When’s the best time to start a Stocks and Shares ISA? Well, the quick answer is now. It’s all about the long term. So the sooner an investor gets started, the more years of investing returns they’ll have ahead of them.
But sometimes, stock market conditions just make me feel that someone starting today could enjoy some even better early years.
A young person just starting out has the time needed to make the most of investing in volatile growth shares, for example. They should have plenty of years to even out the ups and downs.
Right now, the US NASDAQ index has crashed into bear-market territory. So all those high-flying tech shares can now be bought at far more attractive valuations.
Starting out again with my first Stocks and Shares ISA, I’d tuck away some fallen tech shares today and try my best to just forget about them for a couple of decades.
Ignore the market
Billionaire investor Warren Buffett has famously pointed out that he would never buy or sell based on what the market is going to do. Speaking to Berkshire Hathaway shareholders, he once explained: “We haven’t the faintest idea what the stock market is gonna do when it opens on Monday — we never have“.
He added that he’d never make his decisions based on what the economy is going to do either.
But that doesn’t mean we can’t take advantage of what the market, or the economy, has already done. Or on what others think might happen, and what they do with their shares as a result.
Beat the fear
Today, amid soaring inflation, many investors are in a state of fear. They’ve sold stock market investments and shifted money to things they see as safer.
I think that’s exactly the wrong thing to do. But I do think it gives new investors a cracking opportunity to buy shares being sold too cheaply by experienced investors who should know better.
What to buy?
Suppose a new investor has their first Stocks and Shares ISA account set up. And they’ve saved enough money in it for their first purchase. They then face the next big question: what should they buy?
There’s always going to be a learning phase, and some will inevitably make poor early choices. But there’s surely less chance of buying overvalued shares when prices are generally low. I reckon there are simply fewer mistakes to be made buying at a time like this.
Before the financial crisis, a new investor buying bank shares could have been quickly wiped out. And that can turn someone away from investing for life. Anyone buying the same banks today, well, there surely isn’t the same crash-and-burn risk now.
Lower risk
On the contrary, I think a new investor buying shares in our top banks stands a very good chance of enjoying decades of healthy returns.
So I’ll sum up. I reckon the best time to start a Stocks and Shares ISA is always now. But when now is a time of stock market gloom and despondency, it can be even better. If it’s possible to be better than best, that is. But you know what I mean.