February 3, 2014

Is timing the market a wise option when investing? Why or why not? Other options?

2 thoughts on “February 3, 2014”

  1. Garrett Haag says:

    No it is not, you never know what the market is going to do and if your going to buy or sell at the right time, you cant predict the future, you are better off buying an index fund and holding if for a very long time until you get close to your goal for the funds time period, such as retirement or buying a house.

  2. Mike Finley says:

    Right again, Garrett. Let’s take a good hard look at the situation.

    When you time the market (or listen to people who tell you they can time the market) you are making the case that you have some bit of knowledge that others don’t. That is the ego talking and you must learn to take that ego and lock it up in the closet. Your ego is not your friend when it comes to investing.

    Study after study shows that market timing is a mistake for the vast majority of investors, and that includes you and me. Do not play a loser’s game! Garrett provides some sage advice.

    Buy an assortment of stock and bond no-load index funds (asset allocation is something you want to educate yourself on) and then automatically invest monthly into those accounts. Don’t worry about the market being up or down, just feed those accounts over long periods of time. You can do this in your company retirement plan at work (hopefully you have a broadly diversified index fund in your retirement plan) or using a Roth IRA at a place like Vanguard.com. You can educate yourself further on this information by reading my book, Financial Happine$$ or John Bogle’s wonderful book, The Little Book of Common Sense Investing. Go forth and do great things!

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