Share prices go up and down. Of course, you would rather enter when the share price is at its lowest. But when does that moment arrive? If you wait too long, you could already be missing out. We are happy to explain what you can look out for when determining the best entry time.
Every day the financial news places emphasis on falls and rises on the AEX. The daily share price is a snapshot. If you are investing for the long term, peaks and troughs are par for the course. And in the long term, the chances of returns increase sharply. Therefore, it usually makes no sense to wait a long time for the right moment to come.
Share price increases are good for returns, but they are not the only factor. Dividends are also often paid annually for shares and coupon interest for bonds. The longer you wait, the longer you are missing out on dividends or coupon interest. With an investment fund or ETF, you can also benefit from dividend or coupon interest, but from various shares and/or bonds. Depending on the fund or ETF, this is paid out or processed in the price.
The sooner you start investing, the more you can harness the power of compound interest. That is an ever-increasing effect. In essence, this means that the more assets you have, the greater your returns. This also makes it easier to absorb the effects of a bad year.
Example: the return on an investment of €5,000 is 4 percent. In cash, this is €200.00 after 1 year and €408.00 after 2 years. In the second year, the return therefore increases to €208.00.
You do not have to invest all your money in one go. You can also enter at different times. This is also possible over a number of months or even years. This spreads the risk. You can also choose to set up a periodic investment for this. For example, you can deposit a fixed amount every month. This allows you to automatically build up a nice amount.
The interest on savings is not going to help you at this time. And if you include inflation, your money will even be worth less. So if you understand the characteristics of investing, accept the risks and you want the chance of a higher return, it is important that you start placing your first order.
