Waiting for Market Crash Costs Investors More Than Investing at Highs
Overview
Data from multiple fund houses shows that attempting to time the market by waiting for a crash is a losing strategy. Missing just a few strong trading days significantly erodes long-term returns, suggesting that consistent investment and time in the market are more crucial than picking entry points.
The Cost of Waiting
Many investors are pausing their investment plans, hoping for a market correction to buy at lower prices. This instinct to buy low is understandable, but data consistently shows that market timing rarely improves long-term outcomes. Staying on the sidelines can mean missing out on significant gains.
Data Debunks Market Timing
Analyses by DSP Mutual Fund, Capitalmind Mutual Fund, and PGIM India Mutual Fund highlight the futility of market timing. DSP's study on the Nifty 500 Total Return Index (TRI) between April 2005 and November 2025 revealed that seven-year rolling SIP returns clustered narrowly, with little difference based on entry points. For instance, returns were 13% starting from a market high, 14% after a 20% rally, and 12% after a 20% fall.
Capitalmind's research from January 1995 to August 2025 on the Nifty 500 Index found that a 'lucky' investor buying at the annual low earned 16% annualized returns. Even an 'unlucky' investor buying at the annual peak earned a respectable 13.7%. A regular investor, buying on the first trading day, achieved 14.7%, while 90% of random investors fell within a 14.7-15.3% return range.
The Power of Time in Market
PGIM India Mutual Fund's data from September 2001 to December 2025 showed that staying fully invested in the Nifty 500 TRI yielded 17.3% annualized returns. Missing the 10 best days would have slashed returns to 13.7%, and missing 50 best days would have reduced them to 4.7%. Abhishek Tiwari, CEO of PGIM India Mutual Fund, stressed that capturing these best days requires a longer investment horizon.
FundsIndia's analysis of the Nifty 50 since its June 1999 inception showed the index delivered over 12% returns on a seven-year rolling basis nearly 70% of the time. Dhirendra Kumar of Value Research explained that Systematic Investment Plans (SIPs) automate this by averaging costs, buying more units when markets are weak. This strategy patiently builds long-term returns.
