However, historical data shows that investing cash when the market is high is likely to produce even higher future returns. Don't believe it? See the chart from J.P. Morgan below - investing on days where the S&P 500 closed at a new all-time high can actually produce better returns than investing on a day where the market didn't set a new record.
Most people realize trying to time the market by always buying low and selling high isn't a realistic endeavor. Yet even with that knowledge, if you have a substantial amount of cash to invest, the thought of investing when the stock market is hovering near all-time highs may give you pause. Similarly, when facing the opportunity to 'buy the dip' (remember March 2020?), few investors have the stomach to do so. However, historical data shows that investing cash when the market is high is likely to produce even higher future returns. Don't believe it? See the chart from J.P. Morgan below - investing on days where the S&P 500 closed at a new all-time high can actually produce better returns than investing on a day where the market didn't set a new record. Furthermore, history shows as the number of years you stay invested increases, the risk of losing money decreases. This is why we call it long-term investing. Don't believe it? See the chart from BlackRock below. Finally, in the last 20 years, 70% of the best days in the market happened within 14 days of the worst ones. You can't get one without the other. But if you try to time it, it can cost you dearly. So if you're afraid to invest because the market is up or down, consider the cost of missing the best days. Deciding whether or not it's a good time to invest shouldn't have much to do with recent market conditions. See the chart from JP Morgan below as a proof.
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