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Market timing has significant risks

Markets have up and down days. It’s virtually impossible to predict their direction on a day-to-day basis.

Trying to predict their movements results in an attempt to time various sectors of the market. 
Asset classes investors are required to move in and out of the market in order to enhance returns. Being out of the market can be costly. 

The graph below illustrates how a hypothetical equity investment would have been affected by missing the best performing days over a 20-year period from 1994 to 2013. The benchmark investor who remained invested over the entire period would have accumulated £41,946, while the investor who missed just five top performing days would have only accumulated £28,858.


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