Time in the market

The lesson in full

Sell before the crash, buy back at the bottom. It sounds smart. In practice, almost nobody gets both right, again and again.
Timing the market means jumping in and out to dodge the drops. Time in the market means staying invested through the ups and downs.
One well-known study looked at about 20 years of the S&P 500. Miss just its 10 best days and you ended up with about half the money of someone who stayed invested.
S&P 500, monthly averages, 2019 to 2021. In early 2020 it fell about a third in a month, then hit a new high by August. Some of its best days came in the same weeks as its worst.
Many long-term investors use a simpler habit: invest a fixed amount on a fixed date and stay invested. It's called dollar-cost averaging.
Common mistake
Myth: “I'll get back in once things calm down.” In that study, most of the best days came within about two weeks of the worst ones, when things looked scariest.
Key takeaway
For long-term goals, time in the market usually matters more than timing the market.

Timing the market perfectly is... Almost impossibleYou have to be right twice: when to get out and when to get back in. Almost nobody does that again and again.
Big up days often come... Soon after big down daysBig rises and big falls tend to cluster in panicky periods, like March 2020.
For long-term goals, what usually matters most? Time in the marketStaying invested means you're there for the best days, which often arrive without warning.
In the study of about 20 years of the S&P 500, missing the 10 best days... Left about half the moneyA handful of strong days make up a big part of long-term returns. Missing them cut the final amount by about half.