Tue 28 Apr 2020

"No-one knows the future" but why now may be a good time to invest

The first half of the title is in quotes, not because it is a famous quote but simply because it is a phrase I use often when discussing investments.  And any expectations about the future, and certainly any new information, are immediately incorporated into the market price.

Timing the market is all but impossible: sitting here today it is easy to make an argument that the market has fallen (so now is a good time to invest), but there are clearly still reasons to be uncertain and cautious about the outlook.

However, for the bold, then we are seeing some signs of people taking advantage of lower equity prices to invest now for the long term.  As the famous investor Warren Buffett said, “we simply attempt to be fearful when others are greedy and to be greedy only when others are fearful.”

Before investing your cash, a quick note of caution: never invest just because you are disappointed with the level of interest you are receiving on your cash deposits.  "Investing" and "saving" are different activities, and you shouldn't move from one to the other out of frustration.  And always ensure that you have sufficient cash on hand to meet future emergencies.

But beyond that, then history shows the strong returns that investors receive in the years following a market correction.  We don't yet know if the market has finished falling, but we will only know that in retrospect.

So, if you are able to, then feeding cash into the market over the next weeks and months may be well rewarded in the coming years.  Just make sure that you do it with the correct level of risk for your requirements, to be suitably diversified, and to make full use of the tax efficient wrappers available.  Oh, and watch out for the charges on any new investment.

If you'd like to talk to us about this then please get in touch for a no-charge initial call (phone or video).

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