One of the most common questions in investing is “Should I invest now, or wait for a better entry point?” Market uncertainty can make waiting feel safer, and the idea of investing at the lowest point is very appealing. However, in practice, even the most experienced asset managers will acknowledge that timing the market is extremely difficult – and often comes at a cost.
Three Investors, Three Strategies
To illustrate this, we analysed three hypothetical investors, using daily returns of the S&P 500 Total Return Index over the past 30 years (01 April 1996 to 1 April 2026). Each investor started with the same initial capital of $100,000 but followed a different entry strategy.
The above represents the performance of S&P 500 Total Return Index over the past 30 years (1 April 1996 to 1 April 2026). Returns are in USD terms. For simplicity, we assumed that cash earned a 0% return.
Investor A: Fully Invested from Day one
The first investor, invested the full $100,000 at the onset and remained fully invested throughout the entire period. After 30 years their investment grew to $1,757,316 (i.e. 1,657% return).
Investor B: Gradual Entry on Market Declines
The second investor, took a more cautious approach. They initially invested $50,000 and kept the remaining $50,000 in cash, deploying an additional $10,000 each time the market declined by 5%. The investor became fully invested by December 1997. Over the same period, their investment grew to $1,549,280 representing a +1,449% return.
Investor C: Perfect timing (with hindsight)
While perfectly timing the market is virtually impossible, we tested an idealised scenario where an investor managed to invest at the lowest point of each year.
This investor remained entirely in cash at the beginning and, over the first 10 years, invested $10,000 annually at the lowest point each year. They became fully invested by April 2005. After 30 years, their investment grew to $1,169,115 representing a +1,069% return.
The Key Insight
Even under an unrealistic scenario of perfect hindsight timing, Investor C who waited significantly underperformed Investor A who simply stayed invested. The reason is straightforward: markets tend to rise over the long term. By waiting for the “perfect” entry point, capital remains uninvested and investors miss not only periods of growth, but also the compounding of those returns—something that cannot be recovered later. In many cases, the cost of staying out of the market outweighs the benefit of buying at lower prices. This is further supported by Investor B’s more disciplined, gradual approach which may feel intuitive, but even this strategy lagged behind being fully invested from the outset.
The above analysis is intended to illustrate general investment principles and should only be used as an example. This analysis is based on historical data over a defined period and specific assumptions. Results are sensitive to the chosen timeframe, starting point, and methodology. As such, outcomes may differ under alternative scenarios. Past performance is no guarantee of future performance. Investment return and principal value may go down as well as up and could result in a significant loss of the capital invested.