SimplyFI Series — Calculator 04

What does leaving the market really cost?

Based on Fidelity's research on S&P 500 returns 1980–2023. Missing just 5 of the best trading days cuts your returns by 35%. This calculator shows the exact cost with your portfolio size.

Cost of Missing the Best Days 0 Days Missed
Stayed Fully Invested — if you never left
After Missing 0 Best Days — —% reduction
Cost of Timing — — years of returns lost
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All scenarios: your portfolio Based on Fidelity Research
Why the Best Days Follow the Worst Days The Market Timing Trap
October 1987 (Black Monday): Market fell 22.6% in a single day. The following days saw massive recoveries. Investors who sold missed the rebound entirely.
September 2008 (Financial Crisis): After Lehman collapsed, markets fell 50%. The recovery began in March 2009, at the point most investors had given up. The S&P 500 returned +68% in the 12 months after the bottom.
March 2020 (COVID crash): Markets fell 34% in 33 days. The 5 biggest single-day gains of 2020 all occurred in March and April. Investors who sold in February missed a +80% rally.
The pattern repeats. Panic selling happens near the bottom. The best recovery days follow within days or weeks. If you leave the market during a crash, you'll very likely miss them.
The Bogleheads answer: "Don't just do something, stand there." The hardest part of investing is doing nothing during a crash. Written investment rules, committed to before markets fall, are the best defence against panic selling.
Run the peak-investing stress test A pre-committed written plan is the most effective defence against panic selling
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Why market timing is a fool's game

Market timing requires being right twice: when to sell and when to buy back in. Most professional fund managers can't do this reliably, and individual investors do worse.

The Fidelity study of S&P 500 returns from 1980 to 2023 found that missing just 5 of the best trading days reduced returns by 35%. Markets move in bursts, and the biggest up-days often occur near the biggest down-days.

What expat investors commonly do wrong

The common mistake is selling during a crash with the intention to "buy back in when things stabilise." Things almost never feel stable enough to buy back in, and by the time they do, most of the recovery has already happened.

Dalbar's annual investor-behaviour study has found year after year that the average fund investor earns less than the funds they hold, largely because of when they buy and sell.

Frequently Asked Questions

Why do the best days in the market follow the worst days?

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During market crashes, extreme fear causes massive selling. When panic subsides (triggered by central bank action or exhausted sellers), the rebound is swift and concentrated in a few trading days. Investors who sell during the crash are typically still on the sidelines when these recovery days occur.

If I think the market is going to crash, shouldn't I sell?

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Market timing requires being right twice: selling before the crash and buying back before the recovery. Research shows that even professional forecasters cannot do this consistently. The better answer is to hold an allocation you can live with, so you don't need to time anything.

What should I do instead of timing the market?

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Invest regularly (monthly or quarterly), regardless of market conditions. This is pound-cost averaging: you automatically buy more units when prices are low. Rebalance annually to your target allocation. Write down your investment rules before markets fall. Then stick to them.

Is it ever right to change my investment allocation?

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Yes, if your personal circumstances change. A new child, job loss, approaching retirement, or a genuine shift in risk tolerance are valid reasons to review. Market conditions are not. Your allocation should match your life situation, not the news cycle.
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Market timing penalty scenarios are illustrative, based on Fidelity research on S&P 500 1980–2023. Past performance does not guarantee future results. Nothing on this page constitutes regulated financial advice.