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How do I time the share market?

The bad news is that it is not possible to time the market. The good news is that as you can’t time the market you have not missed out.

Growth assets such as shares and property tend to deliver the best long term returns. Returns are typically 8-10% pa over period of 10 years or more. Returns are volatile and you are likely to experience a negative return one in every 4 years (25% of the time).

The most successful investors take the following 4 steps:

1. Invest surplus funds in quality growth assets over the long term.

2. Regularly invest each month to dollar cost average into the market. If the market is down they realise it is a great time to invest a little more.

3. Reinvest the income they receive from their investments. If they need additional cash flow to meet living expenses, then they receive the income as cash payments.

4. Any money that is required in the short term (0-2 years) or medium term (2-5 years) is invested more conservatively to protect the capital value over these shorter period.


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