- Michael Garcia, AAMS®
- Contact Mike
Investing in the stock market can be intimidating, especially when you encounter periods of volatility and unpredictability. However, history has shown that staying invested in the market over the long term as a strategic investor often outperforms the tactical approach of trying to time the market.
The Value of Remaining Invested
If an investor had stayed fully invested in the S&P 500 over the last 25 years (about 1999–2024), their portfolio would have experienced substantial growth. Historical data demonstrates the power of patience and consistency in investing.
Example:
- Fully Invested: A $10,000 investment in the S&P 500 grew to approximately $66,000+.
- Missed the 10 Best Days: That same $10,000 would have only grown to around $30,000–$35,000 — less than half.
The Pitfalls of Tactical Investing
Attempting to time the market and missing just the few critical days can significantly hurt long-term performance. The best days often come during periods of high volatility, sometimes right after big down days. Tactical investing, which involves making frequent buy-and-sell decisions based on market conditions, carries the risk of missing these vital days.
Key Takeaway
Strategic investing means committing to a long-term approach, weathering market fluctuations, and trusting in the resilience of the stock market. By staying invested, you can better capture the overall upward trajectory of the market and avoid the detrimental effects of missing key days of growth.
In summary, patience and consistency are paramount in investing. While tactical moves may seem appealing during volatile times, history has proven that strategic investing generally leads to more favorable outcomes than attempting to time the market.
Looking to develop your own strategic investment plan? Contact our team of financial advisors to learn more about our investment planning services or explore our approach to retirement planning.
