Money Talk

Don’t Mess With Market Timing

The truth is, no one knows what the market is going to do today, tomorrow, or in five months.

Let’stalk about market timing. If someone tells you they know what the market is going to do tomorrow, you know one of three things:

    1. They’re lying. 99.99999% they’re lying.
    2. They’re doing something illegal.
    3. They’re a magical genie, and as such should be treasured and possibly worshipped.

via GIPHY

The truth is, no one knows what the market is going to do today, tomorrow, or in five months. That’s why market timing (aka predict when prices will rise and fall) is impossible. People have been notoriously crummy at it for awhile.

While we may not know what the prices of individual assets are going to do on a day-to-day basis, history does point to one thing: the market has risen over time. Even after major down periods like the Recession of 2008 or The Great Depression, the market continued to bounce back.

So if the market has a history of increasing but we don’t know which individual assets are going to go up/down in price, how do we have any hope of investing successfully?

The answer is through growing passively with the market over the long-term while minimizing fees along the way.

Growing Passively

Instead of trying to determine which stocks and bonds are individual winners and losers, WiseBanyan uses ETFs – low-expense ratio index funds – to track the market. One ETF contains thousands of individual securities. Therefore, a handful of ETFs across different sectors can mirror how the market is generally doing as a whole. This way, your portfolio can grow with the market as opposed to attempting to beat it. Another great thing about ETFs is that it only takes a few of them to create a widely diversified portfolio.

Minimizing Fees

WiseBanyan charges no trading, management, or hidden fees, so you can be confident your returns aren’t being held back unnecessarily. In addition, we invest our clients in ETFs that, unlike mutual funds, have lower expense fees and don’t engage in the constant buying and selling of assets, which helps to avoid a mountain of capital gains taxes. Rather, WiseBanyan holds your ETFs long-term, avoiding these ultra-frequent taxes.

Investing For The Long-Term

WiseBanyan helps set you up with the right kind of investments with the lowest fees possible, but the last investing ingredient is up to you: time. Growing with the market is all about investing for the long-term. Our investment strategy is designed to work best when it’s employed for the long haul. Doing so can better save you money on taxes, grow your wealth reliably, and keeps the process simple and low-stress throughout.

The good thing about time? It’s free. All you need to do is relax.

By growing with the market, minimizing fees, and investing for the long-term, you can begin investing strategically.

Remember, as tempting as market timing can be, there is virtually no way to predict what will happen tomorrow, next month, and especially not next year. However, by having a long-term view coupled with a passive investment strategy, your money should consistently grow with the market over time.

Photo by petradr on Unsplash

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Aliza Kellerman Aliza Kellerman is the Manager of Content Strategy at WiseBanyan. When she's not writing about the life and times of the IRA, she's hanging out with her pug.