Is now a good time to invest in shares?
Is now a good time to invest in shares?
Is now a good time to invest in shares?
It’s the question on a lot of people’s lips after Coronavirus brought about a significant drop in the share market.
Although prices have remained consistently low for an extended period of time, potential investors should beware before spending their hard-earned cash on promising stocks.
After the 1929 Black Thursday market crash and the more recent Global Financial Crisis in 2008, as well as everything in between, it is evident just how volatile the market can be.
It’s this volatility and risk that keep the share players in the game risking their finances every day.
Before you make up your own mind about whether now is a good time to invest, you should first understand the types of shares you can buy.
What is a Share?
Simply put, buying a share is like buying a piece of a company or as it’s sometimes put, you are buying equity.
This equity entitles you to receive a portion of the company’s profits which can be paid out in dividends.
In other companies, those profits are retained and reinvested in the business.
The idea of this, from the company’s end, is that it will grow the company and therefore the share price will increase.
Shares come in all shapes and sizes and have varying characteristics.
The most commonly traded shares are Blue Chip companies which is a term used to describe large reputable companies who are normally leaders in their field.
In Australia, companies like the Commonwealth Bank, ANZ, Woolworths and Coles are all considered Blue Chip companies.
Internationally, think Apple, Samsung and Walmart.
Outside of this, you have a myriad of other listed companies.
Generally speaking, the smaller the company the higher the risk, however, this is not always the case.
You should always consult the advice of a professional financial advisor to help you understand the share market before making any decisions around buying or selling.
Is right now a good time to invest in shares?
So, is it good to invest when the market is down?
The answer is, it depends.
Sure, some markets are down compared to where they were pre-COVID-19, however, there has been somewhat of a recover across most markets.
Generally, the decision around it being a good time or a bad time to invest will depend on each person’s individual situation.
Shares are a long term investment so regardless of market conditions, you need to have the time to buy and hold if necessary.
If you are interested in purchasing shares during these uncertain times, you should be considering this such as:
- Your financial goals
- How much risk are you willing to tolerate?
- Can you spend the time required to properly observe and keep track of your investments?
- Do you know enough about the current market and the risks associated with investing in an uncertain market?
Get professional advice from the financial experts at Simmons Livingstone & Associates
It is always best to consult a trusted financial advisor when it comes to making the decision to invest in shares.
Don’t be seduced by potential quick wealth.
Instead, speak to the reputable financial planners at Simmons Livingstone & Associates today and ensure you properly invest your hard-earned cash in correlation with your needs and circumstances.
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