Many investors are holding record cash reserves, totaling $7.93 trillion, despite the S&P 500 reaching new highs, driven by market timing fears. However, studies by Schwab, J.P. Morgan, and Vanguard indicate that staying out of the market poses the greatest risk. Even consistently buying at market peaks historically yields significantly better returns than holding cash. Record highs are not deterrents; investing on such days has often been profitable. The method of investment, whether lump sum or dollar-cost averaging, is less crucial than simply getting invested. To overcome fear, the article advises a structured approach: rehearse worst-case scenarios (premortem) to understand potential downturns and recovery times, especially with a balanced portfolio. Then, create a written plan, automate investments, and establish safeguards with partners or advisors to prevent impulsive selling during volatility. The core message is to plan, commit, and get invested, as the “cold pool” of the market is always worth entering.
