Asked on 13 Nov 2019
Hi, the economy in 2020 is expected to be slower and worse. I have 10,000 SGD set aside now. Look forward to your unbiased reply, many thanks.
Nobody can time the market. I always believe the best time to invest is now. How if 2020 market never crash? You might lose lots of opportunities
If you are already investing, stay invested and earmark the $10K as a warchest. Better still if you are adding on to your investments regularly with RSP. When the crisis eventually comes, you can deploy your warchest into the markets.
However, if you have not started investing, then you would want to start small and add on. Half of your funds can be used to kick start your investment journey, and it is okay to just hold on to the rest as a warchest, and add on monthly as you earn.
We don't know for sure if the recession will come in 2020, and hence it's better to start now rather than later, but manage the risk correctly.
One of the biggest misconceptions about investing is you have to look at the broad market.
I don't think that is true. During the previous crisis, companies like Netflix actually grew! Both in revenues and share prices.
If you worry is about a worse economy, build your investment portfolio around consumer staples such as Nestle, etc. Their fundamentals are not heavily affected by the economy.
Remember, do your valuation work and pay a reasonable price on it!
Hi! The answer to your question will depend heavily on when you need the S$10,000 you have set aside to invest. If it's money you very likely need any time in the next 5 years, then it's best that you do not invest this money. The stock market is volatile over the short run (anything less than 5 years) and the worst thing to be during a market downturn is a forced seller.
I can share how I look at the situation. I'm investing with money that I do not need for many years. I also invest in individual stocks, as opposed to investing in funds that track broad market indexes. When I find a company I think has bright long-term prospects and a decent valuation, I'm happy to invest. I invest knowing that a market downturn will surely happen in the future - I just don't know when. I protect my portfolio in a few ways.
First, I diversify my portfolio among a wide number of companies (at least 30). Second, I invest in companies with strong balance sheets and a high level of free cash flow. These traits improve the chance that a company can survive an economic downturn, or even win market-share when financially weaker competitors stumble. Third, I invest in companies with high levels of recurring revenues, either from customer-behaviour (think credit-card companies and coffee shops!) or contracts (such as subscriptions). The recurring revenue ensures that a company has a certain base of revenue that will continue to flow in even when the economy is weak. By doing these three things, I protect my portfolio over the long run and ensure that it can survive strongly during the downturn period, and continue climbing when the downturn inevitably ends.
To be honest, you can't time the market, so can't any one of us. Rather than deciding when to invest based on economic conditions, why not identify the businesses which are resilient to these changes? For example, healthcare, retail etc. You know that whatever happens, these businesses will continue to grow for the long term.
Once you have identify them, do your fundamentals and diligience work on the valuation, you will realize that actually, there is no fixed time for you to invest, other than when the valuation makes sense. Opportunities will always be around!
Yes & no.
Yes, if you can see opportunities.
No, if you have no idea of which investment tool to use.
I’ll take 1 step back & ask: What do I want to get out from this $10k?
There is really no correct time to start investing as there are continous market cycles. A bear market will never remain bear permanantly nor will a bull remail bull. There is bound to be a cycle going through both of these circles.
So a better strategy to adopt while investing in the market is the Dollar Cost Averaging. This basically refers to investing small amounts at regular intervals. This will ensure that you invest in both bear and bull markets, so in the long run, you will have a lower average cost of purchasing the securities. In this case, you don't really have to bother about the correct time of investing. You can use the SIP model to apply this in your investments.
I work at Kristal.AI, and it's my passion to evaluate various upcoming investment opportunities.
I assume that you have already set aside some funds for emergency usage and insurance coverage. If you are talking about the timing to invest, I would suggest that you spend more time to study individual companies and compare their business value to the stock price it is trading at.
The market has a lot of noise everyday, and the best advice I would give is this: Time spent in the market is far more important that timing the market.
As long as you are in for the long term, invest within your circle of competene and always set aside some cash to average down when the stock prices crash!
No right or wrong here.
Time in market is better than timing the market.
You already said that “expected to be slower”, what if it did not slow and bullish instead. FOMO will step in and that is when the crush will come.
Be cautious and come out with a tactics. That way bull or bear also make money.
Don't think of market cycles, nobody can predict them
You maybe would like to gather some ideas here:
As what many have said "time in the market rather than timing the market" that being said, if you are looking at lumpsum investments, you'd first have to find opportunities and deduce from there on whether you feel its over or undervalued. No one knows when recession strikes, the main thing is to not put all your eggs in one basket.
It’s very difficult to time the markets, and even when there’s a downturn, the “window of opportunity” doesn’t last long and you won’t know what’s the bottom. Time in market is probably better than timing the market.
You should be flexible. If you feel that the market is slowing or going to be worst, go short. Change it to long once the market is recovering.
Before you start investing, it will be best to understand your objective. Here are some questions to help you:
What is your capital?
How will you want to invest your capital? E.g. lump sum or an amount on a regular basis
How long will you want to stay invested? E.g. 10 years
What is your risk appetite? E.g. How do you feel about short-term volatility?
What is your objective for investing?
To determine if the market condition is favourable to invest, the question will be: Is there a right time to invest?
Accordingly, I have compiled a list of financial crisis and disasters since the 90s and every other strong reasons not to invest. However, the market has proven otherwise year after year.
Therefore, focus with the right investment strategy by knowing your investment objective. Then decide the tenure and decide if a lump sum or smaller amount works. Finally, invest into assets that suits your risk appetite.
Here is everything about me and what I do best.
One can never time the market. Ppl predicted with Donald Trump election, economy will be down but it went inverse.
So to me, don't bother timing just invest now or any time you want, but only after you have done a thorough investing analysis on the company you are interested in
What you are probably experiencing now is fear. I'm guessing you're just starting on your investment journey. Ask yourself what you will do if 2020 comes and goes without a major downturn? Likely you will be even more afraid to invest. So you end up never starting.
So. The important thing is to get started. If you believe the downturn will happen in 2020, and major crashes take about 2 years to bottom out, then you could consider DCAing your 10k over 3 years and just start. That way, if the crash does come, you would be buying into the dip. And if it doesn't you'll be loading up and earning from your early investments.
Its been proven again and again that no one can time the market, and no one should.
The best time to invest was yesterday.
The 2nd best time is NOW.