One should be Investing in Stocks irrespective of the market condition being good or bad. The best way of investing is to invest more when markets are down and to add to your investments consistently. In this way, you can average your buying price that would be benificial in the long run.
In short yes!
One should invest in Stocks as well as stay invested in Stocks irrespective of the market going High or Low. One should also be investing periodically irrespective of the market is high or low, if markets are low, one can get more aggressive and buy more and once markets get overvalued or go higher, then one should not completely stop investing and keep on buying for the base amount that one has planned.
Statistics say that when the market makes an all-time high, there is a 90% chance that it will make a higher high in the coming months. For safer investors, one can also consider booking some profits and reinvesting that amount in fixed income securities such as bonds.
It is always recommended not to try to time the market as that leads to missing some of the most important days in the markets that lead to an opportunity loss that could affect your long-term growth potential by a lot of margins.“Time in the market beats Timing the Market” is a famous saying that has been around for decades.
There are Mainly 2 ways of investing-
- Lump-sum
- SIP (Systematic Investment Plan
1. lumpsum
In the Lumpsom method, one invests all the money that they want to invest at once. The problem with this strategy is that if the price falls further after investing there will be no additional cash to buy more. The investor cannot average his buying price in this method. On the other hand if one buys in a lumpsum method at a very low price the chances of gains are maximized.
2. SIP-
In the case of a SIP (Systematic Investment Plan), one keeps on buying, on a pre-determined date for a number of years or months. In this method, the investor has the advantage to average out his investments for a long amount of time. He buys even the market is high or low. This results in the best average price for your investments.
So it is clear that when markets are high the biggest mistake is to stay out of the market. Staying invested and buying consistently is the key to achieve good returns. Be smart and buy on dips in any market and stick to your goal and you can become a successful investor.