Timing the Market vs Time in the Market - What's Better for NRIs

Every time markets fall, NRIs in our WhatsApp community ask the same question: "Should I wait for the bottom before investing?"

We get it. You've worked hard for your dirhams. The thought of investing just before a crash is terrifying.

But here's what the data consistently shows: the cost of waiting for the "perfect" moment almost always exceeds the benefit of getting it right.

At Belong, we've spent years helping NRIs navigate these decisions. This guide breaks down the research, the math, and the psychology behind one of investing's oldest debates.

The Real Cost of Trying to Time Markets

Let's start with the number that changes most people's minds about market timing.

Hartford Funds research found that if you missed the market's 10 best days over the past 30 years, your returns would have been cut in half. Miss the best 30 days? Your returns drop by 83%.

Think about that. Over 30 years, there are roughly 7,500 trading days. Missing just 30 of them, less than 0.4%, would have wiped out most of your gains.

Here's the data from Wells Fargo Investment Institute covering July 1995 to June 2025:

The 2.1% return from missing just 30 days was actually below the average inflation rate of 2.5% over that period. You would have lost purchasing power while thinking you were being "safe."

👉 Tip: The goal of market timing is to avoid losses. But the data shows you're more likely to miss gains than avoid crashes.

Why the Best Days Come When You Least Expect Them

Here's the catch that makes market timing nearly impossible: 78% of the stock market's best days have occurred during a bear market or during the first two months of a bull market, according to Hartford Funds.

The best days don't come when markets feel safe. They come when markets feel terrifying.

During April 2025, when sweeping tariff announcements sent the S\&P 500 plunging over 12% in less than a week, many investors panicked and sold. 

Then on April 9th, a 90-day pause was announced. The market staged an 8.5% rally in just three hours. If you'd stepped out to "wait for clarity," you missed one of the best days of the year.

The COVID crash tells the same story. Between February and March 2020, the S\&P 500 fell 34% in just over a month. 

The recovery? Complete by August of the same year. Many who sold in panic missed one of the fastest recoveries in history.

The Five Investors Study That Changes Everything

Charles Schwab's research created a powerful experiment. They tracked five hypothetical investors who each received $2,000 to invest every year for 20 years (2005-2024).

Investor 1: Perfect Timer Invested at the market's lowest point each year. Had perfect foresight that no human actually has.

Investor 2: Immediate Investor Invested on the first day of each year, regardless of market conditions.

Investor 3: Dollar-Cost Averager Split the $2,000 into 12 monthly investments of $167.

Investor 4: Bad Timer Invested at the market's highest point each year. The worst possible luck.

Investor 5: Cash Holder Never invested. Kept everything in Treasury bills.

Here's how they ended up after 20 years:

The shocking finding? The gap between perfect timing and immediate investing was only about $6,000 over 20 years. And even the worst timer beat the person who stayed in cash by more than double.

Perfect timing, which no one can achieve consistently, barely mattered. What mattered was being invested.

👉 Tip: Don't let "waiting for a better entry point" turn into "never investing at all." The data shows immediate investing beats cash overwhelmingly.

What 30 Years of Indian Market Data Reveals

Does this apply to India? Business Today's analysis of Nifty data from 1995 to 2025 compared three strategies:

The returns were almost identical. The strategy of "waiting for dips" required tracking markets constantly, maintaining discipline to actually invest during scary times, and keeping cash earning just 6% while waiting. All that extra effort produced nearly the same result as simply investing every month.

This aligns with what we see with NRIs in our community. Those who set up automated SIPs and forget about timing tend to have similar or better outcomes than those who try to "buy the dip."

The Behavior Gap: Why Average Investors Underperform

The 2025 DALBAR study dropped a bombshell finding. In 2024, the average equity investor earned just 16.54% while the S\&P 500 returned 25.02%.

That 8.48 percentage point gap is the second-largest investor underperformance in a decade.

How does this happen? DALBAR's analysis shows investors withdrew money from equity funds in every quarter of 2024. The largest outflows occurred just before major return surges.

The "Guess Right Ratio," which measures how often investors time their moves correctly, fell to just 25% in 2024. Investors guessed the market direction correctly only one quarter of the time.

Over 20 years, this compounds dramatically. A $100,000 investment in the S\&P 500 would have grown to $717,503 if left untouched. 

But the average investor, moving money around at wrong times, ended with just $345,614. That's over $370,000 lost to bad timing decisions.

This isn't about intelligence. It's about psychology. Fear and greed drive terrible decisions, and even smart people fall victim.

The Psychology Working Against You

Why do intelligent people make such poor timing decisions?

Loss aversion: Research shows we feel the pain of losses roughly twice as much as the pleasure of equivalent gains. This makes us sell during downturns and miss recoveries.

Recency bias: After crashes like 2008 or COVID, many investors expected repeated declines that never came. They missed prolonged rallies while waiting for disasters that didn't happen.

Hindsight bias: Looking back, market bottoms seem obvious. But in the moment, they're terrifying. In March 2020, nobody was saying "this is the bottom, buy everything." Headlines were predicting economic collapse.

Analysis paralysis: Waiting for the "perfect" moment becomes an excuse for never investing. There's always a reason to wait: elections, interest rates, geopolitical tensions.

Morningstar's Mind the Gap study found that over the past decade, investors in U.S. mutual funds and ETFs earned 7.0% annually while the funds themselves returned 8.2%. That 1.2 percentage point annual gap meant investors missed roughly 15% of the funds' total returns.

👉 Tip: Your biggest investment enemy isn't the market. It's your own behavior. Automating investments removes the emotion that causes most timing mistakes.

The Longer You Invest, The Less Timing Matters

Here's a statistic that should give long-term investors comfort.

Brown Brothers Harriman's analysis of S\&P 500 rolling returns from 1927 to March 2025 shows:

If you invested in the S\&P 500 for any random one-day period since 1927, you had roughly coin-flip odds of making money. But if you invested for any random 15-year period, you had 99% probability of positive returns.

Time heals timing mistakes.

The Tribe Impact Capital research illustrates this differently. If you had invested in global stocks for just one year since 1970, your results ranged from gains of 70% to losses of 36%. But if you stayed invested for 10 years, the best average yearly return was 24% and the worst was just -1%.

Volatility compresses dramatically over longer holding periods.

When Market Timing Makes (Some) Sense

We'd be dishonest if we said timing never works. There are specific situations where adjusting your investment timing can be reasonable:

Near retirement or major expenses: If you need money within 2-3 years, market volatility matters more. Having that money in stable instruments like GIFT City USD FDs or debt funds makes sense regardless of market valuations.

Lump sum windfalls: If you receive gratuity, inheritance, or sell property, the SIP vs lump sum decision becomes real. Research shows lump sum investing wins about 60% of the time over 15-year periods. But SIPs provide psychological comfort that helps you stay invested.

Obvious extremes: In March 2020, the market fell 34% in a month while the underlying economy was fundamentally sound. Investing additional funds during such extremes has historically rewarded investors. But these moments are rare and terrifying when they happen.

Rebalancing: Periodic rebalancing, say annually, involves some "timing" as you sell winners and buy losers. This systematic approach is very different from emotional market timing.

The key distinction: these are rules-based decisions made in advance, not emotional reactions to headlines.

👉 Tip: If you're going to "time" the market, make rules now while you're calm. Deciding during market chaos leads to poor decisions.

SIP vs Lump Sum: What Really Matters for NRIs

Many NRIs face a practical version of the timing debate: should they invest their savings via monthly SIP or all at once?

Standard Chartered's analysis shows that mathematically, lump sum investing often outperforms in bull markets. If you invest Rs 1,20,000 as a lump sum vs Rs 10,000 monthly SIP in a rising market, the lump sum gets more time to compound.

But here's what the math ignores: human behavior.

SIPs work better for most people because they:

1. Remove the paralysis of deciding "when" to invest
2. Create forced discipline through automatic deductions
3. Reduce regret by spreading entries across different prices
4. Make investing a habit rather than an event

The 30-year Nifty study we mentioned earlier found nearly identical returns between monthly SIP and annual investing-on-dips strategies. The difference was stress levels and effort required.

For NRIs specifically, SIPs through GIFT City mutual funds offer additional benefits. You can invest in USD, start with just $500, and avoid the complexity of rupee cost averaging across currencies.

The Hybrid Approach That Works

Rather than choosing extremes, consider a practical middle ground:

Core portfolio: Stay fully invested Keep 70-80% of your long-term money invested regardless of market conditions. Use diversified mutual funds or index funds that don't require timing decisions.

Opportunity fund: Cash for dips Keep 10-20% in liquid instruments like GIFT City FDs or debt funds. When markets fall 15-20%, deploy some of this systematically.

Automated investments: SIPs for consistency Set up monthly SIPs that invest regardless of what you think about markets. This ensures you're buying through ups and downs.

This approach keeps you mostly invested (capturing most gains) while giving you something productive to do during crashes (deploying opportunity cash) without requiring you to predict markets.

Funds like the Tata India Dynamic Equity Fund or DSP Global Equity Fund can serve as core holdings for NRIs looking to stay invested long-term.

What About Current Market Valuations?

"But the market is at all-time highs. Shouldn't I wait?"

Markets hit all-time highs regularly. That's what growing markets do. Schwab's research shows that investing at all-time highs has historically produced positive returns because markets continue rising more often than they fall.

As of late 2025, some metrics suggest elevated valuations. But they've suggested that for years while markets continued climbing. Morgan Stanley notes that the S\&P 500 is trading at the 95th percentile of 35-year valuations. Does that mean a crash is imminent? Not necessarily. Elevated valuations can persist for years.

The alternative to investing at high valuations is holding cash while waiting. If markets continue rising for another 2-3 years, you've paid an enormous opportunity cost for "safety."

👉 Tip: "The market is too high" has been wrong more often than right. Time in the market has historically beaten timing the market.

Practical Steps for NRIs

Based on everything we've covered, here's a practical framework:

Step 1: Define your time horizon Money needed within 3 years shouldn't be in equities regardless of valuations. Use NRE FDs or FCNR deposits for short-term needs.

Step 2: Automate your long-term investing Set up SIPs that invest monthly without requiring decisions. Use our Mutual Funds Explorer to find suitable options.

Step 3: Ignore the noise Create rules for how you'll handle volatility before it happens. Write them down. When markets fall 20%, your rule might be "invest additional 5% of cash reserves." Having pre-set rules removes emotional decision-making.

Step 4: Review annually, not daily Checking your portfolio daily creates anxiety and temptation to trade. Annual reviews are sufficient for long-term investors.

Step 5: Focus on what you control You can't control markets. You can control: savings rate, investment costs, tax efficiency, and asset allocation. These matter more than timing.

Use Belong's tools to track your investments and ensure you're staying on plan:

• Residential Status Calculator to understand your tax situation
• Compliance Compass to stay on top of regulations
• FD Comparison Tool for comparing safe options

Common Objections and Honest Answers

"But what if the market crashes right after I invest?"

It might. In 2008, markets fell 50%. In 2020, they fell 34%. But historically, patient investors recovered within 2-5 years and went on to make new highs. If your horizon is 10+ years, short-term crashes are painful but not permanent.

"Warren Buffett waits for opportunities. Why shouldn't I?"

Buffett does time some investments. But he also says most people should just buy index funds and hold them forever. He manages billions of dollars full-time with a team of analysts. Unless that describes you, his tactical moves aren't a relevant template.

"I'll just wait for a 10-20% correction."

What if it doesn't come for 3 years? The market might rise 50% before correcting 20%, leaving you buying at higher prices than today. And when the correction comes, will you have the courage to invest when headlines scream "recession" and "bear market"?

"The economy looks terrible."

Markets don't track the current economy. They price in future expectations. Some of the best investment returns have come during recessions because markets had already priced in the bad news and were anticipating recovery.

The Bottom Line

The data is overwhelming. Schwab's research says it best: "The cost of waiting for the perfect moment to invest typically exceeds the benefit of even perfect timing."

Missing just a handful of the market's best days can devastate your long-term returns. And those best days cluster around the worst days, exactly when timing-focused investors are most likely to be sitting in cash.

For NRIs especially, the complexity of managing investments across borders adds another reason to keep things simple. Automated SIPs, diversified portfolios, and a long-term perspective outperform sophisticated timing strategies for most investors.

The question isn't "when should I invest?" It's "how do I stay invested through all conditions?"

Ready to stop worrying about timing and start building wealth?

Join our WhatsApp community where NRIs discuss investment strategies without the timing stress. Get practical advice from fellow investors who've learned these lessons firsthand.

Download the Belong app to set up automated investments in GIFT City mutual funds and USD FDs that work while you focus on your life.

Sources:

• Charles Schwab - Does Market Timing Work?: https://www.schwab.com/learn/story/does-market-timing-work
• Hartford Funds - Timing the Market Is Impossible: https://www.hartfordfunds.com/practice-management/client-conversations/managing-volatility/timing-the-market-is-impossible.html
• Wells Fargo Investment Institute - Perils of Timing Volatile Markets: https://www.wellsfargoadvisors.com/research-analysis/reports/policy/volatile-markets.htm
• DALBAR 2025 QAIB Report: https://www.dalbar.com/press-release/investors-missed-the-best-of-2024s-market-gains-latest-dalbar-investor-behavior-report-finds/
• Business Today - SIP vs Lump Sum 30-Year Data: https://www.businesstoday.in/mutual-funds/story/sip-or-lump-sum-in-2026-what-30-year-data-tells-investors-about-mutual-fund-investment-pattern-509211-2026-01-02
• Brown Brothers Harriman - Case Against Market Timing: https://www.bbh.com/us/en/insights/capital-partners-insights/the-case-against-market-timing.html
• Tribe Impact Capital - Time in the Market: https://tribeimpactcapital.com/impact-hub/time-in-the-market-beats-timing-the-market/
• Standard Chartered India - SIP vs Lumpsum: https://www.sc.com/in/investment/wealthinsights/sip-vs-lumpsum/

Disclaimer: This article is for educational purposes only and should not be considered investment advice. Mutual fund investments are subject to market risks. Please read all scheme-related documents carefully before investing. Past performance is not indicative of future results.