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When Investing, Sit Tight and Wait

| August 18, 2016
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If you have been investing in the market since the recovery of 2009, have you been capturing all of the gains the market has had to offer?

A good investment barometer that one can look at to see if the returns have been captured is the market performance of the Spider S&P 500 ETF. This is an investment in the S&P 500 Index. Since March 2009, this S&P 500 ETF grew at an annualized rate of 18.1% per year.

Yet, investors in this same ETF earned an annualized 11.8% per year return. That's a difference of 6.3% less in return. If you think about the math, getting 11.8% versus 18.1% means that, in total, your money only grew at 2/3 of what it was supposed to grow.

When it comes to your investment dollars - two thirds of a dollar amount is substantial. Instead of having $10,000, you only have $6,600. Instead of $100,000, you have $66,000. 

So how does this happen? Selling and Buying at the Wrong Time

As an investor, it can be very easy to become concerned and, in some cases, scared to the point of selling out of the market at the wrong time and buying in at the wrong time.

There have been a number of reasons one could point to as a cause of concern since the spring of 2009:

  • Fiscal Cliff
  • Monetary Experiment – QE, ZIRP, NIRP
  • Grexit, Brexit
  • Occupy, Populist
  • Arab Spring, ISIS
  • China
  • Double Dip Recession Fears

*There is a constant barrage of news media reports and pundits telling you that we're in for a recession or market crash. Then there's the thought, “Here We Go Again.”

There's a difference between worrying and taking action because of worry. The investor who sits tight usually comes out ahead. Listen to my full podcast below:

Date Posted: 08/18/2016 Advice provided in this article is meant for educational purposes only and financial education is important to us. Before making decisions regarding your personal financial situation, please consult an advisor or conduct your own due diligence. If you would like to discuss your Retirement Income Plan with an HCM Wealth Advisor, please give us a call – 513-598-5120. Located in Cincinnati, Ohio, we serve clients in 28 states, and we’d love to help.

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