The Cost of Market Timing

The impact of being out of the market for a short time can be profound, as shown by the chart below, using a hypothetical investment in the Russell 3000 Index, a broad US stock market benchmark.

• A hypothetical $1,000 investment made in 1998 turns into $6,356 for the 25-year period ending December 31, 2022.

• Miss the Russell 3000’s best week, and the value shrinks to $5,304. Miss the best three months, and the total return falls to $4,480.

• There’s no proven way to time the market — targeting the best days or moving to the sidelines to avoid the worst. Staying invested and focused on the long term helps to ensure that you’re in position to capture what the market has to offer.

Russell 3000 Index Total Return, 1998 - 2022

See Notes and Disclosures

David Rappaport, CFP®

David is the Co-Founder of Rappaport Reiches Capital Management. He acts as personal CFO to entrepreneurs and corporate executives, providing organization and clarity in their finances. Please connect with David below. He loves to talk about investing, financial planning, and Aspiritech, a non-profit hiring individuals on the autism spectrum.

Past performance is no guarantee of future results. Indices are not available for direct investment. Their performance does not reflect the expenses associated with the management of an actual portfolio. In USD. For illustrative purposes. Best performance dates represent end of period (November 28, 2008, for best week; April 22, 2020, for best month; June 22, 2020, for best three months; and September 4, 2009, for best six months). The missed best consecutive days examples assume that the hypothetical portfolio fully divested its holdings at the end of the day before the missed best consecutive days, held cash for the missed best consecutive days, and reinvested the entire portfolio in the Russell 3000 Index at the end of the missed best consecutive days. Frank Russell Company is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes.

The author does not intend to provide investment, legal or tax advice as these materials are for general educational purposes only. Please consult your legal, tax or investment professional for advice on your particular situation. This material is derived from sources believed to be reliable, but its accuracy and the opinions based thereon are not guaranteed. It is not intended to be a solicitation, offer or recommendation to acquire or dispose of any investment or to engage in any other transaction. Investing involves risk including the possible loss of principal. Past performance does not guarantee future results. Please refer to RRCM’s Form ADV Part 2 for additional disclosures regarding RRCM and its practices.