I've been reading a lot of chatter online about the current economic situation – and it got me thinking about early 2020. Think Tiger King. Blinding Lights TikTok dances. A little pandemic-y feeling around the place.

As COVID became more present in our lives, the stock market fell off a cliff. And many people did what felt completely logical at the time.

They waited.

By the time things felt safe again, the market had already recovered. The people who'd been waiting had missed it, even though most of them knew the argument for just getting in and starting an investment journey.

That's the trap. And right now, with markets doing what they're doing, a lot of people are falling into it again. Let’s talk about time in the market versus timing the market.

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This week, I was reading a Reddit thread where someone had been sitting on a pile of savings for two years, watching the market climb the whole time. Now, they were trying to decide whether to invest that money today or hold off because of the uncertainty about what lies around the corner. And honestly? That's not stupidity. It's just how our brains work - the fear of buying right before a downturn is a lot more vivid than the slow, quiet cost of sitting out.

Our brains treat the pain of a loss roughly twice as intensely as the pleasure of an equivalent gain. So paralysis feels like the careful move. 

But, with your permission, I’d like to challenge that. May I?

Thanks! Let me throw this idea out there: at our stage of life, compounding beats waiting. 

Here's what compounding actually means in practice. The longer your money stays invested, the more time it has to grow (sometimes slowly, and certainly with ups and downs) over time. 

Let’s say over a 20-year period (with many ups and many downs) you earn an average of 10% per year, on a lump sum investment with no additional contributions, starting seven years earlier isn't a minor advantage - it can be the difference between $640k and $1.28 million on the same initial investment.

That gap doesn't come from picking better stocks or timing a better entry. It comes entirely from starting sooner.

Which brings us to the number I keep coming back to: it’s been said that missing the Australian sharemarket's 10 best single days over two decades could roughly cut your total returns in half. Ten days. Out of more than 5,000 trading days. Those days are impossible to predict - and they often happen right in the middle of downturns, when everything feels like a reason to stay out.

The second idea is dollar-cost averaging - and it solves a different problem entirely.

Instead of finding the perfect moment to invest a lump sum, you could invest a fixed amount at regular intervals (say $200, once a month for example), regardless of market conditions. When prices are low, your fixed amount buys more units. When prices are high, it buys fewer. Over time, this smooths out the peaks and troughs automatically.

But the value here isn't just mathematical: it's also psychological. You're not trying to be brave at the worst possible moment. You're just following a schedule. The decision has already been made - you don't have to make it again every time the news gets scary.

There's a phrase that gets thrown around in investing circles: time in the market beats timing the market. I used to think people said it to sound smart.

Turns out it's just true. But more than that - it's kind. It's the investing world's way of saying you don't have to be clever about this. You don't have to read the signals correctly, call the bottom, or have better information than everyone else. 

That's genuinely available to everyone - from the person who's been sitting on the sidelines for two years, waiting for a moment that feels right, to the friend reading this, ready to give this all some proper thought.

Invest smarter, not harder

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