Oct 24, 2022  | Tags: share market, wealth management, wealth building

The cost of trying to time the market

The impact of being out of the market for a short time can be profound, as shown by this hypothetical investment in the stocks that up the S&P / ASX 300 Index, a broad Australian stock market benchmark. Staying invested and focused on the long term helps to ensure that you're in position to captire what the market has to offer.

• A hypotetical $1,000 investment made in 2000 turns into $4,932 for the 22-year period ending 30 June 2022.
  
  
• Over that 22-year period, miss the S&P / ASX 300's best week, which ended 30 March 2020, and the value shrinks to $4,328. Miss the best three months, which ended 23 June 2020, and the total return falls to $3,742.
  
  
• There's no proven way to time the market - targeting the nest days os moving to the sidelines to avoid the worst - so the evidence suggests staying put through good times and bad.

 

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 *Source: Dimensional Fund Advisors

This is general advice only and does not take into account your financial circumstances, needs and objectives. Before making any decision based on this document, you should assess your own circumstances or seek advice from a financial adviser and seek tax advice from a registered tax agent. Information is current at the date of issue and may change.