It’s A Matter Of Time

With the market at all-time highs is it still a good time to invest?  Even seasoned investors who are still adding money toward their goals may consider whether the time is right.  This isn’t necessarily just a question for today’s market, but it could be asked any time.  The answer lies in your time horizon and belief about the market’s potential for performance.

First of all, when deciding to invest, you need to believe that the market can move higher from the point it is at today.  If you don’t think it is heading higher then there would be no benefit to investing. But, if you do believe that over the time horizon you have to invest the market will perform positively then you can proceed to the next consideration.

After you confirm there is a benefit to investing then you have to consider your time horizon.  Let’s discuss various time horizons.

Short-Term:  Less than 3 years

This time horizon represents an investor who is saving for a goal that is coming up.  Goals might include things like a home purchase or the start of children’s college. Investing the money being saved would increase the amount they have available to spend on that item.  It could also provide for the ability to finance a lower amount. Be careful with investing toward a short term goal. Understand that what you invest could be worth less due to market performance.  If you’re saving toward a goal and can’t stand the risk of losing any savings, because it’s so close, then investing in the market is not the best place to put those funds. More conservative investments like a money market may be a better fit.

Intermediate-Term:  3 to 10 years

While this time horizon is longer than three years you still need to understand the environment your investing into.  Goals like college, retirement, or home purchases may still fit into this category so it’s imperative you understand when your money will be needed.  Investing could still be beneficial but consider again your tolerance of gaining versus losing any funds saved.

Long-Term: More than 10 years

With a long term time horizon you have the ability to let the market cycles move in your favor.  Many people have saved into retirement accounts and seen the benefit of letting their money remain invested for years.  We are reminded often that if you save each year and leave your money invested over time you will be rewarded. Long term goals like this prove to be the most rewarded by investing.  Another example of long term investing is starting a college fund for your new born child. Given the long term horizon you have time to see the benefit of growth.

To figure out if investing toward your goal makes sense consider your time horizon and economic environment.  Adjustments may need made to your portfolio over time as you get closer to your goal. If you need help considering whether it makes sense to invest we are here to help.

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