Is There a Perfect Time to Invest? Bah! Humbug!

November 17, 2021 Carrie Schwab-Pomerantz
Time in the market is more important than timing the market.

Dear Carrie,

I was able to build up my savings this past year, but with everything that’s going on in the world, I’ve been waiting to invest it. Is there an ideal time to get into the market?

—A Reader


Dear Reader,

While I don't share Scrooge’s negative sentiments about the holidays, when it comes to trying to find the perfect time to invest, I do find myself thinking: Bah! Humbug! Why? Because it's been shown over and over again that trying to time the market is a bad idea. In fact, it could cost you—big time.

With the dramatic market moves we've seen recently, I can appreciate your hesitation. But the most important considerations are your own goals, your appetite for risk, and how long you can afford to keep your money invested—not what the market is doing at any specific moment.

So, if you have money to invest, I'd encourage you to steadfastly avoid trying to time the market. Here’s why.

It's about time—not timing

Chances are slim that even the savviest among us will hit all the market highs and miss all the lows. Instead, the best way to improve your odds of success is to stay invested over time, no matter when you start.

Take last year, for example. During 2020, the S&P 500® Index saw a total return of 18.4%. If you were invested during that volatile year, you'd have done pretty well. But if you'd sold when the market dropped, not only would you have locked in your losses, you'd also have potentially missed out on those trading days with the greatest gains, which would've meant even bigger losses. For instance, if you'd missed the top 10 trading days of 2020, you'd be down 32.9%. If you'd missed the top 40 days, you'd be down a whopping 61.8%!

Staying power

Remaining in the market during both the best and the worst trading days can lead to better returns.

Staying invested in the S&P 500 for all of 2020 would have returned 18.4%, whereas missing the top 10 trading days would have returned –32.9%; missing the top 20 would have returned –47.5%; missing the top 30 would have returned –55.7%; and missing the top 40 would have returned –61.8%.

Source: Schwab Center for Financial Research with data from Standard and Poor's.

Return data is annualized based on 252 trading days within a calendar year. The year begins on the first trading day in January and ends on the last trading day of December, and daily total returns are used. Returns assume reinvestment of dividends. When out of the market, cash is not invested. Market returns are represented by the S&P 500® Index's 2020 returns. Indexes are unmanaged, do not incur management fees, costs, or expenses, and cannot be invested in directly. Past performance is no guarantee of future results.

There's no time like the present

To me, nothing beats using numbers to make a point. So, here are a few more that may convince you not to wait any longer.

Had you invested $2,000 in stocks annually for the past 20 years with absolute perfect timing—always buying low—you'd now have $174,535. However, even if you'd invested that same amount of money in stocks with the worst timing—always buying high—you'd have $140,895. Not so bad, right? Now here's the clincher: If you'd kept that money in cash investments all those years, you'd now have only $64,124.

So, whether your timing was good or bad, you'd still be way ahead by putting your money in the stock market.

Take a lesson from Scrooge

Ultimately, deciding when and how to invest isn't so much about short-term market moves, it's about you and your long-term goals.

Investing in the stock market is a long-term proposition. Money you'll need short term should be in more stable investments like cash, certificates of deposit, or short-term bonds. With money for longer-term goals like retirement or a child’s education, you can often afford to take on more risk because you have time to weather the market’s inevitable ups and downs. Again, it's not about timing the market—it's about giving yourself the time to reap the potential rewards while riding out the downturns.

To make it even easier on yourself, you could put your investing on autopilot by automatically contributing a fixed amount or percentage at regular intervals (a strategy known as dollar-cost averaging), which can help take emotion out of your day-to-day decision-making.

Of course, when times are uncertain, it's easy to get spooked by the ghost of investing opportunities past or the specter of future losses. But take a lesson from Scrooge: To avoid regrets—past, present, and future—ask not what the market is doing at any given moment, but rather whether putting money in the market is the right strategy for you.

We can help you build a diverse portfolio.

Closing Market Update

Stocks gave up some initial gains after a favorable inflation report, but longer-term worries over high yields and oil prices reasserted themselves.

Opening Market Update

Stocks built on gains in premarket trading and Treasury yields receded this morning as August inflation data showed hints of improvement. However, a likely government shutdown casts a shadow and could trigger volatility.

Getting Started with Stock Investing

This interactive webcast is specifically geared to introduce the new stock investor to the world of growth, value, or income investing. Watch live as your education coach demonstrates a few ways to search for these different types of investments on

The information provided here is for general informational purposes only and should not be considered an individualized recommendation or personalized investment advice. The investment strategies mentioned here may not be suitable for everyone. Each investor needs to review an investment strategy for his or her own particular situation before making any investment decision.

All expressions of opinion are subject to change without notice in reaction to shifting market conditions. Data contained herein from third-party providers is obtained from what are considered reliable sources. However, its accuracy, completeness, or reliability cannot be guaranteed.

Examples provided are for illustrative purposes only and not intended to be reflective of results you can expect to achieve.

Past performance is no guarantee of future results and the opinions presented cannot be viewed as an indicator of future performance.

Investing involves risk, including loss of principal.

Indexes are unmanaged, do not incur management fees, costs, and expenses, and cannot be invested in directly. For more information on indexes please see

Periodic investment plans (dollar-cost-averaging) do not ensure a profit and do not protect against loss in declining markets.