The advantages of investing regularly on a schedule

Two years into his new job, Ibrahim has saved a big part of his salary in preparation for making a big investment. In trying to enter the market when it is low, he has been waiting for over a year despite having the funds. In fact, he went one step ahead and took out the money he had already invested out of the financial market, thinking he would re-enter when it’s low. Ibrahim is trying to time the market, which is defined as trying to predict when the market will rise and fall, to maximize profits from these movements.

Experts caution, however, that trying to time the market can be counterproductive. Data shows that in two decades between 2004 and 2024, the best and worse days for the market occurred very close to each other, which means an investor trying to enter or exit at lows and peaks would have a lot of chances of making a mistake.

So what is better?

1. The time is now:

The cost of waiting for the right time or the best time means that your wealth is not growing while you wait. Investing as soon as possible in the most suitable assets gets you started on your wealth journey.

Don’t procrastinate. Waiting for a good time to start investing means losing out any benefits.

2. Stay consistent:

Being a consistent investor helps you take advantage of predictability. Some investors choose to invest at a certain time each year, once a year.

Just being in the market can mean the difference between being part of a cycle regardless of current conditions.

3. The high cost of short-term investments:

A short-term approach in trying to time the market requires you to exit and enter the market constantly, which increases the cost of transactions.

A long-term approach protects you from mini-transactions that result in higher costs. Take advice before investing and plan for the long term.

4. Invest regularly:

If you invest regularly at a set timetable you can take advantage of cost averaging in a way that losses are offset by gains. The result is that your investments grow at an averaged-out rate.

Timing the market has emotional costs too, which can be offset by averaging the gains and losses.

If you want to take advantage of dips in the market to enter when it slows, set aside some cash just for that. Don’t let it affect your whole portfolio or investment journey.

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