The Simplest Reasons Why Time In The Market Beats Timing The Market

[@mmabagain]

This is the best explanation of this phenomenon I have heard.

[@truthteller6743]

Dollar cost average. Fixed investing is the best. Buys less high. Buys more low. I’ve retired under 50, but enjoyed life along the way. Real Estate also helped. Cheers to all.

[@NextLevelLife]

Congratulations, and thanks for sharing! Yes, dollar cost averaging has historically been a highly effective approach :)

[@naushadchathoth4349]

What about value averaging? Does it give more returns in history?

[@Bob-yh7ir]

Yep. I have never flinched over the decades of investing. Now I am retiring far earlier than most or what the gov says is retirement age. Get in, stay in, live well. Easy.

[@NextLevelLife]

Congratulations!

[@George-ps5]

Dude!!! I love that you’ve uploaded for so many years in a row!!! You seem legit and chill, love you bro from 🇬🇧 Ps could you do a video on the opportunity cost of buying vs renting?

[@Commando303X]

4:02: Let us bear in mind that this figure - that is, of ~forty percent of returns' coming from dividends - is rather poorly representative of how American equities are expected to behave in future (as of writing, Wednesday, December 13th, 2023, ~2:24 P.M., E.T.): Component-dividend from the 1990s through the 2020s have represented only ~ten to twenty percent of total returns, both as companies have had longer-tenured growth periods (versus in historical context), and as businesses have favored making share-repurchases to issuing cash-dividends.

[@JohnHandle-]

The tl;dr for this explanation is the decision to invest. By deciding to invest regardless of the ups or downs in the market, you guarantee that you will be around for both. This should make you break even over a long period of time. You can increase your gains by only investing in markets that you know. If you work for a tech firm, invest in the tech market. If you work in real estate, invest in reits or become a property owner. Risk is ever-present, you lower risk by mitigating it with education and knowledge.

[@JohnHandle-]

Most importantly, when the market is down, the time to sell is past. When the market is down, you invest MORE not less.

[@NextLevelLife]

I couldn't agree more! Investing when the markets are on sale is one of the best/most reliable ways to boost the long-term growth of your wealth.

[@asdfTheGreat]

@@NextLevelLife But how is is that different from timing the market? Where did that money come from / why wasn't it already in the market? What's the difference between someone who purposefully waits for a crash vs someone who says oh look what I found, $150k just so happen to be sitting in my checking account when the market crashed?

[@lizs502]

I don't understand why timing the market is so bad when supposedly having an asset allocation and rebalancing (which seems to me to be a sort of market timing) is said to do better than just having all money in the market.

[@asdfTheGreat]

I'm not saying it would have affected the point, but you made it sound like that $823k won't be taxed.

[@leesweets4110]

Never mind coming out a winner or not; never mind playing a perfect game. Its impossible to devote that amount of time and attention to the market to even come remotely close. You couldnt work a job to pay your bills and have money left over to invest if you were constantly watching the market. Thats an awful lot of effort and stress to play an impossibly perfect game, that keeps you from working a job, having a life, etc. You couldnt sit around investing and researching all day every day unless you were already independently wealthy.

[@NextLevelLife]

The time factor is certainly another substantial wall to overcome... unless you were already independently wealthy and had lots of free time to devote to market research as you pointed out :)

[@copywritersblock]

Is there a limit to how high the S&P can go? I checked the all time high and with the market going up right now, it looks close to the ATH. Is it really possible for it to keep going up, beyond its ATH?

[@michaelswami]

I think the factor of time is also an important consideration. My guess is John spends a lot more time on his investments than Jane.

[@NextLevelLife]

Agreed. He probably would have to spend quite a few hours (likely daily) to achieve those kind of results. Available free time is certainly something to take into consideration with this decision.

[@TimPaddy]

I know there's unlimited what ifs, and you covered a lot of hypotheticals. That said, I don't think it's crazy talk to say it was reasonable to side step the 2022 "crash" and furthermore to currently be making a decent risk free return on treasuries rather than staring down the barrel of recession

[@davidfolts5893]

Mr. Market could be thought of as having rapid-cycling bipolar disorder. Are you going to base your decisions on what he has to say from day to day?

[@NextLevelLife]

Mr. Market can be a bit dramatic sometimes, that's for sure!