Introduction:
In this article, we will discuss whether you should invest right now or wait until the market declines further. We will review some tips and strategies that can help you make the right decision based on your personal circumstances and investment goals.
Investing Now or Waiting?
When you have a large percentage of your net worth in cash, it’s understandable to be hesitant about waiting for the market to decline before you invest a significant amount of cash into your investments. You mentioned the cyclically adjusted price-to-earnings (CAPE) ratio – one of the ways investors technically analyze whether the market is high or fairly priced – as a means of trying to determine the best time to enter the market.
Many investors use the price-to-earnings ratio to decide whether they want to buy a stock or not, so I don’t want to downplay your use of this formula. However, you didn’t tell me whether you are an advanced or beginner investor. You mentioned that you are investing for the long term, but you didn’t specify how long you have to monitor the market and conduct technical analysis on the indicators or stocks you are interested in.
Therefore, since you are someone with a long-term goal of investing for retirement, I would suggest that you completely forget about calculating the cyclically adjusted price-to-earnings ratio and make things easy on yourself by using a dollar-cost averaging strategy. Market analysis and timing the best entry points are difficult even for the most skilled traders, and there’s a greater chance that you’ve already missed some opportunities. So, just jump in and remember that the amount of time you spend in the market is always more important. Moreover, if you are waiting for the central bank to stop raising interest rates, you will have to wait for a long time: the central bank has already made it clear that it has no plans to halt interest rate increases as inflation remains high above its target of 2%.
Dollar-Cost Averaging Strategy:
By using a dollar-cost averaging strategy, you can eliminate emotion, effort, and risk, and instead, invest regularly over time. This may lead to reduced potential returns, but since the markets have declined by more than 15% since this time last year, you are likely to be satisfied with your returns. Alternatively, you can take the risk and invest a large amount now, while using the dollar-cost averaging strategy in the future.
Regardless of which method you choose, I do not advise waiting – with each passing day, you are missing out on opportunities.
– Christine
Source: https://www.thebalancemoney.com/should-i-invest-now-or-wait-until-the-market-sinks-more-7095252
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