Waiting for a better moment costs more than getting the moment wrong

The most expensive thing most people do with their money is nothing at all.

I hear the same sentence every few weeks. Markets feel high. There is something in the news. I will wait until things settle down. It sounds careful. It is usually the costliest decision in the whole plan, and because nothing appears to happen, nobody notices it happening.

There are two problems with waiting.

The first is that things never settle down. There is always something. Over the last twenty years there has been a financial crisis, a debt crisis, a pandemic, a war, an inflation shock and more than one election that was going to change everything. At no point did a morning arrive when the news was clear and the road ahead looked obvious. If you are waiting for that morning, you will be waiting a long time.

The second is that cash is not neutral. It feels safe because the number does not move. But a number standing still while prices rise is a loss, just a slow and well mannered one. Money earning less than inflation buys less each year, and because the balance never falls, it never feels like losing.

You can see the size of that gap for yourself on the markets page. Put your own number in and compare what a lump sum would have done in global shares against leaving it where it was. Over ten years the difference is not a rounding error. It is often the difference between stopping work when you wanted to and working a few years longer.

None of which means charging in. There is a sensible middle.

If a large sum makes you nervous, phase it in over several months. That takes the sting out of being unlucky with your timing, and it gets you invested rather than waiting.

Hold enough cash that you will never be forced to sell at a bad moment. That is what the emergency fund is for, and it is why it comes first.

Agree the rules in advance, while you are calm, for what you would do if markets fell twenty per cent. Deciding that in the moment is how people end up selling at the bottom.

The investors I see do best are rarely the cleverest. They are the ones who started, kept adding, and then left it alone.