When the light bulb moment happens and you decide to start investing you soon realize there are lots of ways you could get started. There’s real-estate, 401K’s, IRA’s, stocks, and many other choices, all with varying returns and associated risks.
Of course, one of the considerations that could influence your method of investment is how much money you can make. Another is risk, and still another is the length of time you tie up your money.
But with all of the variables you should consider, have you ever stopped to think about the possibility of investing seasonally? Could seasonal investing make you more money over time?
1. Real Estate
If real estate is the area in which you wish to invest, in order to make the most money you need to purchase properties at their lowest price. Determining what season you should invest in a home in order to capitalize on price could be tricky.
As an example, if the home is in an area that attracts many tourists at certain times of the year, purchasing a home during the off season may be best. You may need to study home prices in the area and their fluctuations in order to make the best decision.
For the average home in an ordinary city or town, buying during late fall or winter could benefit you. There may be fewer homes available, but prices might also be lower due to the desperation of some home owners who lower their price to make a quick sale.
2. Stock
However, what if you choose stocks as your medium for investing rather than real estate? Can seasonal investing make you more money through this type of investment?
Should you decide to invest in stocks you obviously wish to purchase low and sell high. However, making decisions on your own, as a novice, could be just as tricky as investing in real estate.
To make the most of your investment dollars, you could invest based on the “seasons” of the market instead of seasons of the year. Using sector rotation strategy you can do just that.
Sector rotation strategy enables you to invest and ride the momentum until it is time to sell. Making a profit is all in the timing.
Another way to invest in stocks, though, is truly based on the seasons of the year. Many people believe you should invest November through April and not May through October.
One theory behind why this strategy works is because returns on stocks are lower during the months when people travel.
Obviously purchasing certain stocks shortly before the Christmas holiday could benefit you as well. If you choose to invest in this way, waiting until just after the first of the year to sell your stocks could gain you the most on your investment.
Purchasing certain stocks based on these types of investing seasons could help you to make more money. But you must know what types of stocks are subject to these fluctuations. In addition, there is no guarantee the stock market will follow past trends.
It seems that seasonal investing could make you more money if you know what you are doing as an investor. For the beginning investor, however, it may not be the best choice.
Have you ever made a premium by investing based on the seasons?
