The impulse to time the market is deeply human. When headlines scream about economic uncertainty, recession fears, or geopolitical crises, pulling your money out feels like the rational, protective thing to do. The problem is that this instinct — however understandable — is one of the most reliably wealth-destroying behaviours in investing.
The math of missing the best days
The stock market's long-term returns aren't evenly distributed across time. They're concentrated in a relatively small number of exceptional days — and those days are nearly impossible to predict in advance.
The S&P 500 averaged approximately 10% annually over the past 30 years. But if you had missed just the 10 best single days in that 30-year period — trying to avoid the bad days — your return would have dropped to roughly 5%. Miss the best 20 days, and you'd be below 2%. This is the hidden cost of market timing: you don't just avoid the crashes. You miss the recoveries.
Why human instincts work against us
Our brains are wired to respond to threats — to act when things feel dangerous. In most of life, that instinct is useful. In investing, it's often exactly wrong.
- We sell during crashes (fear): When markets fall and headlines are dire, the emotional pressure to stop the pain by selling is intense — even though this locks in losses permanently.
- We wait too long to re-enter (regret avoidance): After selling, many investors wait for the market to 'stabilize' before re-buying. But by the time the news feels safe, the recovery has usually already happened.
- We buy near peaks (FOMO): Bull markets attract attention. People often invest most aggressively just before a correction — buying high and then panicking low.
- We overweight recent events: After a crash, we expect more crashes. After a long rally, we expect it to continue. Neither is reliable.
These aren't signs of stupidity — they're signs of being human. The solution isn't to be emotionally superhuman. It's to build a system that removes emotion from the equation.
Dollar-cost averaging: what actually works
Dollar-cost averaging (DCA) is the strategy of investing a fixed amount at regular intervals — monthly or bi-weekly — regardless of what the market is doing. It's not glamorous. It doesn't require predicting anything. And it consistently outperforms market timing for the vast majority of investors.
Here's why DCA works:
- When markets are high, your fixed contribution buys fewer units — naturally limiting your exposure at elevated prices.
- When markets are low, your fixed contribution buys more units — automatically buying more when things are 'on sale'.
- It removes the emotional weight of deciding 'is now a good time to invest?' The answer is always the same: yes, because it's your scheduled contribution.
- It builds the habit of investing consistently — which compounds powerfully over decades.
Set up an automatic monthly contribution
Into your TFSA, RRSP, RESP, or non-registered account — pick an amount you won't miss. Even $200/month builds meaningfully over time.
Choose your funds and don't change them based on news
Market noise is constant. Your fund selection should be based on your goals and risk tolerance — not headlines.
Reinvest all distributions automatically
Don't take distributions as cash. Reinvesting them compounds your returns significantly over long periods.
Review your allocation annually with Carrie
Not because of market conditions — but to ensure your portfolio still reflects your goals, time horizon, and life situation.
The power of staying invested
Every major market crash in history has been followed by a recovery — and in most cases, the recovery has taken the market to new highs. The investors who suffered permanent losses were those who sold during the crash and didn't reinvest during the recovery.
- 2008–09 financial crisis: Global markets fell 40–55%. By 2013, they had recovered to new highs. Investors who held through the crash were made whole.
- COVID crash (March 2020): Markets fell 30–37% in weeks. By August 2020 — just 5 months later — North American markets had fully recovered.
- 2022 bear market: Rising rates caused broad declines. By 2023–24, markets had recovered significantly and moved higher.
The pattern is consistent: short-term pain, long-term recovery and growth for patient investors. The losses are only permanent when you sell and stay out.
What to do when markets feel scary
When volatility spikes and markets fall, here's Carrie's practical advice:
- Don't check your portfolio daily. Short-term fluctuations are noise. Your quarterly or annual statement is the relevant measure.
- Remember your time horizon. If you're investing for retirement in 20 years, today's market level is almost irrelevant. What matters is how much you contribute consistently.
- Call Carrie before making any changes. A 10-minute conversation can prevent an emotionally driven decision you'll regret for years.
- Keep your emergency fund separate. One reason investors panic-sell is that they invested money they might need. Keep 3–6 months of expenses in a liquid account, separate from your investments.
- Remind yourself of the historical record. The market has recovered from every crash in history. There is no historical example of a diversified portfolio permanently going to zero.
The bottom line: Time in the market beats timing the market — over every long-term period that has ever been studied. The best investment strategy is the one you can stick with through uncertainty. Let's build yours together — with the right asset allocation, the right funds, and a plan you can hold on to even when markets are uncomfortable.
Carrie Wang
Carrie is the founder of Seven Lakes Financial Services Inc. and a Sun Life advisor serving clients across Ontario and Saskatchewan. She specializes in retirement, estate, and investment planning, with a warm, personalized approach. She is fluent in English, Mandarin, and Taiwanese.