Wealth ManagementInvestment Advice

Is now a good time to invest? Here's why it doesn’t matter.

Jonathan Scholes
17 May 2024
6 min read

In today's world, we're constantly bombarded with market news and opinions. Whether the market is up due to inflation concerns or down for the same reason, it's easy to get caught up in the daily fluctuations and market timing debates. Over dinner with friends, you’ve probably heard: "Is now a good time to invest?"

Living in a fast-paced, 5-minute news cycle, terms like bull runs, corrections, and crashes can leave anyone feeling overwhelmed and unsure about when to act. But here's the truth: the timing of the market doesn't matter as much as understanding your financial goals.

Getting started with investing

Think of investing like building a house. You wouldn't start hammering nails without a blueprint, right? Just like constructing a house, investing requires a clear vision of what you want to achieve – your financial goals. So, when getting started with investing, what should you focus on?

Here are some pointers:

  • Adopt a long-term perspective: When it comes to market fluctuations, history tells us that they generally trend upward over the long run. By investing for the long haul (think retirement, not next year's vacation), you ride out the bumps. Did you know that the worst annual return on the ASX 200 over the last 30 years was in 2009 at -47.2%?* However, if you look at the 30-year average return, it's 8.6% per annum.

  • Remember, discipline is key: Focusing on goals keeps you disciplined. Instead of panicking when the market dips, focus on your long-term plan.

  • Develop a tailored approach: Different goals require different investment strategies. A young professional saving for a house might place importance on growth, while someone nearing retirement might focus on income and stability. It needs to be right for you.

The question, 'is now a good time to invest?' often accompanies another common inquiry: 'what is the best investment?' These questions reveal the inquisitive and careful approach investors take in navigating financial markets. But ultimately, the answers depend on your own circumstances and intentions.

It's essential for you to conduct thorough research, seek professional financial advice, and align your final investment decision with your unique financial objectives. By understanding the broader economic landscape and maintaining a disciplined approach, you can make informed choices that support your financial wellbeing over time.

Clarifying your financial goals and strategy

Establishing a clear financial roadmap is essential for achieving long-term success. Think of your financial goals as the destination, and your strategy as the route to get there. Here's how to craft a robust financial plan:

  • Goal identification: Start by defining specific and achievable financial objectives. Whether it's saving for a home, funding education, or retiring comfortably, clarity is key.

  • Prioritise SMART goals: Ensure your goals are SMART—Specific, Measurable, Achievable, Relevant, and Time-bound. This framework keeps your objectives focused and attainable.

  • Risk assessment: Understand your risk tolerance and investment preferences. Your strategy should align with your comfort level, balancing potential returns with acceptable risk.

  • Financial snapshot: Take stock of your current financial situation. Evaluate income, expenses, debts, and assets to inform your strategy.

  • Tailored strategy: Develop a bespoke plan that suits your unique circumstances and aspirations. Consider factors like investment horizon, liquidity needs, and desired outcomes.

  • Regular review: Financial planning is dynamic. Regularly revisit and adjust your strategy to accommodate life changes, market conditions, and evolving goals.

By defining your financial vision and implementing a tailored investment strategy, you empower yourself to navigate financial challenges with confidence and clarity. Partnering with a financial planner can further enhance your plan's effectiveness and ensure alignment with your long-term objectives.

Five reasons to work with a financial planner

With clarity and understanding comes confidence. In a recent study of Australians just like you, almost twice as many people who have a financial planner felt confident in managing and growing their super. Our research shows that 73% demonstrated a strong understanding, while only 46% of those without a planner felt confident!

A good financial advisor is like a skilled architect for your financial future. They play a pivotal role in crafting a comprehensive strategy tailored to your unique needs and aspirations. Here's how a financial planner can help you:

  1. Development of a goal-oriented strategy: A great financial planner does more than just handle investments. They take on the role of a reliable counsel, collaborating with you throughout your investment journey. Your planner will create a customised plan based on your unique objectives and risk tolerance, whether it's building a sizable home deposit, ensuring your children's school dreams come true, or building a comfortable retirement nest egg.

  2. Comprehensive financial knowledge: For those without experience, the financial markets and investing might feel overwhelming. A financial planner is equipped with the skills and information needed to navigate the options available to you. They can perform in-depth research, evaluate your financial status, and suggest appropriate investment vehicles that fit your time horizon and risk tolerance. This is also where scale plays its part, a planner backed by a large firm will often have an entire research and investment team to assist them and you in helping your investment portfolio to hit its targets.

  3. Australian market insight: There are certain rules, tax ramifications, and superannuation considerations unique to you as an Australian. This is where the many years of education and experience benefits you as a client. The goal of a planner is to improve your entire financial wellbeing, may make sure you are maximising possible benefits, using tax-effective investment methods where appropriate and ensuring that you minimise tax where possible.

  4. Accountability and continued assistance: Financial planning is a continuous process. Both the state of the market and personal circumstances change over time. A financial advisor will be there with you as your situation and your world changes.

  5. Peace of mind for long-term security: Some would suggest that a meaningful life and the achievement of your goals depend heavily on your financial security; although wealth is just a component of this. A planner can assist you in managing possible financial difficulties, reducing risks, and creating a solid long-term plan. They can also help you with ensuring your legacy is secured.

Key takeaways

Financial advice is more than just managing investments; it's about building a strong foundation for lasting financial success. Instead of asking yourself, "Is now a good time to invest?", think about your life goals and seek guidance to reach them.

While going solo might sound tempting, investing is usually a long-term game. Don't get caught up in daily market chatter. Partner with a qualified financial advisor to create a solid investment strategy. This approach is essential for achieving real financial success, regardless of today's market trends.

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*Period ended 28/02/2009. Data sourced from Morningstar.

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Author: Jonathan Scholes | Head of Client - Wealth