“The timing of your investment matters much less than how much time you have to invest,” says Robin Hartill, a certified financial planner who’s also an editor and financial advice columnist at The Penny Hoarder.
“The S&P 500 has delivered inflation-adjusted returns of about 7% per year on average for the past 50 years. The cost of waiting for the perfect time to invest is high. You’re missing out on long-term growth.”
Her advice: Take the long view. The stock market will grow your money over time, so you might as well get started sooner rather than later.
“If you were hoping to make a quick buck off the stock market, now may not be a great time,” she says. “We’re still in a recession, but the stock market has recovered. But true investing isn’t about making a quick buck. It’s about growing your money over time.”
Use this strategy to avoid a common investing mistake
The best way to invest is to build a routine around it.
Hartill recommends budgeting a certain amount of money to invest each month, no matter what.
“Rather than trying to time investments based on what the market is doing, the best way for most investors to build wealth is to practice dollar-cost averaging,” Hartill says. “Budget a certain amount each month to put in stocks and automatically invest it, regardless of whether the market is up or down.”
And it’s important to note you don’t need to throw thousands of dollars at full shares of stocks at once. In fact, with an app called Stash, you can get started with as little as $1.*
Stash lets you choose from hundreds of stocks and funds to build your own investment portfolio. It makes it simple by breaking them down into categories based on your personal goals.
Plus, you’re investing in fractions of shares, which means you can invest in stocks you wouldn’t normally be able to afford.
For instance, Amazon stock has been doing pretty well, but a single share of Amazon stock costs more than $3,000. With Stash, it’s easy to buy a piece of Amazon if you can’t afford a whole share.
“Some people may not like this approach because they’re hoping to pinpoint the exact moment the market has bottomed out, but it rarely works out that way,” Hartill says. “Instead, people miss out on the best days of the market that often follow a crash and often wind up overpaying for stocks. Consistency is a much better strategy than market timing.”
If you sign up for Stash now (it takes two minutes), Stash will give you $5 after you add $5 to your investment account. Subscription plans start at $1 a month.**
Then, commit to setting aside a certain amount of money each week, paycheck or month to put toward investing.
* For Securities priced over $1,000, the purchase of fractional shares starts at $0.05.
** You’ll also bear the standard fees and expenses reflected in the pricing of the ETFs in your account, plus fees for various ancillary services charged by Stash and the custodian.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.
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Fine art as an investment
Stocks can be volatile, cryptos make big swings to either side, and even gold is not immune to the market’s ups and downs.
That’s why if you are looking for the ultimate hedge, it could be worthwhile to check out a real, but overlooked asset: fine art.
Contemporary artwork has outperformed the S&P 500 by a commanding 174% over the past 25 years, according to the Citi Global Art Market chart.
And it’s becoming a popular way to diversify because it’s a real physical asset with little correlation to the stock market.
On a scale of -1 to +1, with 0 representing no link at all, Citi found the correlation between contemporary art and the S&P 500 was just 0.12 during the past 25 years.
Earlier this year, Bank of America investment chief Michael Harnett singled out artwork as a sharp way to outperform over the next decade — due largely to the asset’s track record as an inflation hedge.
Investing in art by the likes of Banksy and Andy Warhol used to be an option only for the ultrarich. But with a new investing platform, you can invest in iconic artworks just like Jeff Bezos and Bill Gates do.
