Should You Invest in the S&P 500 Right Now or Wait? History Offers a Clear Answer.
Hope isn't an investment strategy, but being an optimist tends to pay well.
Overview
The S&P 500 (SNPINDEX: ^GSPC) has soared higher over the past few months, putting the famous stock market index up 18% over the past year. At approximately 20.4 times expected earnings, the S&P 500 has become notably more expensive than its 30-year average of 17.2. It's a legitimate cause for concern; the price you pay for stocks always matters.
However, it's not as simple as avoiding the stock market until prices come down. Expensive markets don't always fall. Meanwhile, trading in and out requires constantly guessing correctly about something that nobody can predict: what the market might actually do next. History shows that investors are better off simply investing as much as possible in the S&P 500 for as long as possible, riding the volatility as it comes.
Details
In 2023, Vanguard published a study that used historical and simulated stock market data to compare different investment strategies. It found that 68% of the time, someone who invested a lump sum outperformed someone who spread that investment out over time, a strategy known as dollar-cost averaging. Even though dollar-cost averaging can be a great method for investing in individual companies, the broader market tends to go up more often than it goes down.
Source
Originally published at www.fool.com.