Buy low, sell high? Huh?
If you have ever mentioned you are thinking about investing, there is a good chance someone, maybe your cousin at the BBQ or your next-door neighbour over the fence, has told you, “It’s simple. Just buy low and sell high.”
It sounds like flawless logic. Buy when prices are cheap (eg: The low part of that statement), sell when they are expensive (sell high), and you will make a profit. On paper, it is the perfect strategy.
The only problem? Doing it in real life is far harder than it sounds.
Why it is easier said than done
To pull off “buy low, sell high” consistently, you would need to know:
- Exactly when prices have hit rock bottom so you can buy in
- Exactly when prices have peaked so you can sell out
That means making two perfect timing calls for every investment you own. And the reality is, no one, not your neighbour, not your cousin, not even the pros with huge research teams, can do that with accuracy every time.
Markets move quickly, and often for reasons you cannot see coming. A single news headline, a shift in interest rates, or a global event can turn prices in a matter of hours.
A perfect example of how quickly markets can move happened recently in April 2025. U.S. President Trump announced new rules called “tariffs,” which are extra taxes on goods coming into the country. This made investors nervous about the economy, and in just two days the U.S. share market dropped sharply. It was all doom and gloom in the news! But only a week later, President Trump said he would pause most of the tariffs for 90 days and this change saw the same share market have one of its best days in history.
It was a reminder that markets can swing wildly in a short time, and trying to guess the “right” moment to get in or out is almost impossible.
Even if you get it right once, there is no guarantee you will get it right the next time. And missing just a few of the market’s best-performing days can seriously hurt your long-term returns.
How this thinking can cause panic
When you are locked into the “buy low, sell high” mindset, you can end up riding an emotional rollercoaster.
- A sudden drop in prices? You might panic and sell too early, locking in a loss.
- A rapid rise? You might buy in at the top because you do not want to miss out.
- Waiting for the “perfect” low? You might sit on the sidelines for months or years and miss out on gains altogether.
It is not just exhausting – it is risky. Emotional decisions often work against your long-term goals.
Great in theory… but in practice?
The concept is sound: buy when things are cheap, sell when they are expensive. The problem is the execution.
For it to work, you would need:
- Perfect foresight
- The discipline to act when everyone else is panicking
- The confidence to sell when prices are high but still rising
And most importantly, you would need to do it repeatedly for years, across all your investments. That is why most investors who try to time the market end up falling into analysis paralysis; constantly waiting for the right moment, but rarely pulling the trigger.
A simpler approach: Dollar-Cost Averaging
Rather than trying to predict the perfect moment, many investors take a more consistent approach called dollar-cost averaging.
Here is how it works:
- You invest the same amount of money at regular intervals – weekly, fortnightly, or monthly – no matter what the market is doing.
- When prices are lower, your fixed amount buys more units.
- When prices are higher, your fixed amount buys fewer units.
Over time, this smooths out the cost of your investments. You are not making one big decision about when to invest – you are making many small ones automatically.
Why dollar-cost averaging works for real people (and busy people!)
This approach helps you:
- Avoid the stress of trying to pick the perfect moment
- Keep investing through both good and bad markets
- Remove emotions from the decision-making process
- Build a strong investing habit that can last for years
It is also practical for most budgets. You do not need to save up a big lump sum before you start. With Raiz, you can set up automated weekly or monthly contributions from as little as $5, so your investing happens in the background without constant decision-making.
An example in action
Let’s say you invest $200 a month for a year. Over that time, the price of your chosen investment will go up and down:
- Some months, $200 will buy more units because prices are lower.
- Other months, $200 will buy fewer units because prices are higher.
By the end of the year, you will have bought at a variety of prices, giving you an average cost per unit rather than the risk of investing everything at a high point.
And because you are still investing when prices are low, you benefit when they eventually rise again.
The takeaway; “Buy low, sell high” might make for confident backyard advice, but in the real world it is a tough strategy to execute consistently. Without a crystal ball, it is almost impossible to get it right every time.
Dollar-cost averaging removes the pressure of market timing and replaces it with a steady, consistent approach. Over time, it can help you grow your wealth without the stress, the guesswork, or the emotional rollercoaster.
With Raiz, you can put this strategy on autopilot, setting up regular contributions from as little as $5 so you keep building your portfolio, no matter what the headlines say.
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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.
