Thus, if you hold equities for many years, you can expect to realize significant positive growth in your wealth. This is the management risk referred to earlier. Underperforming the market benchmarks is a big risk to which many people are oblivious. The more years you remain with a subpar performer, the greater the damage to your nest egg. Weed out funds that have lagged their peers over the past 18 to 24 months.
Market timing is especially easy to do with mutual funds.
Resist the temptation. Participation in the best up months is far more important than avoiding the worst down months, and the really dramatic upward surges in stocks are unpredictable, of short duration, and few and far between. Market timers risk being in cash when the bull stampedes. Missing out can make a big difference in your long-run returns. Investing monthly in a specific stock is a great way to build wealth and cope with market ups and downs.