To Invest ? Right now .
as well . In the same time , Immediate Investor accumulated $ 163,126 or just $ 12,733 less than the Perfect Timer . Even the Terrible Timer came out in good shape , ending up with $ 141,954 .
The worst performer by far : The Hesitator , who by failing to ever invest his money wound up with just $ 64,651 — a substantially smaller amount than all the others .
The experiences of these four investors offer some important lessons about investing :
The best time to invest is right now . Don ’ t get caught up in what the financial markets are doing today or what pundits predict will happen next week . The Immediate Investor ’ s results are an example of how smart it is to invest as soon as you possibly can , while the Hesitator ’ s poor results show the risks of dilly dallying .
Even the worst timing beats doing nothing at all . Over the long term it ’ s almost always better to invest in stocks — even at the worst time each year — than to hesitate and not invest at all . Even with her exceptionally poor timing , the Terrible Timer earned more than 50 percent more than what she would have if she ’ d avoided the market entirely .
Don ’ t worry about trying to time the market . Ultimately , the benefits of timing the market perfectly aren ’ t all that great . Over the 20 years , The Perfect Timer amassed only around $ 13,000 more than the Immediate Investor who put her cash to work right away . What ’ s more , trying to time the market perfectly is a Herculean task that even most professional investors can ’ t do successfully over time . Ask yourself : Would you rather stare at stock charts all day or spend your free time with family and friends ?
Dollar cost averaging is a great compromise . If you don ’ t have the opportunity , or stomach , to invest a lump sum all at once , consider investing smaller amounts more frequently . Dollar cost averaging helps prevent procrastination by helping you stick to an investment schedule . And by ensuring you put relatively small sums of money to work on a regular and consistent basis , dollar cost averaging helps you buy more of your investments when prices are low , and less when prices are high .
Joseph Killgore , CFP ® is a Financial Consultant at the
Charles Schwab Greenville Independent Branch with over 6 years of experience helping clients achieve their financial goals . Joseph also has his Masters of Science in Personal Financial Planning from the College for Financial Planning . Some content provided here has been compiled from previously published articles authored by various parties at Schwab .
Information presented is for general informational purposes only and is not intended as personalized investment advice . Where specific advice is necessary or appropriate , Charles Schwab recommends consultation with a qualified professional .
The Schwab Center for Financial Research is a division of Charles Schwab & Co ., Inc .
This analysis shows the outcomes for four hypothetical investors who invested $ 2,000 a year for 20 years . The Perfect Timer invested each year at the market trough . The Immediate Investor invested immediately on the first day of each year . The Terrible Timer invested each year at the market peak . The Hesitator never implemented the plan and stayed in T-bills . The Perfect Timer & the Terrible Timer invested their yearly $ 2,000 investments in T-bills while waiting to invest in stocks . Stocks are represented by the S & P500 ® Index with all dividends invested . Indices are unmanaged , do not incur fees or expenses , and cannot be invested in directly . Average results remained relatively unchanged when the study is extended to 12-month periods that begin with a month other than January . In the case of the 12-month period that goes from February to January , the Immediate Investor invested immediately on the first day of February each 12-month period for 20 years . Past performance is no indication of future results . Ibbotson US 30-Day Treasury Bills is an unweighted index which measures the performance of one-month maturity US Treasury Bills . S & P500 ® Index is a market-capitalization weighted index that consists of 500 widely traded stocks chosen for market size , liquidity , and industry group representation . ( 0120-92LR )
SPRING 2022 19 GREENVILE LIFE