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Ever wanted to start investing, but wanted to wait for the right moment? Some people put off getting into the stock market for years – or even forever – as they keep waiting for what they hope will be the right moment.
I understand that. Successful investing involves buying something for less than it ultimately turns out to be worth. So it makes sense not to want to overpay.
But the signals can be confusing. On one hand, the economy is lacklustre. Set against that though, we have already seen the blue-chip FTSE 100 index of leading British shares hit a new all-time high this month.
Market timing can be problematic
I think it can be helpful to step back from the question and ask exactly what the “right time” for someone to start investing might look like?
Some of that will be personal to them. Does their financial situation give them enough leeway to start buying shares, even if only on a small scale? Have they decided why they want to invest and set some goals?
Also, have they taken time to learn at least the basics of important concepts like how to value shares and how to diversify a portfolio to help reduce risk?
But there is a more general point too. There may not be a single “best” or “worst” time to start investing. To some extent, it depends on what investments someone makes.
Lots of people try to time the market by guessing what they think will happen next. But that can only ever be a guess.
Choosing individual shares
When I say that the right time to start investing depends on what investments someone makes, that is partly because shares do not move as a mass bloc. Even when the overall market may seem expensive, there may still be some individual bargain shares. Conversely, even after a market crash, some shares can still be overpriced.
That helps explain why I like to buy individual shares (as part of a diversified portfolio), instead of an index tracker.
One share to consider
At the moment, one share I think investors should consider is FTSE 100 asset manager M&G (LSE: MNG). The market for asset management is large and likely to stay that way over the long term. The sums involved mean that even fairly modest commissions can soon add up.
With its strong brand, deep experience and customer base in the millions across several dozen markets, M&G has proven it has the ability to generate cash on a meaningful scale.
That allows it to fund a juicy dividend. The current yield is already 6.9% — well over double the FTSE 100 average — and the company’s stated aim is to keep increasing its dividend per share annually.
Will it succeed? Dividends are never a sure thing at any company. One concern I have is that M&G may see policyholders take more funds out than they put in. That could hurt cash generation.
From a long-term perspective though, I am upbeat about the outlook for M&G.
Getting ready to invest
Of course, before someone can start investing, they need a platform to do so. That could be a share dealing account, Stocks and Shares ISA or trading app, for example.
Then after putting some money into the chosen vehicle, they could then start buying shares.
