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A Good Time to Start


I get this question all the time and more frequently since my Time Not Timing

post. The answer? YES.

It is never a bad time to build financial strength and wealth.

RED ALERT: That said, there are some critical points to keep in mind. Not

every purchase makes money right from the jump. Stock and bond prices and housing

values do not only go up; prices go down too. (A Red Alert is Roadside Scholar speak

for Pay Attention!)

My children’s first investing experiences are great examples.

The oldest was a genius. Her market timing was outstanding. After the first

year, the value of her portfolio was up 30%.

The middle child was just OK. He started when the market was on a gentle

upswing and had a nice 10% profit in the first twelve months.

The youngest was an embarrassment. Despite being a finance major in college,

he was an awful investor. Immediately after making his first purchases, prices went

down, down and down some more. After six months of torture during which his capital

account value fell 20%, he sent me an email saying, “Dad, you’re killing me. At this

pace, I will be at zero soon.”

What happened?

Each opened a capital account and began buying after their high school

graduation. They started with about the same dollar amount. They had the same

advisor – me -- and bought essentially the same investments.

Six months later, if each had been asked if Dad knew what he was doing, only the oldest would have said “Heck yeah.” The middle child would have given a non-

committal shoulder shrug. The youngest would have said, “Heck no” or maybe

something more colorful.

Why did one do so much better than the others? Why did one do so awfully?

The answer is that markets go up and down. Even the best strategies do not

make money for investors every year, much less every part of every year. Remember

that the stock market is a popularity contest in the short-run. Like a popularity contest, it

is hard to predict. Over the longer run, the market is more rational with price levels

reflecting company profits. Hence, the longer the holding period, the more likely an

investment will make a profit.

The fact that you (a beginner anxious not to lose money) are investing for the first

time has no impact on the market. The small investor simply gets carried along with the

market’s natural flow.

As a result, first time investors should not worry about trying to pick a great time

to start. They should get in the wealth creation game when the timing is right for them –

when they have the money. They should use a sound, diversified strategy and plan on

making additional purchases. Over time, prices paid will average out – some purchases

will turn out to be expensive and some to be cheap.

Back to my children: Years later, all three are happy they got started after high

school (well before most of their friends). All three have made substantial profits. Most

importantly, all three are still talking to Dad.

Roadside Scholar Tip: Begin when the time is right for you. Do not worry about

the market.


For more information and easy to understand explanations of important money

matters go to or purchase The Roadside Scholar:

Amazing Money Lessons from Behind the Fence.

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