2017 has been a great year for Irish investors.  Many well-regarded investment funds available through Moneycube are showing double-digit growth on a year ago.  But is market timing becoming an issue?

Warning sounds continued through the year that markets look high (just like they did in 2016…)

Time to stop and take a breath?

Some savers naturally wonder if it is better to bide time and invest after a downturn in the market.

It’s true that if you are trying to make a quick buck, choosing the moment you get in and get out of the assets you buy is a vital decision.

But we’re not in the business of recommending that anyway.

Timing isn’t everything

For most of us, market timing doesn’t really matter.  If you are truly investing in a planned way over time to build up your wealth, market timing is mostly irrelevant.

Chris Dillow has explained this really clearly in a recent article on Investors Chronicle.

His analysis shows what would have happened if you’d invested your savings in the UK’s All-Share index 30 years ago.

Worst case scenario… 4.5% per year

In the worst case, you’d have done this in September 1987, just before the crash known as Black Monday, on 19 October.

Inside a month, you’d have lost a quarter of your money.  Ouch.

Despite this, if you had stayed invested, you would have made an average return of 4.5 per cent each year since then – and that’s after adjusting for inflation.

Keep calm and carry on investing

So even after suffering the two biggest stock market drops in the history of the FTSE 100, your money would still have compounded at an average after-inflation rate of 4.5 per cent.

For wealth-builders then, the point is not to worry very much about market timing.  You can’t choose the perfect moment to put your money to work.

Instead, the best route to wealth is to make a start and stay the course.

 

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