Stocks 101: When is the Right Time to Buy and Sell My Stocks?
It’s a very common question and concern to have when first starting out with a stock market investment: when is the best time for me to invest in stocks? Everyone knows the stock market has its own beating heart, surging and recessing from time to time. Getting started at the wrong part of the market cycle can leave you with big losses right from the get-go, which is why it’s so important to understand the right times to throw down your money.
If you’re a new investor, or someone just looking to know more about investing in stocks, here is our expert overview of when you should foray into the stock market:
- Get to It:
The world of stock trading is not for the cautious. Instead of worrying about timing, first think about how long you are willing to invest your money. For example, bonds offer smaller, more reliable returns for people looking to get in and get out quickly. For the longer term investors, overall, large-cap stocks have returned on average 10.4% per year since 1926, which means that if you put your money in and walk away, over time, it’s going to pay-off.
- Let it Sit:
If you want your money back within 5-years, then you will want to avoid individual stocks with greater short-term volatility. Instead, consider options like certificates of deposit with a 3-year cap on them, or opening a savings account.
- When to Sell:
Now that you’ve bought your stocks, bonds, etc., you want to know when it’s the right time to tell these stocks to make the greatest potential profit. Most investors will say sell everything when you predict the market is about to fall from a peak. Then, buy it all up again when it’s dirt cheap. Of course, it’s not that easy to determine. If you endure a market plunge, we recommend you hold tight – those that get nervous and sell when the market is low do significantly worse than those who stay put.
- Ignore the Media:
All of the media talk shows, economic spokespersons, etc. will all try and get you worried. It’s part of their job to come up with a story, as well as exaggerate the state of the stock market. Don’t listen to the noise, and hold fast with your investment.
- Do Your Homework:
Companies, stocks, and the market is ever-changing. Remaining complacent will get you caught in second place. Set aside time to review your portfolio at least once every few months. Although we don’t recommend gluing yourself to the TV, if you make a stock investment blunder, take time to learn why so it doesn’t happen again. This kind of insight will make it more natural for you to determine the best times to buy or sell a stock.
Our final answer is that: there is no right answer for when you should buy and sell your stocks. Remain steadfast, don’t give into the media emotion, and know that longer-term investments have more of a guaranteed payout than shorter term options.