What you can't possibly do is to time the Market. It's too costly!

The Risks and Rewards of Timing the Market

This was originally posted on Advisor Channel.

Timing the market seems simple enough: buy when prices are low and sell when they’re high. But there is clear evidence that market timing is difficult. Often, investors will sell early, missing out on a stock market rally. It can also be unnerving to invest when the market is flashing red.

By contrast, staying invested through highs and lows has generated competitive returns, especially over longer periods.

The above graphic shows how trying to time the market can take a bite out of your portfolio value, using 20 years of data from JP Morgan.

The Pitfalls of Timing the Market

Mistiming the market even by just a few days can significantly affect an investor’s returns. The following scenarios compare the total returns of a $10,000 investment in the S&P 500 between January 1, 2003 and December 30, 2022. Specifically, it highlights the impact of missing the best days in the market compared to sticking to a long-term investment plan.

Credit: Visual Capitalist