The Math
Mathematically, the right time to invest is when you know the market is at its lowest point it will be in the next ten years. This is true whether you’re investing in stocks or collecting trading cards. You can purchase your investment at the lowest value it will be and you will make the most possible gain from the growth of the investment over time. Purchasing undervalued assets is often jokingly called buying into the market when it’s on sale. The timing is the problem. Picking the right day and also having the money available on that day is a DC 20 or more. It’s possible, just not probable.
The Emotion
Emotionally the right time to buy into the market is when you have a strong motivation to achieve goals. Those goals should be five, ten, or thirty years from now and have significant price tags associated with them. As the market goes up and down, you’ll be able to weather the one or two month dips because you know you don’t need the money yet. You can hold it for the long term as long as the goal remains both temporally distant and emotionally significant. If your goals are too soon or not motivating, you will fail your wisdom save and end up withdrawing from the market at the wrong time.
The Reality
The right time to buy into the market is when you can. The best money to buy into the market with is money you are saving for the long term. That long-term money should be backed up by a comfortable emergency fund. The c-c-c-combo of a comfortable cash reserve and money that is deployed into the market for a gain is the best. So the right time to invest is when you have money you actually should be investing.
I talk a lot more about how to get invested in my upcoming book: Achieving Accumulation. Check it out on August 29th!