The cost of trying to time the market

It’s not unusual to hear me say that timing the markets doesn’t work. Instead, I recommend creating an investment plan that’s designed to meet your individual goals and sticking with it. (With regular reviews, of course, to make sure your plan is still on track to deliver what matters to you most.)

Trying to time the markets increases the risk of missing some of the best performing days, and this can have much more of an impact on your investment growth than you might think.

As the graph below from Dimensional Fund Advisors demonstrates, if you had invested $1,000 in the S&P 500 in 1970, the cost of missing the best performing 25 days in the 50 years to March 2020 would be around $94,364. That’s a significant amount of lost growth.

The moral of the story?

 Focus on your long-term end goal and stay invested through the good and the bad times. And if you ever feel uncomfortable when markets become volatile (as is their nature), I’m always at the end of the phone to reassure you of the benefits of sticking with your plan.