Investors: This Is the Most Expensive Risk You Might Be Taking Without Even Realizing It
Investing can be risky, but so can not investing.
Overview
Long-term investors know the risks involved with investing, which is why they are long-term investors. They protect themselves from risky markets filled with short-term volatility by having a diversified portfolio of well-managed, well-capitalized companies with long-term growth potential that can help them ride out the ups and downs.
But if you try to time the market, jumping in when stocks are on a dip and cashing out after they rise a certain amount, you're inviting a certain degree of risk -- the risk of not maximizing your investment. That's because you don't really know if you are buying low and selling high, and you are risking missing the best days.
Details
An analysis by Fidelity Investments found that missing the top five days on the stock market from 1987 through 2025 would reduce a hypothetical portfolio by 38%. Missing the 10 best days would reduce it by 55%, and missing the 30 best days would drop its value by 84%.
Source
Originally published at www.fool.com.
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