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The Best Time to Start Investing

The SPDR STI ETF (SGX:ES3) – a proxy to the market barometer, the Straits Times Index (SGX:^STI) — took a little dip last month and settled briefly at a low of $3.19. This represented a drop of about 7% from the intraday high of $3.43 that the ETF had  hit in July this year.

As I was talking with some of my friends over the weekend, I came to realize that some Foolish readers may rue that they had “missed the recent correction.” In other words, they were smacking their own foreheads for failing to act on cheaper share prices.

In light of this, a good question from new investors might be: When is a good time to invest?

The best time to invest

To answer this question, I am reminded of a little proverb which was shared by a fellow Fool in the US, Jeff Fischer, in a recent presentation:

The best time to plant a tree was 20 years ago, the second best time is now” — Anonymous

If the individual investor had “planted their tree” (bought shares) since the SPDR STI ETF’s inception on 11 April 2002, he or she would have gathered a compounded annual growth rate of 8.32% on their investment from then till the end of last month. Every $1000 invested would have turned into about $2720 in a little over 12.5 years.

But that was then, and this is now.

It may seem reckless to suggest the act of buying without a care for the market, but there is a hidden benefit in buying your first ever shares at any random moment in time. That’s because the act of buying, in itself, puts new Foolish investors on their journey to learn more about themselves. Along the way, they can then discover what fears they might have when market corrections inevitably arrive.

Every one individual is different and its only by putting yourself out there (in the market) that you may discover how you would react during volatile market conditions. If you are able to gain awareness of your own emotional reactions — you may, in turn, begin thinking about how best to deal with it.

So, give all the above a thought if you’re wondering when’s the best time to invest. Be sure to circle back, and share what you learn in the future. Read more about gardening and investing, FREE! Sign up here to The Motley Fool Singapore’s weekly investing newsletter, Take Stock Singapore. 

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Chin Hui Leong doesn’t own shares in any companies mentioned.