There’s a famous proverb about investing:
“The best time to invest was yesterday, the next best time is today and the worst time is tomorrow.”
If you are trying to time the market based on the indices, then you might never be able to find the right time to enter the market. Every time is right time to invest in any market if you know what you are doing. Focus on the individual stocks. If you can find a good stock at a decent price, then buy it. If you follow the stock, you can time it. With the market at an all-time high you may not be sure if this is the right time to invest. Question like “Is there a correction waiting around the corner that you can take advantage of?” may knock your brain.
Everyone wants to time their entry into the equity market, so they can buy low and sell high. Market timing entails predicting whether the market will keep going the way it is or make a U-turn, which is easier said than done. No one can predict if a stock which has doubled in the last five years is 'high enough' or if it will go on to treble, quadruple or become 10 times. The same holds true for for a stock that is headed downwards. Therefore, there's a dilemma underlying.
You may be willing to wait for the right level to invest. However, you would also be more inclined to sell after a major market drop and would be eager to invest when the market is rising. When the market falls, the natural tendency for the human brain is to predict that it will continue falling and vice versa. Therefore, you may end up buying at the top and selling at the bottom, hurting her overall returns. Alternatively, waiting for the 'right' time to invest might send you into what is known as 'investment inertia'.
Timing is a game that is tough to win. Moreover, research reveals that regular investing yields better results than timing the market. If you had invested regularly in equity in the last few years, irrespective of market movements, you would have made more money than by trying to time the markets, with the risk of getting it wrong. In theory, market timing makes perfect sense and seems like the right thing to do. However, in practice it just doesn't work successfully for most investors.
In trying to avoid regretting a wrong decision, you run the risk of perpetually waiting for the 'right' time to invest. The best strategy for you would be to avoid trying to time the market. Instead, you must make a plan and systematically invest at regular intervals.
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