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When is it the right time to get into the stock market?

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Leo’s Answer

It depends on your time horizon, i.e. you expect to make money on your investment, but it depends when you want the money. You may want to maximise your gains over the course of a year, or you might wish to make more money over the course of 5 years or much longer.

If you have shorter time horizons, then the timing matters much more, and you should buy at a time when the market is undervalued. You might identify this when the broader stock market has a low price/earnings (P/E) ratio. However, of your investments, some of them should have much longer time horizons to serve you well in later life. Here, because you can ride out little bumps over time, it is simply better to get involved sooner rather than later, because over time those bumps won't really matter.

For example, the biggest index in the world right now is the United State's Standard & Poor 500 (S&P 500, or $SPY). Right now it's priced at around $4,500, and over the next few months it might fall to $4,200 or something. However, over the next 5, 10, or 25 years, it is likely to be nearing the five-figure mark (in 2002, the price was just $1,200). So that $300 fall that we may have at the start matters a lot less.
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Marc’s Answer

Hi Jesse -

This may sound tongue-in-cheek, but get into the stock market only when you have money to spare and don't have better alternatives available. Let's quickly look at alternatives, the simplest of which is a 401k or other retirement plan (I'm reading the question as buying stocks or similar, but yes, investing in a retirement plan is putting money into the stock market). It is much better from a tax perspective (assuming you plan to only use that money upon retirement), and many employers offer a 401k match which means you already get more out of contributing than flat-out buying stocks. On the long haul, that investment is much more likely to yield positive results, and you don't need to worry about day-to-day market fluctuations as you don't plan to take the money out anytime soon. In hindsight, I would tell my 20-year-old self to put more money into my 401k and to not buy stocks. If you're able to max out the allowable contributions into a 401k that year ($20,500 in 2022), I'd recommend then and only then looking into stocks.

As far as when to invest in the stock market, the general "expert" consensus is that you can't time the market and magically come up with the right time to buy stocks at their all-time low and then (also magically) determine when to sell at the all-time high. Instead of trying to time it, the recommendation is to invest over time so you aren't putting all of your money in at once and then getting burned if the market happens to drop. There's a ton of advice out there on when to invest, but there's no special formula that will get it right all of the time, hence the summary advice above.

Lastly, if you're hoping to turn a quick profit, you're just gambling (I would really advise against this as you aren't a day trader or financial analyst who does this for a living).
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Andrew’s Answer

Honestly, the best time to get into the stock market depends on your goals. If you're holding stock in the short term, it's best to get in when the market is undervalued or just not looking too hot. There will be some industries/stocks that will tank due to some circumstances, especially when a major decision or situation hits the company. In the long run, timing isn't as important as stocks will gradually increase their value over time, so getting into the market as soon as possible is the most important thing.
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Anthony’s Answer

Please, note the following concerning the right time to get into the stock market :-
1. It is okay whenever the business
is able to achieve its objectives
and goals.
2. It is okay when economic and
marketing conditions are
favourable,
3. Again, whenever government
policies are favourable.

Best wishes to you.


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