Maintaining a buy-and-hold investment strategy can be challenging when the stock market is volatile. During these times, many investors often wonder whether timing the market is better than time in the market.
Does time really make a difference when it comes to investing? The following chart can help answer that question.
Stick to your investment strategy
For a one-year holding period in the stock market, the difference between “best” and “worst” can be dramatic. In fact, comparing these results might make it look as if you gambled with your money rather than investing it. However, adding more time to your holding period helps paint a different picture.
As the chart shows, the worst one-year holding period performance was -43%, while the worst five- and 10-year annualized performance periods yielded -6.6% and -3.4%, respectively. However, over a 20-year time frame, the worst period resulted in a 4.8% annualized gain.
Don’t lose sight of the importance of time. In the long run, it tends to be on your side.
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