I’ve spent the past 7 years studying finance and the financial markets. When I finally decided to invest my first dollar (euro, actually), I was hesitant. When to invest? “Market timing is possible.. just follow these steps!” - yelled some gurus.. “Day trading made me rich, try it yourself!” - screamed others.. I’m telling you: Don’t make my mistakes. Please learn from them, and listen to those who really mastered this “game”. Warren E. Buffett has said, Invest long-term. Okay, then. First of all, let’s define what “long-term” means. It is my humble opinion that it has ≠ different ≠ meanings for each of us and also a bit for each phase of our life. All in all we can regard 5 years as a fair time - best horizon is 20 years (considering market cycles etc.), but also five years will force you to do one simple yet crucial thing. Think before you act. You should invest like the stock market will close tomorrow and reopen only occasionally perhaps in a couple of years. You don’t want to do the wrong thing, do you? I’ll add some more color on that, if you like, just comment below and let me know. To conclude this post, I’d like to do a simple - and hopefully clear - list of 5 principles essential to investing:
Figure 1 - 30 years returns (from 1987 to 2017) in S&P500 index with different scenarios of best days (higher returns) missed during the full period. 0 day missed, 10 days missed, 30 days missed, 60 days missed displayed.
It doesn’t matter, as long as you’re comfortable of setting that - small - amount in your savings and will not need for your basic necessities, just start. Little amount is better than no amount (see point 2.). Invest in a fairly diversified portfolio, several are available here on eToro and elsewhere too. Beware of those who don’t fully disclose their holdings. Are they hiding something? Are they charging you non-sense fees? That’s all for today. I hope you’ll enjoy this post and please let me know in the comments if you have any other fear/doubt/question/suggestion. I wish you safe and profitable investing, peterlavi - Pietro Disclaimer: I am not a financial advisor or registered investment advisor. The information contained in this article is for informational purposes only and should not be construed as financial advice. Past performance is not a guarantee of future results. You should always conduct your own research before making any investment decisions.
Figure 2 - 30 years annualized returns (from 1993 to 2022) in S&P500 index with different scenarios. In blue if you stay invested (no market timing); in orange if you miss the 5 best days of the period (average attempt of market timing)."What if I don't have a lot of money?"