Timing is the key

The stock market can be a great place to invest over the long term but sticking to your investment plan during the tough times can be difficult.

You may decide to try a 'market timing' strategy, where you aim to sell when share prices are high and buy when they are low. A market timing strategy may seem appealing but in practice it is extremely difficult. There is a high risk that you will end up locking in the losses suffered from a fall, while missing out on gains when the market picks up.

A better strategy to meet your goals is to remain invested, be patient, and let your investment plan work for you.

The charts below show that the longer you invest, the higher the chance that you will achieve positive returns and lower the chance that you will lose money. The charts illustrate what would have happened during the period from 28 January 1984 to 30 January 2009 if you had invested for any ten-year, five-year, or one-year period. There were a total of 181 possible ten-year periods over this time and you would have made money if you had invested over almost all of them. In contrast, out of the 289 possible one-year periods, you would have lost money 25% of the time.