If you invest in stocks, you probably dream of correctly timing the market. Who wouldn’t want to know exactly when to buy shares just before they soar or to sell them just before they plunge?
But study after study shows that timing the market successfully over the long haul is nearly impossible. Even worse, trying to guess the direction of the stock market can be downright disastrous to your efforts to build wealth.
A new study from J.P. Morgan Asset Management illustrates the danger of a failed market-timing strategy.
The analysis looked at a 20-year period — Jan. 1, 2002, through Dec. 31, 2021 — and determined how much a $10,000 investment in the S&P 500 stock market index would have grown based on whether an investor remained fully invested throughout those years or tried to sell out during low periods.
As it turned out, guessing wrong and pulling out of the market could result in missing some of the best days for gains. And missing even a handful of those days can have an incredibly negative impact on a portfolio.
Here are some scenarios that reveal how much your personal wealth might grow — or shrink — based on trying to time the market.
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