Two days ago I wrote: “Are you prepared for mortgage rates of 10% or more?“, looking to give you a crystal ball to see the future of interest rates based on past history. Today I’m giving you somewhat contradictory advice, to say to you “don’t try to time the market”.
Any investment advisor will always tell you this, to take the long view, to invest regularly (pound/dollar cost averaging is an almost magical way to ensure your savings grow over time, simply invest the same amount regularly and you will smooth out the ups and downs of markets). Don’t trust me though, Warren Buffett is also someone who practices not timing the market!
Now, my thoughts return to this today because I am in the process of selling my house in the UK, so as then to buy another one of a different size (larger, more expensive). As a seller, I’m finding the market a “seller’s market”, having already received offers well over the asking price. Part of me then thinks “ah, let me time the market”, so to sell my place now while the market is hot, then consider renting a place for a year or so to wait for the recession to bite and then enter the market as a buyer while prices are at least a little depressed.
I have thought about that, but then who knows what will happen with the property market, I could tie myself in knots trying to time it, or else I could simply go with the market as it is and buy somewhere I love (as this will be a home as much or more than an investment).
I also reflect on selling my home in Cayman a few years ago. For some reason it sat on the market for well over a year, with two deals falling through. It then sold early in the pandemic and we were very happy to sell to a lovely family who would make it their home. Now, since then (two years ago) the Cayman property market has been about the most overheated anywhere, so selling in 2020 literally cost me hundreds of thousands. I could beat myself up for the market timing, but there were other factors at play and, besides, timing the market is a tough one.
In terms of investments, then, focus on consistent investment over time and you will smooth out the ups and downs. As regards properties, remember to be clear on to what level you see it as a hard-nosed investment, and to what level you see a house as a home.