When to Invest? No Time Like the Present!
By ALAN OLSON
WHEELING — Investing financially may seem daunting, but advisers at WesBanco say that hesitating on making the plunge can set prospective investors back substantially if they miss out.
Scott Love, Senior Vice-President of Economic and Equity Analysis with WesBanco, said there’s never the perfect time to start investing, but gains can be made at any time, and going in sooner will allow interest to begin accumulating, and can keep prospective investors from missing out on the best trading days of the year.
“History tells us that if you miss the 10 best days (of the 250-day trading year), you’re going to significantly underperform from the benchmark,” Love said. “In our view, there’s no best time to get started, but we would prefer you to just get started. Taking that first step, allowing interest and returns to compound, is really where people are going to see the growth on their investment portfolio.”
Scott Cunningham, CEO of Security National Trust Company, echoed this sentiment — the sooner a person starts investing their money, the sooner it generates interest.
“The best time to invest is sooner, rather than later,” Cunningham said. “The big benefit from investing is the effect of compounding over time, and the more time you have to compound your investment, the richer you’re going to be”
Cunningham said the Rule of 72, which provides a rough estimate on how long it takes for an investment to double in value given a fixed rate of annual interest, provides a good general idea for the effect of interest.
“If you invest at age 28, you’ve got a doubling jump on the person who waited until age 35,” he said of a hypothetical situation with 10 percent interest.
Love recommended visiting a local financial advisor’s office to get started, of which there are many throughout the area, associated with large financial firms such as WesBanco or Edward Jones. Alternatively, those without a baseline knowledge base can pursue online or local education programs to get a basis in finance.
“We offer a wide range of people who can help them get started, and in addition there are other investment platforms people can take a first step,” he said. “If you’re relatively new and need a little more background and information, there are a number of websites and education services that will get you up to speed. But what we’ve found is that individual investors don’t have the stomach sometimes, or the depth of knowledge, that professional investors will.”
Cunningham agreed, referring to Thomas Stanley and William Danko’s 1996 book “The Millionaire Next Door,” pointing out two things from the book: most millionaires live beneath their means, investing the extra money, and that many millionaires enlist the help of professional advisors.
“They have investment advisors, lawyers, and CPAs. So if people are interested in investing over time, it’s good to engage in professional advice,” Cunningham said. “We saw this recently with the GameStop debacle, where the stock of GameStop was going way up and everyone jumped in, bought hundreds of thousands in stock, and then, of course, the … scheme collapsed. Somebody was left holding that stock and it collapsed in value, and all of us in the business looked at each other and said, ‘Ah, those people are going to get hurt,’ and many of them did.”
Love advised that, historically, “timing” the market — acting in accordance with perceived trends — rarely works out either for personal or professional investors, and again stressed that a prospective investor be fully invested.
“By getting invested, staying invested, and sticking to your long-term strategic goal, that’s where investors will be able to post some pretty solid returns, and really allow their returns to compound over longer periods of time.”
Love said the COVID-19 pandemic affected the market, with the equity markets bottoming out following the March 2020 initial lockdowns. However, those markets recovered quickly in the days that followed.
“If you look, just as the lockdowns really ramped around March 23, that’s when those equity markets bottomed,” Love said. “If you were worried about current events, or worried about where the economy was going to go, you would have missed one of the quickest recoveries in the equity market in history.
“There’s really no great time to invest, and in fact, the times that are uncomfortable are traditionally where you want to get started. Even now, … we still encourage investors to take a longer-term view, take that first step, get started in investing, and allowing interest and returns to compound over time.”
Even for those who may not have as much disposable income, Love said it’s often possible to find the money to begin investing.
He recommended starting with a 401(k) investment plan through work, if one is offered, or when getting a raise or changing jobs, investing a portion of the increased salary.