Time in the market
Also Interesting
Weekly Digest
Amidst the recent political and market uncertainty it is all too easy to lose sight of the importance of investing for your long term financial wellness. Sophisticated investors are well versed with the “time in the market not timing the market” arguments and while they border on the trite, that does not diminish their significance. Likewise the rather hackneyed quote from Einstein that compound interest is the “eighth wonder of the world”. It’s easier to see the wonder, of course, when interest rates are materially above zero. You don’t need to be a Nobel prize winning theoretical physicist to calculate that a rate of interest close to zero remains pretty close to zero even when compounded for a very long time. The implication for us is that it is, on balance, better to be in than out. It is always difficult to top up investments when the going is tough but it can be just as heart wrenching to add to a position once the market has rallied and, not only is it difficult, it could be less rewarding to boot.
