Our cash is going to grow as we are moving on in the journey, because of the dividends and interests that we are going to get, or because the top up amount that we are going to input. We may have already an action plan with the investments that we have selected for our journey, and the amount that we aim to have for each of those selected investments, but we still need to make the last decision: when is the best moment to buy?
There are things that we must do, and things that we must avoid.
The things that we must do depend on the type of investment:
For the funds, we should make an shedule and set how many times / purchases are we going to make each year; the amount or percentage of the total investments that we plan to spent on each purchase; and is also advisable to pick the month/s where we will do this purchases. For example, we may have planned to invest $5.000 in the year 2022, and set a schedule to spent 50% of this amount ($2.500 each purchase) in 2 times on June and December.
For the shares and bonds is a bit more difficult. If we have made already an analysis on how to pick a share and how to pick a bond, and we have already found any that we would like to include in our journey, we should have already an estimated value for the share and have applied a security margin to it. The result of these two values should give us the price that we are targetting for the share, so the moment to buy it will come when Mr. Market offers us a similar price.
The last thing we can to look at, for both funds and individual shares and bonds, are when a market crash occurs. This can open a window of opportunity and give us the possibility of buying an investment that we have already planned to buy, at a better price.
On the other side, the things that we must not to do , we can identify:
Look constantly at the highs and lows of the prices and try to find the best moment to buy based on past statistics or premonitions.
Wait until an investment tops a price because we believe that it will reach that price, or because the technical analysis gives us that estimation.
Follow the trends, as we will be the last person to buy in high markets.
Remember that having a plan and following it is a very important part of the #imap philosophy.
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