Should I wait for the economy to crash before investing?

By | May 11, 2022

I am going to tell you about one of my closest friends. I am not going to mention his full, or even first name, as he does follow me on Quora and know he reads many of my answers.

But I know he doesn’t mind me telling this story, provided I don’t mention his name.

He was one of the few people in my network to successfully predict 2008–2009.

However, even during March 2009, the lows for markets at 7.300, he wanted to wait until `further falls`.

Then markets hit 10,000 in 2010. He thought it was a dead cat bounce.

By 2013 or so, he was even more worried. Markets were at 14,000. Record highs! Higher than during 2007–2008.

Surely this was a bubble! Then 16,000, then 18,000. But now Trump was running for election.

Then Trump won!

Surely, now markets would fall incredibly? Then markets hit new highs.

When markets fell 20% or so in December, he finally bought in, but suddenly the reality dawned on him.

He got in at 21,000–22,000, a discount of 20%+ compared to where prices were a few months previously, and yes he has made 20%+ in the space of 6 months or so.

Yet he realized something. `I should just have invested from day 1`. He missed out on all those gains, and dividends.

People forget that point as well. Even stagnant markets give dividends.

The FTSE 100 is a great example of that. It has been much more stagnant than most markets.

Yet it has a high dividend yield. So this is what reinvesting dividends does:

So when you are out of the market, you miss out on dividends being reinvested, alongside chances to rebalance from bonds when markets fall.

He has finally realized that now. So always invest, for decades. Never be out of the market.

Never be pained by financial indecision because of the media and doom mongers. Speak to people who have seen it all before.

But some people never learn their lesson and we are seeing that with the current coronavirus situation in an election year as well.

Pained by financial indecision? Contact me today!

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