Why time in the market matters more than timing the market

When markets become volatile, it’s natural for investors to feel uneasy.

Periods of uncertainty can create a temptation to “step out” of investments and wait until things feel calmer before reinvesting. On the surface, this can seem like a sensible way to protect your wealth.

But history shows that trying to time the market can come at a significant cost.

The reason is simple: the market’s best days are incredibly difficult to predict.

And missing even a small number of them can have a dramatic impact on long-term investment returns.

The cost of missing the best days

Analysis of the FTSE All Share Index between May 1985 and December 2025 demonstrates this clearly.

If an investor had placed £10,000 into the FTSE All Share and remained invested throughout the entire period, their investment would have grown to £374,665.

However, if they had missed some of the market’s strongest days, the outcome would have looked very different:

• Missed the 10 best days: portfolio value falls to £191,300

• Missed the 20 best days: portfolio value falls to £122,318

• Missed the 30 best days: portfolio value falls to £81,701

• Missed the 40 best days: portfolio value falls to £56,650

• Missed the 50 best days: portfolio value falls to £40,540

• Missed the 60 best days: portfolio value falls to £29,656

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To put that into perspective, missing just the 10 best trading days over a 40-year investment journey would reduce the final value by almost 49%.

Miss the 30 best days, and the portfolio value falls by nearly 78%.

That’s the power of staying invested.

Why market timing is so difficult

Many investors believe they can avoid losses by moving to cash during periods of market stress and reinvesting once the outlook improves.

The challenge is that markets rarely give clear signals.

In reality, the market’s strongest days often happen during periods of uncertainty — sometimes very close to its worst days.

This is one of the biggest reasons why market timing is so difficult.

In fact, many of the best-performing days in the data above occurred during the 2008 global financial crisis, at a time when investor confidence was at its lowest and uncertainty was at its highest.

For investors who moved to the sidelines during that period, there was a real risk of missing the early stages of the recovery — and with it, some of the strongest gains.

By the time confidence returned, much of the rebound had already happened.

This is why staying invested through difficult periods can be so important.

The power of compounding

Long-term investing benefits from one of the most powerful forces in finance: compounding.

Compounding means your returns generate returns of their own over time. But this only works effectively when you remain invested.

Interrupting that process by moving in and out of markets can significantly reduce its impact.

Even short periods out of the market can have lasting consequences.

Focus on what you can control

No one can consistently predict short-term market movements.

What investors can control is:

• Having a clear financial plan

• Maintaining a diversified portfolio

• Investing with a long-term mindset

• Avoiding emotional decisions during periods of volatility

These factors often have a far greater influence on long-term success than trying to second-guess the market.

Final thoughts

Volatility is a normal part of investing.

While short-term uncertainty can feel uncomfortable, history suggests that remaining invested through market cycles has often led to better long-term outcomes than trying to time market entry and exit points.

The biggest risk for many investors is often not market volatility itself — it’s being out of the market when recovery happens.

Because when it comes to investing, some of the most important days are often the easiest to miss.

Source: Liontrust, Morningstar. FTSE All Share total return data, May 1985 – December 2025.

Important information: Past performance is not a reliable indicator of future performance. The value of investments can fall as well as rise, and investors may get back less than originally invested. This article is for information purposes only and does not constitute financial advice. If you are unsure whether an investment is suitable for your circumstances, please seek professional advice.