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Stay invested: The cost of cashing out during a market sell-off

Market timing can lead to missed rallies and lower returns. Stay invested for long-term growth.

April 2025, In the Loop

Investors are often tempted to try to time the stock market, aiming for maximum gains by buying low and selling high. However, market timing can cause them to miss out on significant market rallies, potentially resulting in substantially lower returns. Instead, consider a strategic allocation to stocks for long-term growth.

The case for staying invested  

The bar chart below illustrates how a long-term investment strategy can generate much higher returns. Let’s examine three individuals, each starting with USD 10,000 in the S&P 500 over the past 20 years.

  • Investor 1: Stayed invested and ended up with USD 61,750. 
  • Investor 2: Missed the 10 best days, resulting in USD 22,871. 
  • Investor 3: Missed the 20 best days, ending with a balance of USD 9,724. 

The risks of market timing

These figures underscore the risk of trying to time the market. Short-term investors who mistime their market entries and exits could miss the best days and leave substantial returns on the table. By focusing on long-term goals and adopting a strategic allocation approach, individuals can benefit from growth potential over time.

Staying invested produced a bigger balance over the long term

(Fig. 1) USD 10,000 invested in the S&P 500 (January 1, 2005–December 31, 2024)
Staying invested produced a bigger balance over the long term

Sources: T. Rowe Price, S&P. See Additional Disclosures.
Past performance is no guarantee or a reliable indicator of future results. It is not possible to invest directly in an index. Graph is shown for illustrative
purposes only.

A balanced approach can be both a driver and a buffer

No single long-term investment will both safeguard investors from market volatility and provide the necessary growth potential to achieve their goals. Instead, they typically rely on a mix of diversified investments across asset classes. Individuals who balance stocks (with their potential for higher absolute returns) and bonds (with their durability, income, and predictability) have historically seen less dramatic swings in their portfolios. Balanced investors trade some of the return upside of an all-equity portfolio for less severe portfolio drawdowns and lower average losses in down market years. 

Balanced portfolio performance

(Fig. 2) 30 years ended December 31, 2024
Balanced portfolio performance

Figures refer to simulated past performance and that past performance is not a reliable indicator of future performance.
These hypothetical portfolios combine stocks and bonds to represent a range of potential risk/reward profiles. For each allocation model, historical data are shown to represent how the portfolios would have fared in the past. Figures include changes in principal value and reinvested dividends and assume the portfolios are rebalanced monthly. It is not possible to invest directly in an index. Sources: T. Rowe Price, created with Zephyr StyleADVISOR; Stocks: S&P 500 Index, which represents the 500 largest companies in the U.S.;
Bonds: Bloomberg U.S. Aggregate Bond Index, which represents the intermediate-term investment-grade bonds traded in the U.S.

 

T. Rowe Price
By  Christopher J. Kushlis
By  Adam Marden, Pranay Subedi

Additional Disclosure
Copyright © 2025, S&P Global Market Intelligence (and its affiliates, as applicable). Reproduction of the S&P 500 Index in any form is prohibited except with the prior written permission of S&P Global Market Intelligence (“S&P”). None of S&P, its affiliates or their suppliers guarantee the accuracy, adequacy, completeness or availability of any information and is not responsible for any errors or omissions, regardless of the cause or for the results obtained from the use of such information. In no event shall S&P, its affiliates or any of their suppliers be liable for any damages, costs, expenses, legal fees, or losses (including lost income or lost profit and opportunity costs) in connection with any use of S&P information.

 

IMPORTANT INFORMATION

This material is being furnished for general informational and/or marketing purposes only. The material does not constitute or undertake to give advice of any nature, including fiduciary investment advice, nor is it intended to serve as the primary basis for an investment decision. Prospective investors are recommended to seek independent legal, financial and tax advice before making any investment decision. T. Rowe Price group of companies including T. Rowe Price Associates, Inc. and/or its affiliates receive revenue from T. Rowe Price investment products and services. Past performance is not a reliable indicator of future performance. The value of an investment and any income from it can go down as well as up. Investors may get back less than the amount invested.

The material does not constitute a distribution, an offer, an invitation, a personal or general recommendation or solicitation to sell or buy any securities in any jurisdiction or to conduct any particular investment activity. The material has not been reviewed by any regulatory authority in any jurisdiction.

Information and opinions presented have been obtained or derived from sources believed to be reliable and current; however, we cannot guarantee the sources' accuracy or completeness. There is no guarantee that any forecasts made will come to pass. The views contained herein are as of the date noted on the material and are subject to change without notice; these views may differ from those of other T. Rowe Price group companies and/or associates. Under no circumstances should the material, in whole or in part, be copied or redistributed without consent from T. Rowe Price.

The material is not intended for use by persons in jurisdictions which prohibit or restrict the distribution of the material and in certain countries the material is provided upon specific request.  

It is not intended for distribution to retail investors in any jurisdiction.

Australia—Issued by T. Rowe Price Australia Limited (ABN: 13 620 668 895 and AFSL: 503741), Level 28, Governor Phillip Tower, 1 Farrer Place, Sydney NSW 2000, Australia. For Wholesale Clients only.

EEA—Unless indicated otherwise this material is issued and approved by T. Rowe Price (Luxembourg) Management S.à r.l. 35 Boulevard du Prince Henri L-1724 Luxembourg which is authorised and regulated by the Luxembourg Commission de Surveillance du Secteur Financier. For Professional Clients only.

New Zealand—Issued by T. Rowe Price Australia Limited (ABN: 13 620 668 895 and AFSL: 503741), Level 28, Governor Phillip Tower, 1 Farrer Place, Sydney NSW 2000, Australia. No Interests are offered to the public. Accordingly, the Interests may not, directly or indirectly, be offered, sold or delivered in New Zealand, nor may any offering document or advertisement in relation to any offer of the Interests be distributed in New Zealand, other than in circumstances where there is no contravention of the Financial Markets Conduct Act 2013.

Switzerland—Issued in Switzerland by T. Rowe Price (Switzerland) GmbH, Talstrasse 65, 6th Floor, 8001 Zurich, Switzerland. For Qualified Investors only.

UK—This material is issued and approved by T. Rowe Price International Ltd, Warwick Court, 5 Paternoster Square, London EC4M 7DX which is authorised and regulated by the UK Financial Conduct Authority. For Professional Clients only. 

© 2025 T. Rowe Price. All Rights Reserved. T. ROWE PRICE, INVEST WITH CONFIDENCE, the Bighorn Sheep design, and related indicators (troweprice.com/en/intellectual-property) are trademarks of T. Rowe Price Group, Inc. All other trademarks are the property of their respective owners.

202504-4404625

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T. Rowe Price ("TRP") claims compliance with the Global Investment Performance Standards (GIPS®) and has prepared and presented this report in compliance with the GIPS standards. T. Rowe Price has been independently verified for the 27-year period ended June 30, 2023, by KPMG LLP. The verification report is available upon request. A firm that claims compliance with the GIPS standards must establish policies and procedures for complying with all the applicable requirements of the GIPS standards. Verification provides assurance on whether the firm’s policies and procedures related to composite and pooled fund maintenance, as well as the calculation, presentation, and distribution of performance, have been designed in compliance with the GIPS standards and have been implemented on a firm-wide basis. Verification does not provide assurance on the accuracy of any specific performance report.

TRP is a U.S. investment management firm with various investment advisers registered with the U.S. Securities and Exchange Commission, the U.K. Financial Conduct Authority, and other regulatory bodies in various countries and holds itself out as such to potential clients for GIPS purposes. TRP further defines itself under GIPS as a discretionary investment manager providing services primarily to institutional clients with regard to various mandates, which include U.S, international, and global strategies but excluding the services of the Private Asset Management group.

A complete list and description of all of the Firm's composites and/or a presentation that adheres to the GIPS® standards are available upon request. Additional information regarding the firm's policies and procedures for calculating and reporting performance results is available upon request. 

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