When investing in bonds, stocks, or mutual funds, investors have the opportunity to increase their rate of return by timing the market - investing when stock markets go up and selling before they decline. A good investor can either time the market prudently, select a good investment, or employ a combination of both to increase his or her rate of return. But to make the long story short, you may want to be careful, because if you want to increase your rate of return by timing the market, this could be a gamble. Keep your guard up if you plan to time the market, because even then, life can be full of surprises, and you may find yourself losing money or abjuring a significant return.
Timing the market is difficult. And it can be very tricky, for you have to correctly decide on two things - first, when do you sell and second, when do you buy. If you get either wrong in the short term you are out of luck. In addition, investors should realize that.
Bonus fact - stock markets tend to go up more often than they go down.
But even then, a declining stock market can become a gadarene decline in no time. Therefore your short-term loss may outweigh a similar short-term gain in terms of impact.
The bulk of the gains posted by the stock market are posted in a very short time. In layman's terms, missing out on a day or two of substantial stock market gains could be detrimental.
Timing is an art lost on many investors. This is why marketing timing should not be the be-all and end-all of your investment game plan - it may help you some and add some value, but there are other techniques that, if used at the right time, involve less risks, guarantee more potential returns and are thus better primed for success.
We shall quickly discuss in this last paragraph the reason why timing is such a challenge for many investors, and the reason is simple - being too emotionally involved in the investment. This is the worst mistake you can make as emotion can cause you to invest when prices are high and sell when the prices are low. Those in the know in the world of business are professional enough to put their hearts on the line, and know how to time their investments in such a way that would be successful, yet the bulk of their rates of return is generated through other strategies such as security selection, for instance. You would want to go with a good Tactical Asset Allocation in order to increase your rate of return through market timing. These are funds designed to increase value, but do not rely on emotional, histrionic market timing - they rely on the transmogrification of the investment mix (bonds, stocks, cash, etc.) and follow stringent rules and regulations.
Timing the market is difficult. And it can be very tricky, for you have to correctly decide on two things - first, when do you sell and second, when do you buy. If you get either wrong in the short term you are out of luck. In addition, investors should realize that.
Bonus fact - stock markets tend to go up more often than they go down.
But even then, a declining stock market can become a gadarene decline in no time. Therefore your short-term loss may outweigh a similar short-term gain in terms of impact.
The bulk of the gains posted by the stock market are posted in a very short time. In layman's terms, missing out on a day or two of substantial stock market gains could be detrimental.
Timing is an art lost on many investors. This is why marketing timing should not be the be-all and end-all of your investment game plan - it may help you some and add some value, but there are other techniques that, if used at the right time, involve less risks, guarantee more potential returns and are thus better primed for success.
We shall quickly discuss in this last paragraph the reason why timing is such a challenge for many investors, and the reason is simple - being too emotionally involved in the investment. This is the worst mistake you can make as emotion can cause you to invest when prices are high and sell when the prices are low. Those in the know in the world of business are professional enough to put their hearts on the line, and know how to time their investments in such a way that would be successful, yet the bulk of their rates of return is generated through other strategies such as security selection, for instance. You would want to go with a good Tactical Asset Allocation in order to increase your rate of return through market timing. These are funds designed to increase value, but do not rely on emotional, histrionic market timing - they rely on the transmogrification of the investment mix (bonds, stocks, cash, etc.) and follow stringent rules and regulations.
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