VIDEO: Retirement Investing Pitfall #1 – Trying to Time the Markets
Today, I am going to do something a little different and launch a weekly video series. This series is going to be based on a chapter from my newly released best-selling book Plan Smart, Retire Right. In the book, I wrote a chapter titled Retirement Investing Pitfalls. As experience has taught us, successful investing usually requires discipline and patience, and finding the right balance between changes in the economy and how to manage your money can often seem challenging.
A sound approach to your money can help buffer you against turbulence and uncertainty. There isn’t one right approach to investing for your retirement, and there are certainly a number of commonly encountered pitfalls that many investors make. How can you avoid making these mistakes? When it comes to retirement planning, in my opinion, knowledge is the best defense. The more you know about the pitfalls that could potentially derail your retirement, the better prepared you are when it comes to avoiding them.
This week, I want to cover the 1st Retirement Investment Pitfall from my book, and that is Trying to Time the Market. When markets rally, or pull back, attempting to find the top to sell, or the bottom to buy, may seem tempting. The problem, however, is that investors usually guess wrong, potentially missing out on the best market plays. One reason is attempting to time the market and predict future movements. This sounds great in theory, but market timing works about as well as fortune telling. Essentially, by trying to time the market, you are relying on speculation, instead of certainties or patterns. When people invest on the high and pull out on the low, they may miss opportunities by not remaining patient.
The problem is that equity gains can often be made in a very short amount of time. And if you are not in the market when it moves, you may miss out on the whole play. The bottom line…accurately chasing the market tops and bottoms is virtually impossible. A better approach may be to make small adjustments or tweaks rather than big moves with your money. As my experience has proven, time in the market matters more than timing of the market. Stay tuned for our next video in the series where we will discuss the pitfall of taking too much risk.
