Thomas Bruni @BruniCharting had a excellent tweet on the difference between investing and trading:
“As a trader/analyst I don't like equities.
As an investor, I'm buying stocks next week, month, year, decade, etc. Know your timeframe/goals”
I started thinking about some of the reasons why people delay investing. I ran the numbers on what happens if you delay investing because you don’t like the market.
Let’s take a 30 year time frame. A $4,000 annual investment at a modest 6% return awards you with $339,206 at the end of 30 years.
If you don’t like this market and spend the money this year money instead of investing it, your payout drops to $316,232. Postpone investing by five years? Now your nest egg is down to $236,625. Spending $20,000 now costs you $100,000 down the road.
But you don’t the market? You think maybe a bear market is coming next year? It doesn’t matter. If you put your $4,000 in the market and the market drops 20% this year, your fund is worth $333,572 after 30 years. The 6% annual increase over 29 years more than makes up for one bad year now.
Hey, it’s your money, use it however makes you happy. But I think you’ll be a lot happier if you have more of it to throw around later when you need it.