When one is truly ready for a thing, it puts in its appearance. — Napoleon Hill
The above quote sounds pretty serious, but that’s because today I’m going to raise an issue that will have a significant impact on your wallet. I’ve already discussed what investing is and why it’s worth investing, so it’s high time to consider when to invest. I’ll analyse the moment when you can start an action aimed at increasing the volume of your portfolio.
When to Invest — When You’re Ready
There is a difference between knowing the way and following it. — Morpheus
Yes, I know, I quoted Matrix. However, I find the movie beautiful and the quote perfect because you may know your goal but not how to achieve it. Investing is similar. Our goal is to make money, but the question remains — how to do it? To start implementing your task, you should first find out when to invest. In my opinion, it depends on three factors:
1. When you have some money saved
Imagine this: you earn GBP 2,500. It’s not much, but enough. You pay the rent, bills, credit instalment and you end up with GBP 1,000. Not a fortune. But what to do with it? You can spend it entirely on food or parties, or invest the whole sum, or divide it in two: money for living and savings. If you choose the first option, you’ll simply spend all your money. One day you have it, the next you don’t. If you invest everything, you will either gain or lose. Pretty risky as a loss means you will starve or borrow money again. In my opinion, the best solution is the third one when you divide money into money for living and savings. Remember that by investing your savings only you are financially secured and in case of loss you won’t be left with nothing.
2. When you are ready
The results of investing largely depend on your preparation so the greater the knowledge, the greater the chances for profit. Remember that the time you usually spend over a beer, watching TV, YouTube or Facebook you can spend on expanding your investment knowledge. Yes, I talk like a teacher I know it’s fucking hard. But remember — knowledge is the key to success.
3. When you have an idea and find an opportunity
By learning the secrets of investing, you realise which areas you know best. When your knowledge allows you to analyse the market and understand it you can start looking for assets that you believe to bring a profit. When you feel you know enough, have the idea and are ready, you start investing.
The only acceptable knowledge is that of causes — Francis Bacon
When You Observe and Analyse or When to Invest in the Stock Market
Choosing an asset to invest in is very important and we will definitely come back to this topic. Now let’s focus on the circumstances that are worth paying attention to. Let’s start from the beginning, when to invest in the stock market?
I remember a situation when one of my distant friends offered me to invest in his business. He boasted that it had to be a success, and he did not want a lot of money and if so, I did not have to worry about money, because he would constantly pay me high dividends. Deal of your life, right? Well… not. I carefully checked his business plan and it turned out that the investment didn’t follow any market trends, so there was no chance for growth. And the idea of business didn’t match with the way I see the world. Furthermore, the guy was in debt, a big one. There was no chance of any cooperation. So when to invest in the stock market:
- when the concept of a company goes hand in hand with the trend, e.g. it has a good chance of reaching a large group of customers,
- when you can identify with the concept of the company, e.g. investing does not violate your ideas and values,
- when the amount of dividend paid is not greater than the earnings, e.g. when the entrepreneur does not offer you money they haven’t earned yet,
- when the company is not in debt and there is no debt collector at its door.
When You See the Opportunity or When to Invest in Real Estate
Some are lucky, people say. In fact, luck depends on your preparation and vigilance.
One of my friends once told me how he managed to earn his first serious money on real estate. He had his funds saved, he knew what he wanted, and he was constantly checking the market. He watched it like a hawk watches its prey. Finally, he found an apartment in Warsaw, located right next to the city centre, consisting of a large living room, two separate rooms, a bathroom, kitchen and corridor. Its location and layout enabled him to rent it to both tenants and companies. As a result, the investment soon paid off, and now it earns money for the next investment. Here are some other examples of when to invest in real estate:
- when the undeveloped area is in a busy location and you can convert it into a parking space,
- when you can afford to buy a building that can be converted into a retirement home,
- when, instead of the entire hotel, you manage to buy only one room,
When You Follow the Foreign Economy or When to Invest in Currencies
As you know, the investment market is international, so you can operate both in Poland and abroad. Personally, I prefer our country, but there is one exception — currency.
The structure of many companies is as follows — at the top, there is a group of people managing the business and one person responsible for all management. Then, there are employees with different roles. They deal with sales, advertising, strategy, training, warehousing, etc. There is also Mick, a security guard who looks after the business, and Mrs. Scott, an accountant who takes care of documents. Now let’s imagine that the entire state operates in a similar way. The Sejm, the senate and the president are the company’s bosses. Teachers, educators and lecturers are the trainers. Soldiers, policemen and firemen are the security guard Mick. The court and the prosecutor’s office are Mrs. Scott, and we, the citizens, are employees of various levels. The theoretical task of each of us is to act for the benefit of the country, i.e. the company. So when is it worth investing in currencies:
- when you realise that the state is like a company and its currency is like shares, i.e. when you know how to translate the learned investment techniques into investing in currencies,
- when you learn the carry trade technique (I’ll definitely come back to it).
A journey of a thousand miles begins with a single step — Confucius
In the material, I have presented several situations favourable for investment. However, in my opinion, the answer to the question of when to invest comes in two words — willingness and opportunity. You only invest when you have money set aside, when you learn the secrets of investing and get the right opportunity. When you learn the theory and gain experience, you’ll know when to invest in the stock market, when to invest in real estate, and when to invest in currencies.