fbpx

Investing, Quotes

What if you invest at the wrong time?

By Kanwal Sarai
Categories ▾

The media is full of conflicting and negative news. One day they say the stock market will crash the next day they say everything is fine. When is the next recession coming? How long will it last? How far will stock prices drop? No one knows because no one can predict the future. As an investor, should you invest now or wait?

Getting into the market at the wrong time?
Tony Robbins covered this topic in his book "Unshakeable", and I could not have said it better myself:

"What if you get unlucky, and you're hit immediately by a correction or a crash? As you can see in the chart below, the Schwab Center for Financial Research studied the impact of timing on the returns of five hypothetical investors who had $2,000 in cash to invest once a year for 20 years, starting in 1993.

The most successful of these five investors - let's call her Ms. Perfect - invested her money on the best possible day each year: the day when the market hit its exact low point for that year. This mythical investor, who perfectly timed the market for 20 years running, ended up with $87,004. The investor with the worst timing - let's call him Mr. Hapless - invested all of his money on the worst possible day each year: the day when the market hit its exact high point for that year. The result? He ended up with $72,487.

What's striking is that, even after this 20-year run of spectacularly bad luck, Mr. Hapless still made a substantial profit. The lesson? If you stay in the market long enough, compounding works its magic, and you end up with a healthy return - even if your timing was hopelessly unlucky. And you know what? The worst-performing investor wasn't the unlucky one, but the one who stayed on the bench, the one in cash: he ended up with only $51,291."*

What if you don't know the perfect time to invest?
What if you are like most people and you don't know the perfect time to invest, or even avoid the worst time to invest? Then just do what Mr. Immediate did, he invested his $2,000 immediately at the beginning of each year. After 20-years Mr. Immediate ended up with $81,650.

Start investing, don't wait
As you can see from Tony Robbins example, even if you chose the "wrong" time to invest you were still ahead of everyone who chose not to invest. So, you can be Ms. Perfect, Mr. Immediate, or Mr. Hapless and you'll do fine, just don't wait on the sidelines hoping to start investing "someday".

I'm here to help
I can help you to start investing today, why re-invent the wheel when you can learn from my 20-years of being in the stock market. I've witnessed first hand the ups and downs of the market, and I know what it's like to start investing your hard earned money. I created the 12 Rules of Simply Investing to help you get started right away, so you don't have to wait on the sidelines any longer.

Did you enjoy reading this article? If so, I encourage you to sign up for my newsletter and have these articles delivered via e-mail once a month…and it’s free!

Leave a Comment

Start typing and press Enter to search