time in the market beats timing the market

Insert date and price of real stocks you follow and predict when they it is a good entry point or a time to sell. You can easily build a fake portfolio using Google Finance. If you are still not convinced about market timing and you want to try it out, there is a way. Action of the day: Can you read the future? No need to know when is the right time to buy JNJ when you think look at the dividend payment. This is a “stress-free” investment if you look at the dividend payments. When you look at the blue line (the dividend paid), it is going up clock-work. On the other side, the dividend payment has continuously increase year after year. Some had to be patient to recuperate their investment as the company faced challenging times. When you look at the orange line (JNJ's stock price), you will notice shareholders went through good and bad periods. However, during the same period, JNJ's stock price went through some ups and downs: Never missed a payment, never missed a dividend raise. Over the past 53 years, JNJ has increase its dividend payment each year. This thought alone is enough to make me invest now.Īs an example, let’s take the “mother of all dividend stocks,” Johnson & Johnson ( JNJ). If you wait on the sideline for 2-3 years and wait for the perfect timing, the company you have been looking at will increase its dividend payout by 5-10% each year without sending a single cheque. I will discuss the power of dividend growth investors in another part of this series, but for now, I will start by telling you that the true power resides in the compounding growth rate of the payouts received. Are you rich enough to leave all that money to other investors? I’m not. Therefore, sitting on the sideline and waiting for the next market dip is also synonym of losing 2, 3 even 4% dividend return per year of waiting. In fact, the dividend payouts of many companies would increase even during market corrections. In 2008, your portfolio would have probably show something around -30%, but the dividend payments received throughout the year will more or less be the same than the one in 2007. One of the major advantage of dividend investing is to get paid while you wait. While trying to play the crystal ball reader will not likely work out well, it’s probably even worse if you intend to invest in dividend-paying stocks. Market timing doesn’t do well for dividend investors Therefore, those who try to find the great entry point will most probably never find it. Why? Because the market is going ups and downs but no one can really know when it will happen. This graph explains that if you miss the 30 top days in any trading years, you will most probably end-up in the red. Source: SchwabCenter for Financial Research ( Investopedia) We hate spam just as much as you & will respect your privacy

Time in the market beats timing the market