Time in the Market Still Beats Timing the Market

Despite stocks enjoying a bull market that began in October 2022 and inflation falling steadily since hitting its 41-year high in June 2022, retirement savers should temper their growth expectations for the next decade.

That’s according to MarketWatch, which recently wrote that investors should “expect stocks to produce a -1.9% post-inflation return between now and 2034.” The reason? Since 1973, the market has beaten inflation by an annualized average of 6.1%  —  but currently, the major indices are all near all-time highs, and stocks are “extremely overvalued.”

So what can investors do to circumvent that potential reality? Stay the course. Analysts, fund managers and economists have access to all sorts of data, but they don’t have crystal balls. As Americans save more for retirement and learn how to intelligently invest their contributions, beating the market is a possibility. In doing so, producing gains that outpace the S&P 500 could mean minimizing the impact inflation has on retirement account balances.

The secret, of course, is patience. As the old adage goes, time in the market beats timing the market.

— Jordan Chussler, investing and banking editor

According to new data from Vanguard, the average pre-tax contribution rate among retirement plan participants was 7.4% in 2023, tying the previous all-time high in 2021. Counting employer matches, the average contribution rate was 11.7%, also a record. Money reporter Pete Grieve explains how that has resulted in the average retirement account balance reaching $134,128 last year — an increase of 19% from the prior year.

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