Time vs. Timing


One particular mutual fund family did a study that illustrates what would have happened had an investor bought one of their mutual funds at the peak of the market not once, but each and every year for the last two decades. The result is even though this investor bought on the worst possible day each and every year, his money still grew at an average compounded rate of 15.2% a year.

By the way, if this investor had managed to pick the best day each year to make his investments the day the market bottomed his account would have reflected an average compounded rate of 16.9% a year.

Conclusion: Even though his timing was terrible, this investor still fared much better than if he had done what many people are doing today, waiting for the "perfect" time to invest.

Over the long term, it matters very little when you invest. It matters very much that you do invest.

The secret to stock market success is time not timing. There is more to lose by missing a bull market than there is to be gained by dodging a bear.