Stop Waiting to Invest: How to Build Wealth in Any Market

The single most expensive financial mistake most investors make has nothing to do with picking the wrong stock or owning the wrong fund. It’s the decision to do nothing — to wait for a better moment that never quite arrives.

Call it the market timing trap. It sounds reasonable on the surface: Buy low, sell high, avoid the downturns. But decades of data make one thing abundantly clear: Most investors who try to time the market don’t just fail to beat it — they meaningfully underperform it.

And the investors most likely to be caught waiting on the sidelines are often the ones who can least afford to be there — those approaching or already in retirement.

From just $107.88 $24.99 for Kiplinger Personal Finance

Become a smarter, better informed investor. Subscribe from just ~~$107.88~~ $24.99, plus get up to 4 Special Issues

CLICK FOR FREE ISSUE

Sign up for Kiplinger’s Free Newsletters

Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more – straight to your e-mail.

Profit and prosper with the best of expert advice – straight to your e-mail.

This article is not a call to invest recklessly or ignore risk. It’s a call to understand what the evidence actually says about market timing — and then to use that understanding to stop letting the pursuit of the ideal moment become the enemy of a sound, logical and process-oriented financial plan.

Market timing: The obsession nobody talks about Americans are obsessed with market timing. They may not call it that; they call it being cautious, being patient, waiting for things to settle down.

But at its core, the behavior is the same: Holding off on financial decisions — rebalancing a portfolio, funding an account, shifting an allocation — until the market feels more certain.

The problem is that the market never feels certain.

In 2020, investors waited to see if the pandemic recovery was real
In 2022, they waited for rising interest rates and the worst bond market in history
In 2023 and 2024, they waited to see if the rally would hold

Today, amid myriad persistent geopolitical concerns and markets somehow testing all-time highs almost daily, many are waiting again.

And while they wait, something costly is happening. It’s not what most people think.

The real cost of missing the market’s best days

There is a data point that has appeared in financial research so many times, across so many decades and market cycles, that it should by now be tattooed on the arms of every investor. And yet somehow, it doesn’t seem to change behavior.

Here it is: Missing just the 10 best trading days in the market over a 20-year period can cut your total returns roughly in half.

According to J.P. Morgan Asset Management’s widely cited research, a $10,000 investment in the S&P 500 made on January 1, 2005, and left untouched through December 31, 2024, would have grown to $71,750. Miss the 10 best days? That balance drops to $32,871 — a reduction of more than half. Miss the 20 best days? The damage compounds further still.

Here’s the kicker: The best days and the worst days cluster together. They tend to occur during volatile stretches — exactly the moments when nervous investors are most likely to be out of the market.

Seven of the 10 best days over that 20-year period occurred within 15 days of the 10 worst days. The investor who pulls out to avoid the turbulence often misses the recovery that follows.

This is not a theoretical risk. It’s a mathematically measurable one, and it plays out again and again across every major market cycle we have on record.

The illusion of the perfect entry point

One of the most persistent myths in personal finance is that patient investors who wait for the right moment will eventually be rewarded with a lower-risk entry into the market. The research does not support this. For every (lucky) win I hear about from a lifetime investor, they gloss over several drops and run-ups they missed or frankly misplayed.

A well-known study by the Schwab Center for Financial Research examined the outcomes of five hypothetical investors over the 20-year period ending December 31, 2024, each receiving $2,000 annually to invest in the S&P 500.

The strategies ranged from perfect timing (always buying at the annual low) to the worst possible timing (always buying at the annual high) to simply investing immediately each year regardless of conditions.

The perfect timer finished with $186,077. The investor who simply put money in on the first trading day of each year finished with $170,555 — only $15,522 less, despite zero effort at timing.

Even the investor who somehow managed to buy at the annual high every single year finished with $151,343. The investor who stayed in cash the entire time? $47,357 — last place by a margin that isn’t close.

The pursuit of the perfect entry point is not a strategy — it’s a form of procrastination dressed up in financial language.

Inaction is not a safe move

This is perhaps the most important point in this article, and the one most investors get backward.

When the market feels uncertain — which, to be clear, is essentially always — the instinct is to view inaction as the safe, conservative choice. Do nothing. Stay in cash. Wait it out. That feels like risk management. In reality, it often is risk itself.

Consider the investor approaching retirement who has been meaning to rebalance a portfolio that has become too equity-heavy after a strong run. She knows it should be done. She’s heard her adviser mention it. But she keeps waiting — for the market to peak, for volatility to pass, for more certainty.

In the meantime, she is exposed to exactly the downside risk she’s trying to avoid. And when the correction comes, she hasn’t protected herself. She was just waiting.

The same dynamic plays out across dozens of common financial planning decisions. Funding a Roth IRA. Adjusting a 401(k) allocation. Moving money from accumulation to income-generating assets as retirement nears.

These are not timing decisions. They are structural ones. Treating them as timing decisions — waiting for the ideal moment — is one of the most common and costly errors in retirement planning.

Inaction has a price. It simply doesn’t show up on a brokerage statement the way a losing trade does. That makes it invisible to most investors. But the cost is real, and it compounds over time in the wrong direction.

What the evidence says about market timers

It’s worth being direct here: Professional market timers — people whose entire career is devoted to getting in and out of the market at the right moments — have an almost universally poor long-term track record versus simply staying invested.

DALBAR’s annual Quantitative Analysis of Investor Behavior has tracked this gap for decades. Over the 20-year period ending December 31, 2024, the average U.S. equity investor earned an annualized return of 9.24%, compared with the S&P 500’s annualized return of 10.35% — a gap of more than one percentage point per year, every year, for two decades.

In 2024 alone — a year when the S&P 500 returned 25.02% — the average equity investor earned just 16.54%, a gap of nearly 850 basis points.

DALBAR traced the shortfall directly to behavior: Withdrawals from equity funds occurred in every quarter, with the heaviest outflows arriving just before the market’s biggest surges. Investors guessed the direction of the market correctly just 25% of the time.

This is not a knock on investor intelligence. It’s a recognition that trying to predict the market’s short-term direction is extraordinarily difficult — and that the emotional pressure to act or not to act during turbulent periods works directly against long-term returns.

When timing actually does matter

None of this means that when you buy or sell is completely irrelevant. Context matters.

For a long-term investor with a 20-year horizon, the specific day they invest a lump sum matters very little — studies consistently show that most outcomes cluster tightly regardless of whether you invested at a peak or a trough.

For someone funding a 401(k) with regular payroll contributions, dollar-cost averaging handles the timing question automatically and effectively.

The calculus shifts somewhat for investors in or near retirement. Sequence of returns risk — the danger of experiencing a major market decline in the first few years of drawing down a portfolio — is real and meaningful.

Research by CFA Wade Pfau and CFP Michael Kitces identifies what they term the “retirement risk zone”: The approximately 10 years surrounding the retirement date, roughly five years before and five years after, when the portfolio is at or near peak size and withdrawals have begun or are imminent.

A bad sequence of returns during this window can permanently impair a plan in ways that simply cannot be recovered.

That’s a structural problem. And it requires a structural solution — not perfect timing.

The framework that actually works

If market timing is a false solution to a real problem, what’s the right answer?

As my book Spend, Protect, Grow explains, the most important thing a retirement investor can do is build a structure that makes market timing irrelevant.

The framework has three components:

Spend. The assets dedicated to funding the next 10 to 12 years of retirement income. This bucket must be stable — it can’t afford the volatility of equities because it’s funding your life.
Protect. The money you have decided you never want to lose to market performance. This is where safe money strategies — index annuities, fixed index strategies — do their most important work, providing growth potential without downside risk.
Grow. The long-term equity holdings with a decade-plus horizon, where short-term volatility can be tolerated because there’s no near-term pressure to sell. This bucket customarily provides a long-term approach to outpacing inflation, which most people are aware of.

The elegance of this structure is that it neutralizes the timing problem. If your spending needs are funded for the next decade, you are not a forced seller in a down market — the kiss of death. You don’t need the market to cooperate in 2026 or 2027.

Your Grow bucket can weather the storm because your Spend bucket is doing its job. The obsession with entry and exit points becomes irrelevant when your structure accounts for them in advance.

This is the insight that market timers miss. They’re trying to solve a structural problem with a timing solution. It doesn’t work — not consistently, not over time and most certainly not for the investors who need it most.

What to do now

If you’ve been holding off on a financial planning decision because you’re waiting for a better moment, consider this your prompt to stop waiting.

Review your portfolio structure — not for the right entry point, but for the right architecture. Ask whether you have a defined plan for funding near-term spending needs that doesn’t depend on market cooperation.

Understand what percentage of your assets is exposed to market risk and whether that exposure is intentional and appropriate for your timeline.

And if you’re within five to 10 years of retirement, make sure your plan accounts for sequence of returns risk structurally, not by hoping to time your way around it.

Hope, it turns out, is not a structural solution.

The market will be volatile. It always has been. There will be stretches that feel terrifying and stretches that feel euphoric, and neither emotion will help you make better financial decisions.