Lots of decisions need to be made when it comes to making an investment. You’ll need to think about what sort of investment vehicle you’ll choose, for example, while you’ll also need to consider how much capital you want to tie up. But you’ll also have to think about the timing of the decision, too. Whether you want to base this on wider market performance, price action data derived from other traders or on your own requirements, you’ll have to think carefully about timings before committing to any investment.
Actions of others
If you’re a technical analyst, it’s likely that you’ll source most of your investment insights from price action charts. These charts aggregate recent (and less recent) buying and selling decisions, so they’re often handy for locating the optimal time. And even if you’re not a technical analyst, it may well be worth looking at the charts in order to get a fuller understanding of how and why the markets move.
The wider markets
There’s also the behavior of the wider markets to take into account. From economic events such as monetary policy decisions to political ones like general elections, investment markets of all varieties can be – and regularly are – affected by shifts in their wider contexts. But while all this might sound a little difficult or complicated, it really doesn’t have to be. This week’s financial events can easily be monitored through many different services, while you can also get your head around theoretical market trends by reading books and research papers.
Your own needs
But while it’s advisable to be aware of either the behavior of other traders or the wider economic conditions (or, indeed, both), there’s also something to be said for thinking about how your proposed investment fits with your own goals. After all: it could be a perfect time to invest in the stock market based on technical analysis data and wider market conditions, but you may need the cash for a personal investment such as a house purchase or your kid’s college bills.
As a general rule of thumb, making investments above and beyond the standard – such as pensions, basic savings and home down payments – should perhaps be kept for when you have cash to spare. And you should also assess whether or not you have any debt, as well. If the interest you’re paying on your debts is higher than the returns you’d make from investing, it makes sense to use the capital you’d otherwise have used for investment purposes for debt repayment purposes instead.
Investing your cash in a financial product is something that requires serious thought, and no issue is quite so pressing as the issue of timing. Whether you need to arrange your investment around your own personal requirements or simply want to strike at a moment when your market analysis suggests you should act, you’ll always need to take timing into consideration before taking the plunge and placing your capital into a scheme.