The true cost of ill-timed investment decisions

Volatile markets in 2020 have tempted some investors to try to time the markets. But research shows how difficult and costly this can be.


There have been some jaw-dropping moves in stock markets since the turn of the year and the outbreak of the Covid-19 pandemic.

A near 11-year record bull-run for US stocks came to an abrupt end in early February. What followed was the shortest and sharpest correction in stock market history as economies shut down.

Quick action taken by governments and central banks to support the global economy soon saw a rapid bounce back.


Timing the market

The volatile swings have presented opportunities, tempting some investors to try to buy when the market was at its low and sell when it bounced back.

However, timing the market is notoriously difficult.

This research shows that, even over a short period such as the last six months, trying to time the market could have proved costly. This is because some of the biggest market moves – in either direction – often happen in just a few days. Whether or not you are invested on those days plays a big part in determining the outcome.

An investment of $1,000 on 1 January 2020 and left alone, even as markets swung wildly, would have been worth $1,012 by 17 July.

However, if you had tried to time the market and missed the 10 best days, the same investment would now be worth $574.

Time in the market

The last three decades have seen some of the biggest stock market crises in history.

The dot com bubble, the global financial crisis and now the pandemic have all caused huge volatility in markets.

Mistimed decisions during that period on an investment of $1,000 could have cost you nearly $14,000-worth of returns.

If in 1990 you had invested $1,000 in the S&P 500 and left the investment alone for the next 30 years it would now be worth $17,074. (Bear in mind, of course, that past performance is no guarantee of future returns.)

However, if you had tried to time your entry in and out of the market during that period and missed out on the index’s 30 best days the same investment would now be worth $2,934, or $14,139 less.

Return on $1,000 in S&P 500 since 1990


Return on $1,000

Annualised return

Fully invested



Missed the 10 best days



Missed the 20 best days



Missed the 30 best days



Past performance is not a guide to future returns.

Source: Schroders. Thomson Reuters Datastream. Data shown is for the S&P 500 total return index, which dividend payments, between 23 July 1990 and 23 July 2020. Returns not adjusted for fees or inflation.

Nick Kirrage, a Fund Manager, Equity Value, and a blogger on the Value Perspective, said: “You would have been a pretty unlucky investor to have missed the 30 best days in 30 years of investing, but the figures make a point. The point is that timing the market can be very, very costly.

Investors are often too emotional about the decisions they make: when markets dive, too many investors panic and sell; when shares have had a good spell, too many investors go on a buying spree.

The irony is that historically many of the stock market’s best periods have tended to follow some of the worst days, as shown in previous research.

It’s important to have a plan for how long you intend to stay invested, with that plan matching the goals of what you’re trying to achieve, be it money for retirement or your children’s university education. Then it's just a matter of sticking to it - don't let unchecked emotions derail your plans.”

Important Information: The views and opinions contained herein are those of the author, and may not necessarily represent views expressed or reflected in other Aspect8 communications, strategies or funds. This material is intended to be for information purposes only and is not intended as promotional material in any respect. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide and should not be relied on for accounting, legal or tax advice, or investment recommendations. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Past performance is not a guide to future performance and may not be repeated. The value of investments and the income from them may go down as well as up and investors may not get back the amounts originally invested. All investments involve risks including the risk of possible loss of principal. Information herein is believed to be reliable but Aspect8 does not warrant its completeness or accuracy. Reliance should not be placed on the views and information in this document when taking individual investment and/or strategic decisions. Some information quoted was obtained from external sources we consider to be reliable. No responsibility can be accepted for errors of fact obtained from third parties, and this data may change with market conditions. This does not exclude any duty or liability that Aspect8 has to its customers under any regulatory system. FTSE: FTSE International Limited (‘FTSE’) © FTSE 2016. ‘FTSE®’ is a trademark of London Stock Exchange Plc and The Financial Times Limited and is used by FTSE International Limited under licence. All rights in the FTSE indices and/or FTSE ratings vest in FTSE and/or its licensors. Neither FTSE nor its licensors accept any liability for any errors or omissions in the FTSE indices and/or FTSE ratings or underlying data. No further distribution of FTSE Data is permitted without FTSE’s express written consent. Regions/sectors shown for illustrative purposes only and should not be viewed as a recommendation to buy/sell. This content is issued by Aspect8 Limited, registered address: Holmwood, House, Broadlands Business Campus, Langhurstwood Road, Horsham, West Sussex, RH12 4QP, number 07572431. Aspect8 Limited is a member of Best Practice IFA Group Ltd which is authorised and regulated by the Financial Conduct Authority FCA No. 227247.


Benchmark Financial Planning is an Appointed Representative of Best Practice IFA Group Limited which is authorised and regulated by the Financial Conduct Authority, the registration number is 223112. Registered office: Broadlands Business Campus, Langhurst Wood Road, Horsham, West Sussex, RH12 4QP. Registered in England and Wales No 07572431.

The Financial Ombudsman Service is available to sort out individual complaints that clients and financial services businesses aren't able to resolve themselves. To contact the Financial Ombudsman Service, please visit

The guidance and/or advice contained within this website are subject to the UK regulatory regime and are therefore targeted at consumers based in the UK.