When to start investing in the stock market?
Investing requires capital, and the fastest way to get the capital is to develop good saving habits. Investing is an ongoing process to help you accumulate wealth, so to take advantage of compounding, the earlier you start, the better.  I can suggest a few pointers to get you started on the investing journey. Godspeed! :)
"The market capitalization of a stock is the number of shares outstanding (of each stock class), times the price of last trade (of each stock class). In a liquid market (where there are lots of buyers and sellers at all price points), this represents the price that is between what people are bidding for the stock and what people are asking for the stock.  If you offer any small amount more than the last price, there will be a seller, and if you ask any small amount less than the last price, there will be a buyer, at least for a small amount of stock. Thus, in a liquid market, everyone who owns the stock doesn't want to sell at least some of their stock for a bit less than the last trade price, and everyone who doesn't have the stock doesn't want to buy some of the stock for a bit more than the last trade price. With those assumptions, and a low-friction trading environment, we can say that the last trade value is a good midpoint of what people think one share is worth.  If we then multiply it by the number of shares, we get an approximation of what the company is worth. In no way, shape or form does it not mean that there is 32 billion more invested in the company, or even used to purchase stock. There are situations where a 32 billion market cap swing could mean 32 billion more money was invested in the company: the company issues a pile of new shares, and takes in the resulting money.  People are completely neutral about this gathering in of cash in exchange for dilluting shares.  So the share price remains unchanged, the company gains 32 billion dollars, and there are now more shares outstanding. Now, in some sense, there is zero dollars currently invested in a stock; when you buy a stock, you no longer have the money, and the money goes to the person who no longer has the stock. The issue here is the use of the continuous tense of ""invested in""; the investment was made at some point, but the money doesn't really stay in this continuous state of being.  Unless you consider the investment liquid, and the option to take money out being implicit, it being a continuous action doesn't make much sense. Sometimes the money is invested in the company, when the company causes stocks to come into being and sells them. The owners of stocks has invested money in stocks in that they spent that money to buy the stocks, but the total sum of money ever spent on stocks for a given company is not really a useful value. The market capitalization is an approximation, which under the efficient market hypothesis (that markets find the correct price for things nearly instantly) is reasonably accurate, of the value the company has collectively to its shareholders.  The efficient market hypothesis isn't accurate, but it is an acceptable rule of thumb. Now, this value -- market capitalization -- is arguably not the total value of a company: other stakeholders include bond holders, labour, management, various contract counter-parties, government and customers.  Some companies are structured so that almost all value is captured not by the stock owners, but by contract counter-parties (this is sometimes used for hiding assets or debts). But for most large publically traded companies, it (in theory) shouldn't be far off." Those are valid, but I think you will see banks move into fintech, as they already have, and they are also moving into blockchain. One thing that banks have, is money, and that allows them to move into new spaces in the economy even if they are late to the party. When you have institutions that have been around for more than a century, they don’t just go away.   I think you start to see trading revenue comeback, eventually. The passive versus active investing is a cycle. As more and more people jump into passive investments, it will inevitably change the market because suddenly everything becomes more correlated. Once there is enough volatility to scare people out of their passive investments, then the indices are going to fall. Then you’ll start seeing how active investing is better and people start to move back. Passive investing is good when everything is up, but on the downside active investing (if you have the right managers) will outperform. Once this occurs, you will start to see more volatility in the markets again, and a return to active management, until inevitably people start to move back to passive again. "As many before me said but will say again for the sake of completeness of an answer:  First off provision to have an emergency fund of 6 months living expenses to cover loss of employment, unforeseen medical issues etc.  When that is done you re free to start investing. Do remember that putting all your eggs in one basket enable risks, so diversify your portfolio and diversify even within each investment vehicle. Stocks: I would personally stay away from stocks as it's for the most part a bear market right now (and I assume you re not interested day-trading to make any short term return) and most importantly you dont mention any trading experience which means you can get shafted. Mutual Funds: Long story short most of these work; mainly for the benefit for their management and people selling them. Bonds  Instead, I would go for corporate bonds where you essentially buy the seller(aka the issuing company) and unlike gambling on stocks of the same company, you dont rely on speculation and stock gains to make a profit. As long as the company is standing when the bond matures you get your payment. This allows you to invest with less effort spent on a daily basis to monitor your investments and much better returns(especially if you find opportunities where you can buy bonds from structurally sound companies that have for reasons you deem irrelevant, purchase prices in the secondary market for cents in the dollar) than your other long term ""stable options"" like German issued bonds  or saving accounts that are low in general and more so like in the current situation for German banks. Cryptocurrency I would also look into cryptocurrency for the long term as that seems to be past its childhood diseases and its also a good period of time to invest in as even the blue chips of that market are down party due to correction from all time highs and partly due to speculation. As Im more knowledgeable on this than German-locale bonds, a few coins I suggest you look into and decide for yourself would be the obvious ETH & BTC, then a slew of newer ones including but not limited to OmiseGO, Tenx(Pay), Augur and IOTA. Beware though, make sure to understand the basics of security and good practices on this field, as there's no central bank in this sector and if you leave funds in an exchange or your wallet's private key is compromised the money are as good as gone." "Diversification is spreading your investments around so that one point of risk doesn't sink your whole portfolio. The effect of having a diversified portfolio is that you've always got something that's going up (though, the corollary is that you've also always got something going down... winning overall comes by picking investments worth investing in (not to state the obvious or anything :-) )) It's worth looking at the different types of risk you can mitigate with diversification:  Company risk This is the risk that the company you bought actually sucks. For instance, you thought gold was going to go up, and so you bought a gold miner.  Say there are only two -- ABC and XYZ.  You buy XYZ. Then the CEO reveals their gold mine is played out, and the stock goes splat. You're wiped out. But gold does go up, and ABC does gangbusters, especially now they've got no competition.  If you'd bought both XYZ and ABC, you would have diversified your company risk, and you would have been much better off. Say you invested $10K, $5K in each. XYZ goes to zero, and you lose that $5K. ABC goes up 120%, and is now worth $11K. So despite XYZ bankrupting, you're up 10% on your overall position.  Sector risk You can categorize stocks by what ""sector"" they're in. We've already talked about one: gold miners. But there are many more, like utilities, bio-tech, transportation, banks, etc. Stocks in a sector will tend to move together, so you can be right about the company, but if the sector is out of favor, it's going to have a hard time going up.    Lets extend the above example. What if you were wrong about gold going up? Then XYZ would still be bankrupt, and ABC would be making less money so they went down as well; say, 20%. At that point, you've only got $4K left. But say that besides gold, you also thought that banks were cheap. So, you split your investment between the gold miners and a couple of banks -- lets call them LMN and OP -- for $2500 each in XYZ, ABC, LMN, and OP. Say you were wrong about gold, but right about banks; LMN goes up 15%, and OP goes up 40%.  At that point, your portfolio looks like this: XYZ start $2500 -100% end $0 ABC start $2500 +120% end $5500 LMN start $2500 +15% end $2875 OP start $2500 +40% end $3500 For a portfolio total of: $11,875, or a total gain of 18.75%.  See how that works?  Region/Country/Currency risk So, now what if everything's been going up in the USA, and everything seems so overpriced? Well, odds are, some area of the world is not over-bought. Like Brazil or England. So, you can buy some Brazilian or English companies, and diversify away from the USA. That way, if the market tanks here, those foreign companies aren't caught in it, and could still go up. This is the same idea as the sector risk, except it's location based, instead of business type based.  There is an additional twist to this -- currencies.  The Brits use the pound, and the Brazilians use the real. Most small investors don't think about this much, but the value of currencies, including our dollar, fluctuates. If the dollar has been strong, and the pound weak (as it has been, lately), then what happens if that changes? Say you own a British bank, and the dollar weakens and the pound strengthens. Even if that bank doesn't move at all, you would still make a gain.  Example: You buy British bank BBB for 40 pounds a share, when each pound costs $1.20. Say after a while, BBB is still 40 pounds/share, but the dollar weakened and the pound strengthened, such that each pound is now worth $1.50. You could sell BBB, and because of the currency exchange once you've got it converted back to dollars you'd have a 25% gain.   Market cap risk Sometimes big companies do well, sometimes it's small companies. The small caps are riskier but higher returning. When you think about it, small and mid cap stocks have much more ""room to run"" than large caps do. It's much easier to double a company worth $1 billion than it is to double a company worth $100 billion.  Investment types Stocks aren't the only thing you can invest in. There's also bonds, convertible bonds, CDs, preferred stocks, options and futures. It can get pretty complicated, especially the last two. But each of these investment behaves differently; and again the idea is to have something going up all the time.  The classical mix is stocks and bonds. The idea here is that when times are good, the stocks go up; when times are bad, the bonds go up (because they're safer, so more people want them), but mostly they're there to providing steady income and help keep your portfolio from cratering along with the stocks. Currently, this may not work out so well; stocks and bonds have been moving in sync for several years, and with interest rates so low they don't provide much income.  So what does this mean to you? I'm going make some assumptions here based on your post. You said single index, self-managed, and don't lower overall risk (and return). I'm going to assume you're a small investor, young, you invest in ETFs, and the single index is the S&P 500 index ETF -- SPY.  S&P 500 is, roughly, the 500 biggest companies in the USA. Further, it's weighted -- how much of each stock is in the index -- such that the bigger the company is, the bigger a percentage of the index it is.  If slickcharts is right, the top 5 companies combined are already 11% of the index! (Apple, Microsoft, Exxon, Amazon, and Johnson & Johnson). The smallest, News Corp, is a measly 0.008% of the index.  In other words, if all you're invested in is SPY, you're invested in a handfull of giant american companies, and a little bit of other stuff besides.  To diversify: Company risk and sector risk aren't really relevant to you, since you want broad market ETFs; they've already got that covered. The first thing I would do is add some smaller companies -- get some ETFs for mid cap, and small cap value (not small cap growth; it sucks for structural reasons). Examples are IWR for mid-cap and VBR for small-cap value.   After you've done that, and are comfortable with what you have, it may be time to branch out internationally. You can get ETFs for regions (such as the EU - check out IEV), or countries (like Japan - see EWJ). But you'd probably want to start with one that's ""all major countries that aren't the USA"" - check out EFA.  In any case, don't go too crazy with it. As index investing goes, the S&P 500 is not a bad way to go. Feed in anything else a little bit at a time, and take the time to really understand what it is you're investing in.  So for example, using the ETFs I mentioned, add in 10% each IWR and VBR. Then after you're comfortable, maybe add 10% EFA, and raise IWR to 20%. What the ultimate percentages are, of course, is something you have to decide for yourself.  Or, you could just chuck it all and buy a single Target Date Retirement fund from, say, Vanguard or T. Rowe Price and just not worry about it." "I'd refer you to Is it true that 90% of investors lose their money? The answer there is ""no, not true,"" and much of the discussion applies to this question.  The stock market rises over time. Even after adjusting for inflation, a positive return. Those who try to beat the market, choosing individual stocks, on average, lag the market quite a bit. Even in a year of great returns, as is this year ('13 is up nearly 25% as measured by the S&P) there are stocks that are up, and stocks that are down. Simply look at a dozen stock funds and see the variety of returns. I don't even look anymore, because I'm sure that of 12, 2 or three will be ahead, 3-4 well behind, and the rest clustered near 25.  Still, if you wish to embark on individual stock purchases, I recommend starting when you can invest in 20 different stocks, spread over different industries, and be willing to commit time to follow them, so each year you might be selling 3-5 and replacing with stocks you prefer. It's the ETF I recommend for most, along with a buy and hold strategy, buying in over time will show decent returns over the long run, and the ETF strategy will keep costs low." Start as early as possible and you will want to kiss your younger self when you get to retirement age. I know you (and everyone else at that age) thinks that they don't make enough to start saving and leans towards waiting until you get established in your career and start making better money. Don't put it off. Save some money out of each paycheck even if it is only $50.  Trust me, as little as you make now, you probably have more disposable income than you will when you make twice as much. Your lifestyle always seems to keep up with your income and you will likely ALWAYS feel like you don't have money left over to save. The longer you wait, the more you are going to have to stuff away to make up for that lost time you could have been compounding your returns as shown in this table (assuming 9.4 percent average gain annually, which has been the average return on the stock market from 1926-2010).  I also suggest reading this article when explains it in more detail: Who Wants to be a millionaire? "The most important thing is to start.  Don't waste months and years trying to figure out the ""optimal"" strategy or trying to read all the best books before you start.  Pick a solid, simple choice, like investing in your company sponsored 401(k), and do it today.   This I Will Teach You To Be Rich post on barriers has some good insight on this." Your reaction to bad news is the greatest risk. Are you going to panic and pull all your money out when the market falls 20%? It will. Someday it will. The question is, will you have the stomach to stay the course and keep your money invested when the sky is falling and everyone is screaming that things are definitely going to get worse? If not, the timing of when you invest will matter not at all. My advice: Go all in ASAP. Remember that you don't care where the market is in 2 years. You're in your mid 40's, you care where the market is in 20 years. And 20 years from now, when you're in your mid 60's, you'll be caring about where the market is even further into the future.