Is there ever a perfect time to start investing?
A lot of people have some vague notion of beginning to put money into the stock market. But life has a habit of throwing up expenses that can reduce the amount of money one has available to invest.
That can be particularly true as the year draws to a close. From the cost of Christmas gifts and nights out to annual subscriptions, December is a demanding month for many people’s personal finances. But that is precisely why I think it can be a good time to start investing.
Setting financial priorities
The fact is that there are always multiple ways to spend one’s money. That is obvious in December, but it is true across the whole of the calendar.
Setting aside some money to start investing therefore involves a choice about priorities. One needs to make a conscious choice that buying shares is an activity worthy of one’s time and resources.
Doing that even when there are many competing demands on one’s funds is a strong test of willpower, in my opinion. It shows that one is serious about investing and putting the theory into action.
How much to start investing
What is the right amount of money to use when beginning one’s investment journey?
The answer is specific to each individual’s financial circumstances. The financial pressures of December are real and many people have only limited funds to spare as the year draws to a close.
But I think there is a lot to be said simply for beginning. If investing regularly in a share-dealing account or Stocks and Shares ISA, for example, I could always set a modest contribution level for December and then increase it down the line when I had more funds available.
Deciding how to start
What sorts of shares might do well from Christmas custom? Retailers like Sainsbury and Tesco or entertainment venues like J D Wetherspoon?
The answer is that as a long-term investor, I would not pay too much attention to how a business performs over the course of just a few weeks. I am looking to buy into great businesses I think can perform strongly over many years, at a point when their shares are attractively priced.
There is no guarantee that I could find any such shares in December. But investing is about marshalling funds to invest, as well as buying shares with those funds. So, whether or not I had my eye on any specific companies just yet, I could still start investing in December simply by getting into the habit of disciplined, regular saving and searching for shares to buy. That will give me a pool of cash I can use when I do find shares I decide are right for me and selling at an attractive price.
