We don’t support this browser anymore.
This means our website may not look and work as you would expect. Read more about browsers and how to update them here.

Skip to main content
  • Register
  • Help
  • Contact us
  • A A A
  • Waiting for the right time to invest

    We take a look at why waiting for the right investment opportunity and trying to time the market can hold back returns.

    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

    The topic of investing in the stock market can crop up in conversation between family and friends from time to time. “Is now the right time to invest?” and “Should I hold off and invest when markets are lower?” are probably some of the most common questions asked.

    And the truth is, both questions are pretty difficult to answer.

    There’s never really a picture-perfect moment to invest or to sell. And buying in at the market low point and selling at the top is almost impossible to get right.

    In this article, we take look at why investing is all about time in the market, not timing the market.

    We’ll give you information to improve the way you invest and make more of your money. But it isn’t personal advice. If you’re not sure what to do, ask for financial advice.

    Time is money

    Keeping our hard-earned money as cash is often seen as our safest option. Technically it is. Unlike the value of investments, which can move up and down so you could get back than you invest, the value of cash is seemingly protected.

    But cash isn’t totally risk free.

    We’re in a world where interest rates are at record lows and inflation is threatening to rear its ugly head. Inflation is the cost of things we buy every day rising – it reduces our spending power, especially over the long term. So, it’s important for investors to understand how much cash they should hold and why.

    But how much cash should you hold? There’s no magic number or percentage of your overall wealth you should keep as cash. You know your circumstances better than anyone. The best person to decide how much cash to hold is you.

    Investing in the stock market generally yields better returns than cash over the long term. But it’s important to keep some cash tucked aside in your rainy-day savings pot for any unexpected emergencies. We think around three to six months’ worth of essential expenses held as cash to cover emergencies is about right.

    If you’re retired, we think you should hold one to three years’ worth of essential expenses. For those in drawdown, you should consider holding a full three years’ worth of essential expenses.

    It’s also sensible to hold some cash in your investment accounts to cover any charges – things like dealing charges and platform fees.

    Any cash left over after covering the above, that you don’t need access to for the next five years, could be invested in the stock market.

    Whether you’re worried about taking your first steps into the investing world or waiting for the right investment opportunity – putting off investing could hold back returns and erode the buying power of your money over the long term.

    It could be time to think about the opportunities you might miss out on by not investing early enough.

    Time in the market

    So, is now the right time to invest?

    There’s never a bad time to invest.

    Investing is all about playing the long game – that’s at least five years, but ideally a lot longer. Taking a long-term approach with your investments helps cut out the short-term noise and with it, the worries about finding the right time to invest.

    For investors, time in the market is a lot more important than trying to time the market.

    Waiting for the right time to invest or tinkering too much with your investments can mean you miss the markets’ most fruitful days.

    Impact of missing the best 10 days in the UK stock market (2000 - 2020)

    Past performance isn’t a guide to future returns. Source: Lipper IM, from 03/01/2000 to 31/12/2020 Figures based on £10,000 starting investment.

    The chart above shows how missing the best days in the market can cost investors thousands. Although you would’ve been unlucky to miss them all, is it a risk worth taking? Remember investments rise and fall in value, so you could get back less than you invest.

    In reality, which way the market moves today, tomorrow, or next week doesn’t really matter when investing long term. What matters is you stay invested and diversify your investments across areas you think will perform well over the next 5-10 years.

    Ready to invest?

    Whether you’re new to investing or with years of stock market experience, hand-picking individual company shares with long-term potential isn’t a walk in the park. It takes countless hours of research to find the stand-out companies of the future.

    We think funds are a great option for simple and effective long-term investing. Funds pool together money from lots of investors. They invest in a collection of investments which are chosen and run by a professional fund manager, so you’ll benefit from the manager’s knowledge, expertise and research into lots of different companies .

    Funds come in all shapes and sizes. Some funds invest purely into company shares, which could be considered for portfolios willing to accept more risk. Others hold a mix of investment types like shares, bonds, commodities and cash for a more conservative way to invest.

    To help you get started, our investment research team have put together some fund ideas. But they’re not a personal recommendation to buy.

    Investing in funds isn’t right for everyone. You should only invest in funds if you have the time and know-how to diversify your portfolio to help reduce risk.

    Before investing it’s important to check the fund’s objectives align with your own, understand the fund’s specific risks and if there’s a gap in your portfolio for that type of investment.

    Remember, all investments go down as well as up in value, so you could get back less than you invest.

    Investment ideas

    AXA WF Framlington UK

    • Invests in UK companies across a range of sizes.
    • Focuses on high-quality companies.
    • Invests in higher-risk small and medium-sized companies.

    Find out more

    Find out more

    BNY Mellon Real Return

    • A conservative way to invest.
    • Could offer stability to a more adventurous portfolio.
    • Holds a mixture of different investment types.

    Find out more

    Find out more

    AXA WF Framlington UK

    This fund invests in UK companies across a range of sizes. The fund manager looks to pick companies he thinks have lots of potential to grow over the long term – though of course there are no guarantees.

    The fund invests more in higher-risk small and medium-sized companies than some other funds. When building a well-rounded portfolio for long-term growth, think about balancing with funds focused on more established companies.

    The manager's focus on high-quality companies means it could also sit well alongside a fund that invests in companies believed to be overlooked and undervalued. His focus on broader themes and the way they impact individual companies makes it quite different to other funds.

    This is an offshore fund, so investors aren’t normally entitled to compensation through the Financial Services Compensation Scheme.

    More about this fund, including charges and how to deal

    AXA WF Framlington UK Key Investor Information

    BNY Mellon Real Return

    This fund offers a more conservative way to invest compared to a fund that primarily invests in shares. It could be a good option to offer better returns over the long-term compared to cash, without being too exposed to the ups and downs of the stock market. This fund could also be used as part of a more cautious investment portfolio, or bring some stability to a more adventurous portfolio.

    Over the long term the fund aims for moderate growth, while offering some shelter against the worst stock market falls. That doesn’t mean it won’t lose money though, as unlike cash all investments rise and fall in value, so investors could lose money.

    The fund invests in a mixture of investment types that can be broadly split into two categories. This includes long-term growth investments, like global company shares and bonds including higher-risk emerging markets and high-yield bonds. The fund can also use derivatives, which can add risk.

    BNY Mellon Real Return also holds investments that aim to add stability to returns, like gold, government bonds and cash. The team are focused more on not losing money rather than making it, so we don’t expect the fund to race ahead in rising markets.

    More about this fund, including charges and how to deal

    BNY Mellon Real Return Key Investor Information

    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

    Learn more about investing

    Category: LEARN ABOUT INVESTING

    Should I save or invest?

    Category: Investing essentials

    Diversification: what you need to know

    Category: Investing essentials

    Risk: what you need to know

    Category: Investing essentials

    Investing behaviours: what you need to know