Feeling Lucky? Don’t Chance It with Your Investments

By Pamela Murphy - March 15, 2018

If you feel lucky about buying when the market's down or selling when it's up, this may cost your portfolio. No one knows how the markets will move next, which makes it difficult to time when to buy or sell. Research consistently shows that trying to "time the market" can lower your returns substantially.

Instead of being distracted by short-term trends that may temporarily affect the markets, keep your goals in mind. If you're investing for retirement, it may be better to limit portfolio reviews to a set schedule, instead of when you may be reacting to headlines.

The Cost of Market Timing

Your chances of generating a positive return improves the longer you stay fully invested. Research confirms your best strategy is not trying to time the market but spending time "in" the market. Of course, this doesn't ensure a profit or guard against a loss when markets decline, and past performance is no guarantee of future results.

Your Long-Term Goals Deserve an Established Approach

Markets are going to change. And when that happens, you may be tempted to jump out. Taking chances like that could affect your long-term investments. And it may even cause you to miss out on the best days in the market. Look at the drastic difference below: $9,000 vs. $43,000!

Jumping in and out of the market may cost your portfolio

Growth of $10,000 in the S&P 500® Index, 20 Years Ending December 31, 2017.
Source: FactSet.

Three Tips to Consider Implementing Now

Make It Automatic

One way to be sure you regularly invest for your future and take advantage of market swings is to use an automatic investment plan. Having one in place may help you from letting emotions drive your investing decisions.

Mix It Up

Create a portfolio that is a mix of stocks, bonds and money markets securities—called asset allocation. When you spread your investments across different types of assets you may lower your overall risk.2

Check In

At least once a year, make sure your portfolio still meets your goals, comfort level with risk and timeline. If things have changed, use our tools or call us to help get back on track.

The bottom line? Don't count on luck—make informed decisions. Your investment goals are important. You can save yourself unnecessary stress and anxiety in the short-term if you have your long-term plan in place.

Pamela Murphy
Pamela Murphy
  • Related Articles
  • More From Author

Why Gender Equality Should Matter to Investors and Companies

Investors are starting to view gender diversity as a value driver—a view supported by academic research. In recognition of International Women’s Day, two of our ESG analysts discuss what gender-balanced workplaces mean to the bottom line.

More Invested in You

You work hard to provide for yourself, your family, your legacy. So do we. Put our passion for investing to work for your future.

Investing with Heart; Today & Every Day

For American Century Investments, the idea of investing with the heart starts with a love story. Learn how we live the story of our founder every day.

    6 Sayings Investors Should Ignore

    Investing advice is readily available—but that doesn't mean it has merit. Today we set the record straight to help you achieve your financial goals.

    Feeling Lucky? Don't Chance It with Your Investments

    Don't chance trying to time the market with your investments. Learn why your best strategy may be spending time "in" the market.

    Expecting a Baby? Plan for a Lifetime of Expenses

    Whether you carefully planned for children, or you were pleasantly surprised, at some point finances need to be considered. It doesn't matter if Junior is two years old or 12 years old, it's never too late to make sound financial decisions for the whole family. Here are some tips to get you started.

      1 Sources: Global Financial Data Inc., FactSet; Standard & Poor's; American Century Investments®. The chart shows holdings of 90 one-year periods, 86 five-year periods, 81 ten-year periods and 76 fifteen-year periods. The data assumes reinvestment of all income and does not account for taxes or transaction costs. Stocks are not guaranteed and are more volatile than other asset classes. Stocks provide ownership in corporations that intend to provide growth and/or current income. Capital gains and dividends received may be taxed in the year received. An investment cannot be made directly in an index.

      2 This strategy doesn't assure a profit. It is possible to lose money with an asset allocation and diversification plan.

      Investment return and principal value of security investments will fluctuate. The value at the time of redemption may be more or less than the original cost. Past performance is no guarantee of future results.

      The opinions expressed are those of American Century Investments (or the portfolio manager) and are no guarantee of the future performance of any American Century Investments' portfolio. This material has been prepared for educational purposes only. It is not intended to provide, and should not be relied upon for, investment, accounting, legal or tax advice.