Are you looking to invest in stocks or bonds? Or maybe both? If you’re confused about where to start, don’t worry. There are plenty of options out there.

The stock market has become very complicated over time. Whether you want to invest in individual companies or entire sectors, there are several ways to go about it.

There are two main types of investing strategies: long term and short term. Long term investors tend to focus on holding their investments for years at a time, whereas short term traders try to profit from price fluctuations within days or weeks.

What Is Market Timing?

Market timing is an important part in many trading strategies. Some people think that market timing isn't possible because there is no way to predict what the future holds. Others think that it is very difficult to succeed. But there are many different ways to do market timing, including fundamental analysis, quantitative analysis, technical analysis, and economics. 

However timing the market can be very tricky to successfully pull off. In the following sections I'll discuss why it is so difficult and why time in the market may be a better strategy for you.

You Need to Be a Full-Time Investor

Most people don't have the money to invest like a professional. They are too busy working to save up enough cash to buy stocks or maintain their current life. But you don't need to be rich to trade (or at least to start trading). What you do need, is a lot of time and patience.

This is something I think most of us could do but it requires full time dedication. Being able to identify when markets may go up or down requires full time research.

You need to know first of all, all the terminology and tools that go a long your investing regardless of timeframes. You need to be able to read charts. You need to stay up to date on the areas your trying to trade e.g. staying up to date with a companies press releases, financials, upcoming plans etc.

And in addition you have to find this info fast so you can position your trade before the rest of the market becomes aware of the trade whether that be a 30 minute, day trade or a swing trade over a few days. This is one of the main reasons that people fail in trading. For 1 person to succeed usually many fail.

The Future is Unpredictable

Investors are often afraid of what lies ahead. They worry about the future and wonder how much it might change. But there are some things we know for sure. We know that the economy will continue to grow and that technology will advance. We know that investing is risky. And we know that sometimes markets fluctuate.

So why do investors feel like they're being forced into making decisions based on fear?

Because they are. In fact, fear is one of the biggest reasons people avoid investing in the first place. Fear causes us to make irrational choices. It makes us miss out on great opportunities. And it prevents us from taking advantage of good times.

When we're scared, we don't act. We wait. And that's exactly what we want to avoid. If you've been avoiding investing because you think you'll lose money, then maybe investing really isn't for you. Because the truth is... ALL INVESTORS LOSE MONEY.

Whether a long term investor, trader or anything in-between. All investors lose some money at some point, it's part of the process. But knowing how the markets work in general is crucial to reducing the amount of times you lose.

That's why it's important to understand the facts about investing. Here are three facts that will help you take control of your finances and invest confidently. First, over the short term, the stock market goes up and down for many, many factors that most of us can't comprehend. Second, over are long period of time as the global economy grows (or more specifically the US economy) due to technology advancements so does the stock market.

Take a look at the S&P500 below:

In the image above you can see this chart dating back to the 80's and although their are brutal times of rapid down movements, generally the market is on the rise. Because of this, even with us currently being in a time of financial worry around the world, I am not panicking about my investments. 

And if that isn't impressive, take a look at this graph of world GDP over the last two millennia from Our World Data

Personally, I invest for the long term hence 'time in' the market. And based on past trends I understand that when the stock market goes down it gives me a chance to get my favourite stocks on discount. Now bear in mind, I still do my own research and dedicate time to pickings stocks usually owning no more than 5-10 holdings. 

This may be seen as quite risky to some people so in the next section I'll cover how you can reduce this risk.

You Don't Have an Edge Against the Pros

To beat the pros, you need more than just good luck. You need to understand how the markets work, and you need to be willing to put in the hours it takes to learn about technical analysis. If you want to become a successful trader, you'll need to do some homework and study up on charting techniques, economics, company financials, world current events etc.

But the beauty is, you choose your difficulty level. If you want to go up against the pros to try and pick the best stocks then you can but you must have in mind the added risk. This risk can be mitigated with diligent research and analysis. 

Or if you really want to go minimal effort then just invest in index funds which track the overall market. For example the VUSA (S&P 500) ETF by Vanguard will closely track the S&Ps value without you having to buy every company in the S&P500.

Simply by some VUSA and you essentially own a little bit of everything. This way you are very diversified and will be able to ride out the markets over the long term. Aided by another strategy called dollar-cost averaging you can have stable growth over a long period, but don't expect to make 1000% in year.

Time in the market - not timing the market

Mis-timing the market can cause huge losses. In fact, it happens every day. But how does one become aware of such mistakes? And how do we avoid making similar mistakes ourselves?

The answer lies in knowing our investment goals and objectives, understanding the risks involved, and being able to identify the best opportunities within the market. If we want to achieve long-term success, we must invest wisely.

The most important thing is to plan ahead. We must learn how to invest intelligently, because it takes time to build up a solid knowledge base. Make a plan early, keep your research up to date and invest based on data and not preference.

Diversify your portfolio to reduce risk or pick your own stocks for potential higher reward. The choice is yours. We recommend reading books like "How To Invest Like Warren Buffett", "The Intelligent Investor" and "Common Sense On Mutual Funds". They teach us how to make smart decisions.

But there is no substitute for experience. So, start small. When I started I was investing £30 per week while working part time as a student. Within what now feels surprisingly a short amount of time, I built up my contributions slowly and whenever I got money I wasn't expecting I would add it to my investments. Feel free to checkout my portfolio updates if you are curious on the stocks I own.

Summary

Investment is not easy. It requires discipline, patience, and persistence. The key to success is to have a clear goal in mind and stick to it.

I am not a financial advisor and anything I say in my blog is not to be taken as financial advice. For any financial advice please contact a financial professional. My blog is based on my own opinions, research and understanding of the financial markets.

I hope you have found this blog post helpful. If you did enjoy the blog then consider leaving feedback below or sharing the post on social media. I regularly post content on the stock market, personal finance, and side hustles/entrepreneurship so if you would like to read more then consider subscribing to my blog through my website (www.portfolio-hub.co.uk) for free or follow me on Medium.com.

Thanks for reading

FAQ

What Is Market Timing?

Market timing is the act of moving investment money in or out of a financial market—or switching funds between asset classes—based on predictive methods. If investors can predict when the market will go up and down, they can make trades to turn that market move into a profit.

Source: investopedia.com

Timing the market vs time in the market?

Past performance is not an indication of future performance but we humans are products of our experiences. In the early 2000s, Daniel Kahneman, a psychology professor at Princeton, published research that demonstrated “repeated patterns of irrationality, inconsistency and incompetence in the ways that human beings arrive at decisions and choices when faced with uncertainty”. His research has contributed heavily to the field we now call behavioural finance.

Source: investec.com

What is market volatility?

Before looking at why or how people try to time the markets, it is important to consider stock market volatility. This is a mathematical measure of the erratic up-and-down movements we see in share prices. Volatility is often what unnerves first-time investors who have grown used to the certainty of money in the bank.

Source: bestinvest.co.uk