This article written by Vanguard explores a common investing question: whether it is better to wait for the “right” time to invest or to begin investing despite uncertainty.
It outlines how fear, negative headlines and short-term market movements can lead people to delay decisions that may support their long-term financial wellbeing.
It also reinforces that effective investing is typically grounded in patience, discipline and a focus on long-term objectives, rather than attempting to predict market movements. The article encourages investors to focus on the elements within their control and to avoid allowing short-term uncertainty to disrupt a well-considered long-term strategy.
Analysis of 25 years of data proves that even if the timing is all wrong, staying invested delivers significantly higher long-term wealth.
One of the most common fears investors face is putting money into the market today, only to see asset prices fall significantly tomorrow.
It’s understandable. When headlines are dominated by war, tariffs, inflation risks and AI spending concerns, as has been the case in recent weeks and months, it’s natural for investors to second-guess whether now is the right time to invest.
For many Australians, that uncertainty leads to analysis paralysis. Some delay investing altogether, waiting for a so-called “better time”. Others move to cash after markets fall, telling themselves they’ll get back in when things feel calmer while crystallising real losses in the process.
In all cases, the instinct is the same: avoid the pain of losing money, even if it’s on paper.
But history, along with decades of market data, teaches us something important: even investors with the worst luck in market timing have been better off staying invested than staying out.
Even with the worst possible timing, investors who remain invested through market downturns have generally achieved better long-term outcomes relative to those who take no risk.
At Vanguard, we recently tested the notion of bad luck in an investing context by examining the returns made by a hypothetical investor who managed to put money into the market during three of the worst moments in recent history. Let’s call him Unlucky Steve.
Steve invested $10,000 in a diversified global equities portfolio, represented by the FTSE All-World Index, just before the internet bubble burst in 2000. He then invested another $10,000 immediately before the global financial crisis of 2008, and a final $10,000 before the COVID-19 sell-off in 2020.
Even the unluckiest investors would have earned a decent return
Notes: Calculations are based on the FTSE All World (TR AUD). A bear (bull) market is defined as a price decrease (increase) of more than 20% relative to the previous peak (trough). The plotted areas depict the losses (gains) between a peak (trough) and the subsequent trough (peak).Time period observed: 31/12/1995 to 31/12/2025. An investment in cash is expected to grow by the 90-day Bank Bill Index.
Source: Vanguard calculations based on data from factset.
Past performance information is given for illustrative purposes only and should not be relied upon as, and is not, an indication of future performance.
It is hard to imagine worse luck – after making these investments, equity markets declined at least 20 per cent. Yet Steve held on through every crash, every recovery, every negative headline and every new market high over those 25 years.
By the end of last year, Steve’s $30,000 of invested capital had grown to $117,017 before fees, taxes and transaction costs and assuming all dividends were reinvested – a return of 7.6 per cent a year. Had he stayed in cash instead, his portfolio would be worth $54,165.
What makes this even more powerful is everything that happened in between those crises: the September 11 attacks, the Iraq War, Enron’s collapse, repeated bank bailouts and failures, the European debt crisis, US credit rating downgrades, a pandemic and years of recession fears and interest rate shocks.
Unlucky Steve’s experience highlights that even with the worst possible timing, investors who remain invested through market downturns have generally achieved better long-term outcomes relative to those who take no risk.
That’s because the reality is that accurately calling market highs and lows is extremely challenging. Attempts to delay investing or move to the sidelines often mean missing periods of recovery.
Staying the course in markets is not about ignoring risk. It’s about recognising the difference between short-term volatility and negative headlines versus long-term wealth creation.
This is reinforced by the latest Vanguard Index Chart, which shows returns for major asset classes have been positive across 10, 20 and 30-year periods.
Even the poorest entry points are consistently overcome by being patient and giving investments the time needed to recover and compound.
Specifically, in the three decades to June 2025, Australian shares delivered 9.3 per cent a year, while US shares returned 10.8 per cent annually, and global shares 8.3 per cent annually. Even Australian listed property and fixed income provided 8 per cent and 5.5 per cent a year, respectively.
When we consider the data, Unlucky Steve shows us even the poorest entry points are consistently overcome by being patient and giving investments the time needed to recover and compound.
The real challenge is ensuring your portfolio is built to withstand the natural volatility that comes with investing by focusing on the elements you can control: setting clear goals, establishing an appropriate asset allocation, maintaining broad diversification, staying disciplined and keeping costs low.
For Australians navigating what seems to be an endless barrage of negative headlines, the key takeaway from this exercise is straightforward.
The real risk is not investing at the wrong time – it’s never getting started at all.
The information provided is factual only, and does not constitute financial advice. If you need to speak with a Financial Adviser before making a decision, you can contact us via the button below.