They say, “Good things come to those who wait.” And while that might apply to some areas of life, when it comes to investing did you know that “wait and see” is one of the worst strategies you can adopt?!
Now, the allure of waiting is understandable! It feels prudent and cautious—like taking a deep breath before diving in. It even aligns with common wisdom that says, “Don’t be greedy, don’t rush!”
But here’s the kicker, the market doesn’t reward procrastination. It rewards time in the market, not market timing.
Time in the market = action then patience. Timing the market = patience then action
Let’s look at why the "wait and see" approach often leads to missed opportunities and what you can do to avoid falling into this trap.
Why Do People "Wait and See"
Based on my observations and experience, there are a few reasons this mindset is so prevalent:
Short-Term Pessimism. Many investors are inherently short-term pessimists. They believe the market will drop tomorrow or next week, even if they’re optimistic about long-term growth. But here’s the question: how short is “short term”? A day? A week? A month? The market’s behavior in the short term is wildly unpredictable, so basing your investment decisions on this assumption is a recipe for inaction.
Market Timing Illusion. “I’ll invest when the market hits the bottom” is a common refrain. But how do you know when the market has bottomed out? You don’t. By the time the market feels "safe" again, most of the gains will already have happened. Market timing isn’t just hard; it’s nearly impossible to get consistently right.
Analysis Paralysis. Some people want to fully understand every detail of investing before starting. They think, “Once I understand everything, then I’ll invest.” But waiting for perfection is like saying, “Once I’m an expert swimmer, then I’ll jump into the pool.” Investing is learned through doing—not endless analysis.
The "I Need to Save More" Excuse. Others believe they need to accumulate a significant amount of savings before investing. While this sounds logical, it overlooks the eighth wonder of the world (as Warren Buffett said): compounding interest: the earlier you start, even with small amounts, the more time your money has to grow through compounding.
The Danger of Waiting
The real risk of waiting isn’t just missing out on market gains; it’s that you might never start. Behavioral inertia—the tendency to stick with the status quo—is a powerful force. Every month you delay investing is a month less for your money to work for you.
Consider this: imagine two investors. Investor A starts investing $100 a month at age 25, while Investor B waits until age 35 but invests $200 a month. Assuming a 7% annual return, who ends up with more money by age 65? Investor A wins handily, despite investing half as much monthly.
Investor A has roughly $264,000 in the end, while Investor B only has about $245,000. Not only this, but Investor A only had to contribute $48,000, whereas Investor B had to contribute $72,000. This means Investor A had more money to contribute toward other goals, while ending up with more at the end!
That’s the power of compounding.
Breaking the Cycle: How to Get Started Today
If you’ve been stuck in a "wait and see" mindset, here’s how to take the first step:
Start Small Begin with an amount so small that you won’t even notice it’s gone. For some, this might be $25 a month. For others, it could be much more. The important thing is starting.
Use Dollar-Cost Averaging If you have a larger sum to invest but are worried about timing, divide it into smaller amounts and invest periodically—say, monthly or quarterly. This reduces the risk of investing everything at a market peak and ensures you’re consistently entering the market.
Automate Your Contributions Set up automatic transfers into your investment account. Automation removes the need for decision-making and helps you stay consistent.
Focus on Your Plan, Not the Headlines Markets are noisy. Headlines are designed to grab attention, not guide your financial decisions. Instead, focus on your goals and the long-term plan designed to achieve them.
Waiting might feel safe, but it is often just fear wearing a mask of prudence. The truth is time in the market—not timing the market—is the key to building wealth. Don’t let short-term worries rob you of long-term gains. Start now, start small, and let the power of compounding work its magic.
The best time to start investing was yesterday. The second-best time? Today.
Ready to take the next step? Schedule a consultation with us to create a personalized plan tailored to your goals. Let’s turn your "wait and see" into "start and grow."