If you have money set aside for investment, when ...

Invest when you have the money, withdraw when you need it

If you have money set aside for investment, when is the best time to actually invest it?

 The answer is: sometime before nightfall!


 What we mean is don’t delay investing your money, if that’s what it’s set aside for. Don’t worry about what the market is doing, just put the money in.


 We recently had some clients who had $200,000 in cash. They wanted to keep $100,000 of it in cash as emergency money, but the other half was set aside as accumulation for retirement. That is, they wanted to invest and grow that money.


 So why hadn’t they acted? The clients actually had a hard time giving us a reason for the delay. All they knew was that they wanted to “trickle” the money in rather than invest it in one big chunk. When pressed, they realised the reason for that was: what if the markets fall?

 It’s a common fear. But the flipside of that is – what if the markets go up?


 Again it comes back to the job that the money is assigned. If long-term growth is its job, then volatility shouldn’t be a deciding factor of when to invest.


 Not to mention, this couple already had $100,000 as emergency money – for exactly that reason. Fallback.


 Delaying investment is a two-way risk. Dollar cost averaging, or market timing by another name, is something we don’t advocate doing. But people think we recommend this because we often say, “put your money in every fortnight” – however, this is only because most of our clients get paid fortnightly. It’s the earliest opportunity to invest the money. If you had a lump sum to invest, we would tell you to put it in altogether.


 If you delay investing until next month or even next year, you might get cheaper shares, but you’ve missed out on the profits in the meantime. And often people delay only because they don't want to make a decision. Not to mention that you don’t want to waste all your time looking at share prices. There are much better things to do with it!


 You won't get your decisions right all the time, but statistically, a good rule to follow is: invest money when you have it. So, if you have money set aside for investing, do it before nightfall!