Time in market

Investing in the stock market is a useful, time-tested way to grow your wealth over time. However, some people find it easy to get carried away with the idea of “timing the market” – trying to buy low and sell high in order to maximise profits. While this strategy can work for some investors, it can also be risky. An alternative approach is to focus on “time in market” – the amount of time you spend invested in the market. In this guide, we’ll explore what time in market is, the difference between time in market and timing the market, and which approach might be better for you.



Time in market refers to the length of time that an investor holds their investments. It’s a measure of how long an investor stays invested in the market, regardless of short-term fluctuations. The idea behind this is that, over longer periods of time, the stock market tends to go up, even if there are short-term dips and corrections along the way. By staying invested in the market for longer periods of time, investors can take advantage of this long-term upward trend and benefit from compounding returns – the idea that the longer you stay invested, the more your returns will compound over time.

For example, let’s say an investor puts £10,000 into a diversified stock portfolio and leaves it there for 20 years. Over that time, the stock market may experience several ups and downs, but if the overall trend is upward, the investor’s portfolio will likely grow significantly. In fact, if the portfolio earns an average annual return of 7%, it will be worth around £38,700 after 20 years – almost four times the initial investment.

Time in market Vs timing the market?

Timing the market is the strategy of trying to predict when the market will rise or fall, and buying or selling investments accordingly. This is a much riskier strategy than time in market, as it requires investors to accurately predict market movements in order to maximise profits. While some investors may be able to successfully time the market in the short-term, it’s very difficult to do so consistently over the long-term.

This type of strategy is focused on staying invested in the market for longer periods of time, and therefore this strategy is much less risky as it allows investors to benefit from the long-term upward trend of the stock market and take advantage of compounding returns.

Is it better to time the market?

While timing the market can potentially lead to higher profits in the short-term, it’s generally not a good strategy for most investors. Predicting market movements is incredibly difficult, even for professional investors, and attempting to time the market can lead to significant losses if you get it wrong. Plus, even if you do successfully time the market and make a profit, it’s often difficult to know when to sell and lock in those gains. That’s why, instead of having to accurately predict short-term market movements, focusing on time in market is generally a much more effective strategy for most investors.

Investing in the stock market can be a fantastic way to grow your wealth over time, but it’s still important to have a sound investment strategy. While timing the market may seem like a tempting way to maximise profits, a long-term solid strategy is always best. By focusing on the time your investments spend in the market, you can set yourself up for a successful financial future that doesn’t depend on your skills as an investor.