That’s a very good question. The simple answer is that there is no such thing as the ideal or right time to enter the stock market. No one can predict whether prices on the stock market will go up or down over the coming months. The wise thing to do, therefore, is to diversify and give your investments time. One option is to spread your investments over time to make your returns more resistant to stock market volatility. This way you also avoid entering the stock market with a hefty sum in one go at the wrong time.
The focus in daily financial news is always on whether stock markets were up or down that day, looking mainly at indices such as Euronext Amsterdam’s AEX. These spot prices are snapshots. When you invest for the long term, highs and lows are simply part and parcel of investing. In the long term, chances of better returns may increase. Holding out for the right time to start investing is therefore generally pointless. Instead, you could start investing certain (smaller) amounts at different times.
Imagine you were to invest your money in one go. There is no way to know whether the time is right. Prices can go up or fall further. There is another way to get started: divide your money into smaller amounts and invest these amounts at different times. You can put money into your investments weekly, monthly or even annually. This way, you will be buying investments when prices are higher or lower, meaning that you ultimately pay an average price overall and increase your chances of returns.
Please note: investing involves risk. You could lose all or part of your investment.
Spreading your investments is something you can do flexibly at times that are right for you. This means putting money in whenever it suits you. Additionally, you can opt to invest periodically. With periodic investing, you buy investments at a fixed price and at a fixed time. You buy the investment at the price as it is when you put in the money. It is also possible to set up multiple periodic investments, which will grow your total investment and, if everything goes well, your returns. You decide when to start or stop, how often you want to put money in and how much you want to put in.
Let’s say you have built up a healthy buffer and still have €200 to spare every month, and you want to start investing that money. The first step is to choose the investment option that is right for you, such as Guided Investing. You then invest the first €200 in your chosen ESG Profile Fund from the Guided Investing range. After that, you can set up a standing monthly investment. If you invest €200 every month on a standing order, you will have invested €2,400 after one year. What is important to note here is that you should only invest money you can spare.
Please note: the calculation below is provided for example purposes only. Use our calculation tool to calculate your possible returns with Guided Investing.
With a hypothetical average return of 4%, your investment in that year would have grown by €253 to €2,653.
The longer you invest, the more you benefit from the interest-on-interest effect. This means that you can generate increasing returns as your capital grows, and it enables you to better absorb the impact of a bad year.
Please note: the calculation below is provided for example purposes only. Use our calculation tool to calculate your possible returns with Guided Investing.
Example: with an annual return of 4% on an investment of €5,000, you will have generated a return of €200 after one year. After two years, you will already have generated €408, and after ten years even as much as €2,401 in returns.
As we have established, there is no ideal time to start investing, but there is a good way to get yourself properly prepared. Whatever you do, always be aware of the risks involved in investing. What is your goal, your budget and your preferred way to invest? How much risk are you prepared to take? And do you understand what you will be investing in? It is important that you answer these and other questions for yourself before you start investing. We’ll help you do that in 8 steps. Only invest money you can spare on top of your buffer.
Investing involves risks. You could lose (some of) the money you invested. If you are going to invest, it is important that you are aware of this. Invest with money you can spare. Read more about the risks associated with investments.
You are ready to get started. You have sufficient balance in your linked account and you want to buy your first investment. But what do you buy? What would be a good choice? Perhaps you already know exactly what you want. If not, let us point out the things you should bear in mind.
If you want to build up your knowledge before you start investing, or just want to understand it better, learn the basics in just 8 steps.
