Financial Forum
This series, Financial Forum, is presented by Pro Advantage Services,
Inc., a subsidiary of Pharmacists Mutual Insurance Company, and your
State Pharmacy Association through Pharmacy Marketing Group, Inc.,
a company dedicated to providing quality products and services to
the pharmacy community.
WHEN IS THE BEST TIME TO INVEST?
Sir John Templeton is one of the founders of Franklin Templeton
Investments. When he speaks, listeners often ask, "When is
the best time to invest?" He invariably replies, "Whenever
you have the money." While past performance is not a guarantee
of future results, history has borne him out so far.
Here are some
of the reasons why many investors have avoided the stock market
over the past 75 years:
- Great Depression
- Pearl Harbor
- Assassination of President Kennedy
- Vietnam War
- All-time-high interest rates in early 1980s
- Terrorist events of 9/11
and the war on terrorism
- High energy prices
You can always find a reason to stay away from
stocks, if that's what you're looking for.
However, we believe an
intelligent investor gives more weight to long-term trends than
to the daily
events
that make headlines.
When you invest in any
kind of security, you do face risks. The most obvious is loss of
money. But there
are other
kinds of risk
as well
-- risks that affect all investors and all
non-investors -- like the loss of purchasing
power.
Obviously, putting your money under a
mattress, or in a CD may not even keep up with inflation
-- to
say nothing
of
the additional
erosion
of taxes1.
Why do most investors fail to meet their investment goals? We believe
there are three main reasons:
- They have no plan.
- They select the wrong funding vehicles -- investments
that don't outpace inflation and taxes over long periods.
- They let
their emotions influence their decisions.
In our view, the secret
to investing is not timing the market, but time in the market.
By
investing the same amount of money at regular intervals, you can
avoid the temptation to time the market. This powerful
long-term
investment technique is called dollar-cost averaging. It
helps you
buy more shares when prices are low, fewer when prices
are high.
Dollar-cost averaging in itself doesn't ensure a profit.
If you have to sell your shares at a time when their
price is
lower
than the
average price you paid for them, you'll have a loss.
Before starting such a program, you should consider your ability
to continue buying at periods of low prices. But dollar-
cost averaging can reduce the price you have to get to
break even.
As mentioned earlier, you can always find
a reason to stay away from stocks. Again, past performance does
not guarantee future results. But over the long term, the stock market
has risen, and has preserved and enhanced investors' purchasing power.
For more information on how investing in stocks and stock mutual
funds may help you reach your financial goals, talk with your financial
advisor.
Provided by courtesy of Pat Reding, CFP? of Pro Advantage Services
Inc., in Algona, Iowa. For more information, please call Pat Reding
at 1-800-288-6669.
Registered representative of and securities offered
through Berthel Fisher & Company Financial Services, Inc. Member
NASD & SIPC
Pro Advantage Services, Inc./Pharmacists Mutual
is independent of Berthel Fisher & Company Financial Services
Inc. Berthel Fisher & Company
Financial Services, Inc. does not provide legal or tax advice.
Before taking any action that would have tax consequences, consult
with
your tax and legal professionals. This article is for informational
purposes only. It is not meant to be a recommendation or solicitation
of any securities or market strategy.
1 Any exchange from CDs to another investment may incur a greater
degree of risk to capital than with certificates of deposit. CDs
are insured up to $100,000 per institution by the FDIC. |