Is now a good time to start investing?
According to research from the Share Centre, there has been a spike in new investment platform account openings over the past few weeks. This suggests many investors believe now is an excellent time to start investing.
Indeed, the online broker reported a 269% jump in brokerage account openings in March, compared with the same period in 2019. Other brokers have reported a similar spike in interest.
The first quarter of the year is usually a busy time for new investment accounts. Plenty of investors start investing around this time to make the most of tax allowances before the end of the tax year on 5 April.
However, figures from the past few weeks suggest investors are also trying to make the most of recent market declines.
City analysts are more cautious. They have been warning for some time the market could drop further before it recovers. This implies that now is a terrible time to start investing.
So what’s the right answer?
Is it time to start investing?
Unfortunately, there’s no right answer to the question of whether or not now is the right time to start investing. Multiple studies have shown that trying to pick the bottom of any market is a complete waste of time and effort.
Instead, investors should put money into the market when they can. This implies that the best time to start investing is when you have cash available.
You should only invest money you can afford to lose, and only begin investing when you have enough put by to cover several months of living expenses.
Pound cost averaging in the market is an excellent strategy if you want to start investing today. Put simply, this means setting up a regular investment plan. Most online stock brokers offer one of these plans, starting with as little as £50 a month.
The great thing about pound cost averaging is that you don’t have to spend time worrying about when you need to buy.
You can just set up the plan and leave it alone. When the market falls, you will get more for your money. When it rises, you will get less. This means that investors don’t have to worry about timing the market at all.
Investing in quality
Another thing to consider is that, if you want to own individual stocks and shares, it is always a good time to start investing in high-quality companies.
As long as you can buy the stocks you want at an attractive price, it doesn’t matter what happens over the next few weeks or months. Over the long run, they should produce positive returns for investors.
So overall, if you have the money, now could be an excellent time to start investing. But it might be sensible to remember that it could be some time before you earn a positive return on your money if the market resumes its plunge.
The post Is now a good time to start investing? appeared first on The Motley Fool UK.
Rupert Hargreaves owns no share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
Motley Fool UK 2020