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‘Timing’ the market can be costly

Lonsec-Research/index/market/

19 February 2018
| By Oksana Patron |
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The cost of ‘timing’ the market and deviating from your strategic asset allocation when market are volatile can be great, according to Lonsec Research.

The firm carried out the experiment in which it was looking for answers of what would have happened if investors had missed the best trading days of the Australian equities markets over the last 15 years.

According to Lonsec, if they had invested in the S&P/ASX 300 index between 2013 and the end of 2017, they would see the annualised return of 9.42 per cent.

However, in the worst case scenario, if they had mistimed the market and missed out on the best 50 trading days, the annualised return would be -3.42 per cent over the same period.

Additionally, by being out of the market, investors would risk missing out on the market rallies which typically followed market downturns, the firm said.

Lonsec’s chart shows the growth of $10,000 invested from the start of January 2003 and shows the impact on growth when investors miss out on the top trading days.

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