STOP! Have you gone through your financial plans? Would this action help you to reach your goals sooner? Instead of asking a financial consultant you must ask few questions to yourself. ‘Should I invest in this stock, or should I repay my loans first?’
This may be not the right time to invest, let’s us discuss why.
You Don’t Have Adequate Knowledge About Investing
There are several investing enemies, but the biggest one is within. Although most people advice ‘learn from your mistake’, it’s wiser to learn from other’s mistakes.
Without accurate knowledge about any financial product, it’s not advisable to invest. You can think about putting your money, only if you have gained fundamental knowledge about how it works. I am not asking you to procrastinate your investment plan. But a well researched, and informed decision can take you a long way.
Repay Your Debt First
It’s always better to put off investing until you have repaid your debt, at least the major ones. This is because the profit you would earn from you investment, in most cases, would be way less than the interest you pay on your loans.
Many people do make the mistake of investing in retirement plans without repay all the debt. Later, when they aren’t able to make high-interest payments, they withdraw money from retirement account, by paying penalties on such early withdrawals.
You Don’t have Definite Future Plans
Before you put money in any investment product, it’s important to have a plan. You must decide where you money would go, and how long would you hold your investment. A general investment rule is the longer you hold it, the less risky your investment is. If you have money now, but you don’t know when you future would you need it, it’s wise to stash your cash in a high-interest savings account.
In most investment products, you need to pay some fee to open the account and withdraw the investment. It’s no point rushing to open an IRA account, and depositing all your investments, only finding out that it would cost you a lot to withdraw before retirement. If you start putting money in an ESA for your child’s college education, you cannot transfer them in your 401k account. Hence, make sure you have a proper game plan before making investment decisions.
