Market timing is a fool's errand

Like how uncles dish out truisms as wisdom at family gatherings, allow us to share one, too: timing the market is a risky tactic. But here's the interesting bit: it's even more true for seasoned investors. For starters, market corrections are infrequent. It gives investors limited rare opportunities to meaningfully buy the dip. For instance, a single-day 5 per cent fall has only happened 22 times in the last 22 years. Discount the Global Financial Crisis (GFC) and Covid crashes and you will realise that it happens once every 4 to 5 years. Similarly, a 10 per cent fall in a week has occurred just five times in 22 years, or 32 times if you include GFC and Covid. Suggested watch: Should you wait to buy the dip? Timing failure Now, let's assume a monthly Rs 10,000 SIP for 20 years grows at 12 per cent. If you i

This article was originally published on August 06, 2024.