Should I wait for the markets to pick up before investing?

Markets go up, markets go down

If you’ve been keeping an eye on the stock market lately, you’ll know it’s had a bit of a wobble. After a strong run, prices dipped recently and some investors started to panic-sell.

But if you've been investing for a while, chances are you're still doing well overall. For example, if you'd invested in the MSCI World Index five years ago, by 11 April this year your investment could’ve grown by 158%*. Not bad – especially considering those five years included a pandemic and a cost-of-living crisis.

If you're new to investing, this might feel like bad timing...

When the market drops and headlines shout about downturns, it’s easy to think: maybe I should just wait. But here’s the thing – no one can predict exactly when markets will go back up (not even the pros).

And if you’re sitting on the sidelines waiting for the ‘perfect time’ to invest, you could miss the rebound completely. History shows that some of the best market days happen right after the worst ones – which makes timing things perfectly near impossible.

Miss the best days, miss out on growth

Take April as an example. On Friday the 4th, the S&P 500 dropped by 6%. Just a few days later, it jumped back up by 9.5%. That kind of bounce is hard to catch if you're waiting for the ‘right’ moment.

In fact, over the past 20 years, seven of the 10 best market days came within two weeks of the worst ones**. So if you’re not in the market when things turn around, you could miss out on a big chunk of growth.

Even investing at the 'worst time' can work out well

Worried about accidentally picking the worst possible time to start? You’re not alone — but even that isn’t as bad as it sounds.

One study by Capital Group compared two imaginary investors over 20 years: one who invested on the best day each year, and one who invested on the worst. The result? Best-day investor saw average annual returns of 12.6% – but the worst-day investor still made 10.8% a year. That’s the power of staying invested over time.

Think long term – and focus on your own goals

Rather than trying to second-guess the market, it can help to look inward. What are your goals? Saving for a home? A big life milestone? A little more financial freedom in the future?

Whatever it is, getting started can be more important than perfect timing. The longer your money’s invested, the more time it has to ride out the dips and benefit from long-term growth.

Time in the market beats timing the market

At Dodl, we believe investing should be easy and accessible – and that includes knowing when to start. Truth is, waiting for the ‘right’ time can mean missing out.

So if you're thinking about investing, it might be time to stop waiting and just start – even with a small amount. Because when it comes to building your future wealth, every little helps.

*Figures based on return of index and don’t account for fund or platform charges

**Source: JP Morgan

🔔 Always remember, the value of your investments can go down as well as up. Dodl doesn’t give financial advice, but we do hope the info is helpful! Past performance is not an indicator of future performance.