Gav Blaxberg, a financial influencer, warns that attempting to time the market can lead to significant losses. He asserts that the real danger lies not in the market’s ups and downs, but in failing to invest altogether.

If you’re hesitant to invest because you fear a market downturn, you’re essentially trying to time it—and you may be losing out as a result.

Here’s why market timing is a poor strategy, backed by data:

The accompanying bar chart details the outcomes of investing $2,000 each year over two decades. As expected, those who perfectly timed their investments achieved the highest returns.

Investors who held onto cash ended up with the lowest returns.

However, the middle section of the chart presents an intriguing insight. If you invest consistently on the first day of each year for 20 years, your returns would only be marginally lower than those who perfectly timed their entries.

In fact, you’d see a difference of only $12,645 in total returns. Consider a scenario where you invested $2,000 each year but made poor timing decisions every time. You would only be $32,264 behind the market timers after 20 years, which is not as bad as it sounds.

Keep in mind; it is improbable that you will buy at the market’s lowest point consistently over two decades.

Therefore, stop stressing over potential market crashes. With a suitable investment horizon, such worries become numerically insignificant.

The data suggest that your only guaranteed financial loss occurs when you decide not to invest at all.

Cash in your bank account loses value each year due to inflation, making inaction a risky choice.

So, don’t let fear deter you. Just invest and focus on enjoying your financial journey.

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