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It has been quite a start to the new decade. For many of us, 2020 has thrown many challenges our way. A lot has happened over the past few months, Brexit, international trade wars, climate fears, natural disasters, and now the Coronavirus pandemic.

You may be thinking that now is not a good time to start investing your money.

However, if you have large sums of money available, that is only sat in a bank account, today may well be the best time to invest.

Why should you invest now?

Like many other things in life, such as changing jobs, buying a house or starting a family, there will never be the “perfect” time to invest. Life is short and so the sooner you start investing your money, the more time it has to grow and create sizable returns.

How to know if you should invest or not

When thinking about investing, you should always ask yourself the same set of questions. It doesn’t matter whether the economy is booming, or whether we are in the middle of a global crisis. Ask yourself:

  • Do you have extra cash spare to invest and a comfortable savings pot? If you don’t already have this, then you will need to build this up first. We strongly advise everyone to save for a rainy day.
  • Will you need any money in the next few months or years? If so, you may not want to invest it, as short term investments will have to be high risk in order to return big. Remember, you may also lose money and you won’t have time to build this back up again. You may want to look at placing this money into an ISA or an easy access savings account.
  • Do you have anything else you could use the money for? We can help you to evaluate your position. You could have other options that may have better returns or may better suit your needs such as investing into property.
Investing is about giving your money time to grow

Many people believe that you have to try and predict the future so you can buy when prices are low and sell when they’re high. In reality, it’s impossible for anyone to time the market and no-one can know for certain what will happen.

You are better off focusing on your time in the market. Most investments are a medium-to-long-term commitment meaning you leave your money in the same place for a minimum of 5 years. Because the longer you invest, the greater your potential for making a profit.

Markets gradually rise over time but do have short-term fluctuations. You may lose money for months or even years but eventually, it will rise again. By the time you come to take your money out, you should have made money.

One reason why it’s important to have a cash fund for emergencies is that you’ll be less likely to have to sell your investments during a downturn, such as now, allowing you time to give your investments time to recover from any losses it may have incurred.

It’s important to remember that past performance of the market is no guarantee of future returns. Markets can go down as well as up and you may end up getting back less than you put in.

Speak to us about investing your wealth

We have a dedicated Independent Financial Adviser who can advise you on wealth management strategies including when and where to invest your money to match your financial goals. Get in touch with Chris Slatter on cslatter@ellacottswealth.co.uk or 01295 250401 or contact us here.