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Investments

The Cost of Waiting to Invest

The Cost of Waiting to Invest

“The best time to plant a tree was 20 years ago. The next best time is today” – Chinese proverb

4 min read

The Cost of Waiting to Invest

“The best time to plant a tree was 20 years ago. The next best time is today” – Chinese proverb

4 min read

There is an old saying you have might have heard: “It is time in the market, not timing the market.” While this phrase is often repeated, its relevance remains strong as ever. 

With market volatility an ever-present feature of investing, whether influenced by geopolitical events or economic headlines, it is tempting to delay investing until the ‘right moment’. Yet, what many people do not realise is that these delays can quietly erode their long-term outcomes in ways that are not always immediately visible. 

This article explains why delaying making your investments may cost you more than you think, and how compounding, inflation, and market rebounds work against ‘timing the market’.  

The influence of Global events 

In early April 2025, markets experienced a sharp correction following a landmark US tariff announcement (‘Liberation Day’) that rattled global trade expectations. While the selloff was short-lived, with most major indices showing clear signs of recovery by month’s end, it served as a reminder of how quickly global events can shake markets. Fear and uncertainty can often lead investors to make reactive decisions, hoping to time their way around volatility. 

But this event, like many before it, could have been related to almost anything, whether a geopolitical development, a central bank comment, or a natural disaster. The reasons and severity may vary, but the pattern is familiar, with short-term volatility triggering reactive behaviour, even as long-term fundamentals remain intact. 

The result?  

Historically, many people would delay investing, waiting for the “right time.” However, for those who remained invested, the brief dip ultimately became a small footnote in an otherwise upward trend. 

The real cost of waiting 

It is understandable why you may want to delay investing. Markets feel uncertain, headlines are unsettling, and it may seem safer to hold off until conditions feel more stable. But waiting, even for what feels like a justified reason, can come at a cost.

Let us consider two hypothetical investors:

Investor A invests 100’000 on 1 January 2025.

Investor B waits until 1 January 2026 to invest the same amount.

Assuming a 7% average annual return, Investor A ends up with 761’226 after 30 years. Investor B, who delayed by just one year, finishes with 711’426, a difference of nearly 50’000 due to purely waiting one year.

This gap exists not only because Investor B missed a year of growth, but because Investor A’s money had more time to compound, generating returns on top of returns year after year.

Even if the time you enter the market initially appears volatile, or it seems like a better opportunity is just around the corner, history has consistently shown that markets recover and those who stay invested through the noise tend to be rewarded.

Short-term movements often smooth out over the long-term and the cost of waiting tends to outweigh the perceived benefit of trying to time things just right.

Inflation never waits 

There is another factor quietly working against those who wait to invest and that is inflation. 

While your money may appear safe in a bank account or savings vehicle, it may be losing value in real terms. When the interest earned is lower than the rate of inflation, your purchasing power declines year after year.  

For example, a cautious saver earning 2% interest while inflation runs at 3% is effectively losing 1% of their purchasing power annually. That erosion may not be immediately obvious, as the monetary balance of the account does not reduce, but your money will continue to buy less and less over time, diminishing its real world value.

This silent loss can be just as damaging as market volatility, especially when left unaddressed over many years. While waiting may feel like a safer option, doing so in a rising-cost environment steadily diminishes your wealth.

Market timing: A game few win 

Research consistently shows that even professional investors cannot time the market with accuracy. More often than not, you miss out on the best days by being out of the market during times of volatility. 

One of the greatest examples of this is with the S&P 500. If you had invested in the S&P 500 over the past 20 years but missed just the 10 best trading days, your return would have been cut by more than 50%. 

It just so happens that these ‘best days’ often followed closely after market selloffs which is precisely when many investors choose to exit or delay entry.

If you do not wish to invest everything at once, you can use a staggered approach, such as dollar-cost averaging, to help manage risk and smooth your overall returns. This can be useful to manage risk through changing market conditions.

What this means for you 

Timing the market is rarely effective and often costly. The most consistent outcomes come from staying invested, not from trying to predict market moves.

The cost of waiting can be easy to overlook, but between lost compounding, inflation, and missed recoveries, the long-term impact can be significant.

At Patterson Mills, we help you cut through the noise with long-term investment strategies that are built to weather market ups and downs. Rather than trying to time the market, we focus on creating a clear, structured plan tailored to your goals.

If you are not sure where to begin, get in touch with us today to learn more about how we can help.

E-mail to contactus@pattersonmills.ch or call +41 (0) 21 801 36 84 and we shall be pleased to assist you.

Please note that all content within this article has been prepared for information purposes only. This article does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.

Categories
Investments

When is the Best Time To Invest?

When is the Best Time To Invest?

“Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves” ― Peter Lynch

3 min read

When Is The Best Time To Invest

When is the Best Time To Invest?

“Far more money has been lost by investors trying to anticipate corrections, than lost in the corrections themselves” ― Peter Lynch

3 min read

Investing wisely is a pivotal aspect of financial growth and security. However, the question that often perplexes both seasoned and novice investors alike is: When is the best time to invest?

Navigating the labyrinth of market volatility and attempting to decode the optimal entry point (i.e. timing the market) is difficult, so read below to find out when might be the best time to invest.

The Illusion of Timing

Attempting to time the market is a prevalent misconception among investors. The allure of predicting market movements and entering at the perfect moment often leads to a challenging endeavour. History bears witness to the unpredictable nature of markets, and the consequences of misjudging the timing can be detrimental to investment outcomes. Countless studies emphasise the risks involved in trying to time the market, showcasing that the vast majority of investors fail to consistently outperform the market due to mistimed entries and exits.

Whilst not impossible, it is highly unlikely you will be able to accurately predict future market movements with success, and it is often not a gamble worth taking for most investors.

Timing the Market: Real Data

Without a crystal ball it is extremely difficult to know when it is the best time to invest. More importantly, missing the timing by just a small margin can have a
severe negative impact on overall returns. Take a look at the chart below that details how just missing the 10 best days between 2000 and 2022 could impact your investment of, in this case in GBP, 10,000.

As you can see, an investor missing the best 10 days since 2000 would see a return on £10,000 of £12,719.80 – just under half of the £25,536.10 they would have received if they were fully invested throughout the period. What is even more interesting is that missing the best 20 (and 40) days would actually see a negative return over the period. It is clear that missing even a relatively small number of high-return days has a major impact on total return. 

Consistency with Regular Investing

Enter the power of regular investing – a time-tested strategy aimed at bypassing the perils of market timing. Whether it’s dollar-cost averaging, pound-cost averaging, or franc-cost averaging, this approach embodies consistency. By investing fixed amounts at regular intervals, regardless of market fluctuations, investors benefit from purchasing more shares when prices are low and fewer shares when prices are high. Over time, this not only minimises the impact of market volatility but also potentially yields significant gains and fosters a disciplined investment habit.

Long-Term vs. Short-Term Mindset

Shifting from a short-term gain mentality to a long-term wealth-building strategy is an essential key to your financial success. A long-term perspective focuses on the steady growth of assets over extended periods. By staying invested through market fluctuations, investors capitalise on the power of compounding returns, which can substantially enhance wealth accumulation over time.

Strategic Asset Allocation

A fundamental aspect of investment success lies in strategic asset allocation. Diversifying investments across various asset classes, such as stocks, bonds, real estate, and commodities, helps mitigate risks associated with market downturns. This strategic diversification not only cushions against market volatility but also optimises returns by capturing opportunities across different sectors and industries.

Patience, Not Precision

The best time to invest often aligns with having funds available and a long-term investment horizon. Attempting to wait for the perfect moment may result in missed opportunities. Research and market analysis consistently show that staying invested for the long haul yields more favourable outcomes than attempting to time short-term market fluctuations, as per the previous chart. Remember, the goal is not precision in timing the market but patience and persistence in staying invested.

Charting Financial Stability

So, when is the best time to invest? The real answer is, there is no best time. Timing the market is a daunting pursuit with many risks and uncertainties. The consequences of mistiming can significantly impact investment outcomes and, as mentioned, is often a risk not worth taking. Instead, focusing on a consistent, disciplined approach to investing, leveraging regular investment strategies like dollar or pound or franc-cost averaging, and adopting a long-term mindset are proven strategies to navigate market volatility and achieve potentially rewarding investment outcomes.

No investment is guaranteed, so for the best chance of success make sure to get in touch with Patterson Mills today and book your initial, no-cost and no-obligation meeting, you will be pleased that you did. Send us an e-mail to info@pattersonmills.ch or call us direct at +41 21 801 36 84 and we shall be pleased to assist you.

Please note that all information within this article has been prepared for informational purposes only. This article does not constitute financial, legal or tax advice. Always ensure you speak to a regulated Financial Adviser before making any financial decisions.