Investing – When Is The Right Time?

Many people claim the want to start investing right away and no time is better than now. But starting to invest before other financial areas are handled often puts a financial strain on the building for the future.

I believe that after a family has come to a point where it they handle money well, and has basic protection (emergency fund) against financial emergencies and has its housing situation under control, it is ready for the world of investing. By this time family has some money coming in above current expenses – it is money which can now be put to work. The stock market may look inviting and perhaps other investments as well such as bonds, real estate, a small business and so on.

Common stocks are perhaps the most intriguing investment. The long-range future of America still appears bright… especially compared to other countries around the world. Yes, the US has some challenges but there is still tremendous opportunity. It is an amazing thing to think that anyone can own a financial share of a major company, merely by buying common stocks. Buying stocks you not only give yourself the chance to pocket some money but also contribute your bit to the development of the new ideas, the new products, the new methods and the new businesses. And these, of course, provide the spark and vigor that moves a free economy forward.

Here is where people soon discover… The opportunity to invest comes with NO instruction manual. You can get tons of advice, but how much of it is good. Remember, for every seller of stock, there must be a buyer. Some would much rather have cash than stock; others think the stock is much more valuable. Both cannot be right.

It is a fact… You will make mistakes. You can reduce them and keep them at a minimum by gaining a working knowledge how money works and business cycles. If the idea of reading and putting in some work to gain a financial education is of no interest to you that is fine. But if you invest in stocks or real estate without being at a minimum an amateur economist and business forecaster be prepared for some losses and rough waters.

You must understand that money is a commodity like wheat or copper or oranges. True it is much more convertible than any of these, it still has an important characteristic of a commodity. The value of money moves up and down. When you don’t have your money invested in stock or real estate or something of that nature, you probably have it invested in dollars down at the bank. And dollars can lose value just like the others.

This is where inflation comes in here. During certain periods money goes down in value and other things go up. In recessions the opposite occurs. Money becomes more valuable while stocks, commodities and real estate decline. These facts must be known and reviewed by those who plan to invest for the long haul. Otherwise they can overload themselves with the wrong investment at the wrong time.