Have you ever noticed how cashmere sweaters cost the most when you don’t need them? The price for these luxurious wardrobe staples is the highest in the July catalog that arrives in the midst of sweltering 100 degree heat; anticipation drives the pricing.
This is the perfect analogy for how the prices work in the financial markets. The markets move in trends that are related to the economy, but the timing is not the same. Investors anticipate the moves in the financial markets, and they buy or sell ahead of those moves.
All investors know the pain of buying high and selling low; I certainly do. If you do everything else right to grow money, but you always buy high and sell low, you won’t be able to accumulate wealth. This is why Step 5 in the Financial Woman Grow Your Money method is to be aware of trends.
This doesn’t mean eating, sleeping and living the financial markets; we are all way too busy for that. It does mean taking notice of the price and the trend before putting your money into an investment. If you work with a financial advisor, you have the power to monitor if this is being factored into your investment plan.
Just as certain as those cashmere sweaters will be full price in July, and deeply discounted come March, your investment options will reflect full pricing and discount pricing at different times allowing you to get more for your money; this factor can speed the trail to your financial goals. Use the same level of diligence you use in other areas of your life with your investment purchases.