Time in the market beats timing the market
Have you ever opened your Raiz app and seen your return in the negative?
Maybe you’ve been watching the news and seen that big red arrow when commentators talk about the share market falling?
It’s normal to feel a bit uneasy, especially when you’re new to investing. Seeing red can trigger that instinct to react straight away. But when it comes to investing, what feels big in the short term often looks like just a blip when you zoom out and look at the longer-term picture.
Why short-term moves feel dramatic
Day to day and week to week, markets move a lot. Prices rise one moment and dip the next. Lots of things influence that movement, including global news, interest rates, company earnings and investor sentiment. None of these alone can predict where markets will go next.
Trying to guess the “perfect” time to buy or sell is called timing the market. It sounds clever, but even professional investors find it hard to do consistently.
That’s where time in the market comes in.
A simple piece of advice many investors use is: if in doubt, zoom out.
What this looks like in real life: When you look at a short-term chart, a drop can feel huge. It can make you question your strategy. But when you change the timeframe to five, ten or fifteen years (the zoom out part), those same drops often look tiny compared with the overall growth.
And that’s the whole point. Investing is a long-term game.
Some long-term context
The Australian share market is a good example. Between 1900 and 2023, it returned an average of around 13% per annum, but not every year was a “good year”.
Across that period, around 100 years had positive returns, while 24 years had negative returns.
So yes, we have to take some bad years with the good. But here’s the catch: we don’t have a crystal ball. We don’t know when the bad years are coming. That’s why time in the market (how long you stay invested) generally beats trying to time the market (picking the perfect moment to buy and sell).
See the report here: https://files.marketindex.com.au/files/statistics/historical-returns-infographic-2024.pdf?utm_source=chatgpt.com
What to do when you see red
Seeing a negative return in your Raiz app can be uncomfortable. That’s a natural human reaction.
Instead of reacting straight away, try this:
- Remember why you started investing.
- Check your timeframe. Are you investing for 5, 10 or 20 plus years?
- Zoom out and look at the long-term trend, not just the recent days.
If your goals are long term, short-term noise is just that, noise.
The main risk for many first-time investors is not volatility itself, but reacting to it by selling at the wrong time, or avoiding investing altogether.
The takeaway
Markets will have days, weeks and even months of volatility. That’s part of investing.
Just remember: If in doubt, zoom out.
And if you want to build confidence as an investor and learn more about how markets work? Head to Raiz Academy and explore the basics of long-term investing.
Don’t have the Raiz App?
Download it for free in the App store or the Webapp below:
Important Information
This blog has been issued by Instreet Investment Limited (ACN 128 813 016 AFSL 434776) as Responsible Entity of the Raiz Invest Australia Fund (ARSN 607 533 022) and has been prepared without taking into account your objectives, financial situation or needs. Before acting on such information, you should conduct your own review or consult a financial advisor before making a decision to invest. Please read the relevant Product Disclosure Statement and any associated reference documents before making an investment decision. In accordance with the Design and Distributions Obligations, we maintain Target Market Determinations for our Funds. All documents can be found on the Raiz website www.raizinvest.com.au, or calling the Customer Support team on 1300 754 748. Please note that past performance is not a reliable indicator or guarantee of future performance. Historical returns, forecasts, and market commentary are provided for general informational purposes only. All investment carries risk and may result in loss of capital.
