What is the best time to start investing?

It is the million dollar question and the one that thousands of people have been asking for centuries: what is the best time to invest? The truth is that most investors continue to wonder when they can obtain a higher return on their investment. Is there a way to find the answer? Unfortunately, there is no magic formula that tells you when to invest. However, people spend a lot of time and energy trying to answer what time of year they should invest. And the truth is that it is a pretty useless effort. A real waste of time.

Peter Lynch did a study, with quite surprising results, on profitability of investing at the highest and lowest point in the period between 1965 and 1995.

Yes With great luck we had invested a few hundred dollars at the lowest point over the years in that period, the resulting compound return would have been 11.7%.

On the contrary, if with the worst luck in the world, we had invested those hundreds of dollars at the highest point of the market each year, the final annualized return would be 10.6%.

In a last case, if we decided to invest the same amount of money systematically in the first day of market each of those 30 years, it turns out that the annual profitability that we would have obtained would be 11%.

You don't have to go crazy trying to find the best time to invest. In the end, in the long term and with the effect of compound capitalization, the differences are minimal. Although the best time to invest also depends on the type of investment and even how you want to diversify your portfolio, there is something that all investors should keep in mind: the sooner you start making your money profitable, the better. The reason for this is that savings generally lose value over time due to inflation, and this affects purchasing power.

There can be many excuses to start investing or saving and the best time may never come. Therefore, you should know that the best time to invest was yesterday and that the second best time to invest is today, regardless of how the markets are doing. In other words, start getting returns on your money as soon as possible.