The Cost of Trying to Time the Market

When markets fall by as much and as quickly as they did in 2020, it’s easy to conclude that it’s time to move all your assets into the safe haven of cash or something tangible like property. The oft-quoted maxim when markets take a dive is, “It’s not about timing the market it’s about time in the market”. While that may seem trite – particularly if your superannuation balance has just been decimated – it is important to take a look at history and see how missing only a few days of strong returns from trying to “time” the market can drastically impact your overall performance.

This article illustrates the hypothetical growth of $1,000 invested in the S&P500 index from 1 January 1970 to 17 March 2020 and the potential impact of missing 1 or more of the market’s best days of performance.

Read the article here.