There is a difference between speculating and investing, and most investors don’t recognize that difference. The American Heritage Dictionary defines investing as “acquiring property for future income” and speculating as “engaging in risky business transactions on the chance of great profit.” On which would you rather stake your retirement claim?
A large number of investors like to believe that they can time the market. Nothing could be farther from the truth. Instead of trying to outsmart the markets and failing in the process, adopt a more scientific approach. Use a systematic investment plan and invest regularly to benefit from the markets. Don’t try to beat the markets, join them instead!
There are a lot of stories about investors who tried to get the highest return possible by moving all of their retirement money in and out of stocks when he thought the market was headed up or down. Yes, some were successful once in a while, but many also experience significant investment losses, losses that easily take away previous gains. And when they suffer a big loss just years before they planned to retire, they have to postpone their retirement indefinitely. As things turn out, they are usually better off sticking with an investment program designed to meet their long-term goals.