By Jay Fedak, CFP® | Fee-Only Financial Planner, New Milford, CT
Sarah had $200,000 in cash in March 2020. When the market crashed 34%, she finally had her dip.
She didn’t buy.
“It might go lower. I’ll wait for clarity.”
By late 2021, the market had recovered and pushed 80% higher. Her caution cost her over $500,000.
This is the most common and expensive mistake I see—not reckless speculation, but the quiet cost of waiting for the “right” moment that never comes.
The Compounding Cost of Inaction
Doing nothing isn’t neutral. It’s expensive.
Two investors, both 30:
Emily invests $500/month starting today. Michael waits 5 years, then invests $500/month.
Both invest until 65 at 7% returns.
Results:
- Emily: $933,000
- Michael: $566,000
Michael’s 5-year delay cost him $367,000. Those early contributions totaled just $30,000 but represented 40% of Emily’s final wealth.
Early money works harder and longer than late money.
Meanwhile, $50,000 in “safe” savings at the bank getting 0.5% interest for 10 years:
- Real value after inflation: $39,000
- If invested at 7%: $73,000
- Opportunity cost: $34,000
Cash doesn’t preserve wealth. It quietly destroys it.
Why Market Timing Fails
Missing the Best Days
S&P 500, 2003-2023:
- Fully invested: 9.8% annual return → $724,000 on $100k
- Missed 10 best days: 5.6% → $315,000
- Missed 30 best days: 1.2% → $135,000
You missed 30 days out of 5,040 (0.6%) and lost 80% of your wealth.
The killer: 7 of the 10 best days occurred within two weeks of the 10 worst days.
You cannot dodge the bad without missing the good.
If Professionals Can’t Do It…
Nobel laureate William Sharpe: You’d need to be right 74% of the time just to break even with buy-and-hold.
Professional market timers are right about 50%—a coin flip.
DALBAR’s 20-year study:
- S&P 500 return: 9.5% annually
- Average investor return: 6.8%
- Behavior gap: 2.7% per year
On $500,000 over 20 years, that’s a $1.3 million difference.
Why? Investors buy high when confident and sell low when terrified.
The Dip That Never Comes (Or That You Can’t Buy)
The 8-Year Wait
Investor waits with $100,000 in 2010 for a 20% correction:
- 2010-2017: Market up 150% total (“too high”)
- 2018: Gets 20% drop, finally buys
Result: Bought at roughly the same level as 2010 after waiting 8 years.
Opportunity cost: $100,000
When Fear Takes Over
March 2020: Market drops 34%. Everyone waiting for a dip finally got one.
Most didn’t buy.
“It might go lower.” “What if it’s a depression?” “I’ll wait for clarity.”
Meanwhile:
- April 2020: +12.7%
- May: +4.5%
- Three months later: up 40% from bottom
By the time it felt “safe,” they’d missed the entire recovery.
The dip you waited years for came and went. You missed it anyway.
Bob the Terrible Timer
Bob invested $6,000 at the worst possible moments:
- 1973: Right before -48% crash
- 1987: Right before -34% crash
- 2000: Right before -49% crash
- 2008: Right before -57% crash
Total invested at literally the worst times: $24,000
Bob’s 2020 value: $1.1 million
His 40+ year horizon made terrible entry points irrelevant noise.
What the Data Actually Says
Lump Sum Beats Waiting
Vanguard studied 90 years of data (1926-2015):
Lump-sum investing beat dollar-cost averaging 68% of the time.
Why? Markets go up ~75% of all days. Waiting means missing those days.
$100,000 example over one year:
- Invest immediately at 10%: $110,000
- DCA over 12 months: ~$105,000
Over 30 years, that 5% difference compounds to $87,000 lost.
Even Perfect Timing Barely Helps
Best case scenario: You perfectly time a 20% dip after an 18-month wait.
Net advantage: ~5% better entry
On $100,000 over 30 years:
- Perfect timing: $1.83 million
- Immediate invest: $1.74 million
- Benefit: $90,000
But you had to perfectly time both the top and bottom (impossible), have courage to buy in a panic, and stay invested for decades.
The risk/reward is terrible.
What to Actually Do
If you have 20+ years: Invest immediately.
The data is clear. Markets rise more than they fall. Every day you wait is betting against the long-term trend.
If you need emotional comfort: DCA over 3-6 months maximum.
Be honest—are you managing emotions or trying to time the market?
If it’s emotions, spread it out briefly, then be done.
If it’s timing, stop fooling yourself.
Focus on what actually matters:
- Asset allocation for your risk tolerance
- Annual rebalancing
- Tax efficiency (Roth conversions, tax-loss harvesting)
- Staying invested through volatility
These determine 90%+ of returns. Entry timing determines maybe 5%.
Stop optimizing the 5% and ignoring the 90%.
The Truth
The best time to invest was many years ago. The second-best time is today.
Not when the market drops. Not when “things settle down.” Not when you “feel ready.”
Today.
Every day you wait is compounding you forfeit forever. You can never get that time back.
Three Expensive Lies
“I’m being prudent by waiting” → You’re paying the compounding cost of inaction
“I can time this better than staying invested” → Professionals with PhDs can’t. You can’t either.
“I’ll invest when the market dips” → When dips arrive, you’ll be too scared to buy
Final Word
I’m a fee-only CFP. I don’t earn commissions, nor do I sell or push financial “product”.
I have zero incentive to rush you. I want what’s best for you, and I know that our behavior is what is most likely to undermine our investment performance.
I’ve seen what waiting costs. I’ve calculated the six-figure opportunity costs of “being cautious.”
This isn’t sales advice. This is math.
If you have a long time horizon, your biggest risk isn’t buying at the wrong time.
It’s either delaying buying or never buying at all.
Time in the market beats timing the market. Every. Single. Time.
The question isn’t whether you can afford to invest today.
It’s whether you can afford to wait another day.