Monday, October 3, 2016

Attempt to time the market is stupid

You have read many reports about how the stock market performs over the years.

That means if you have bought an index fund and hold for 20 or 30 years, you would have made a lot of money if you sell it now.

However, many people do not have the same rate of return.

They try to time the market, and they lose out in the end.

For one thing, the frequent trading results in high transaction cost.  You will have to make much more money to achieve the same rate of return, because you give the money to the brokerage house.

It is best to use the dollar cost averaging method to invest in an index fund if you do not want to take the risk of investing in individual stock.

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