The S&P 500 reached a record high in October even as rising interest rates, heavy borrowing linked to the artificial-intelligence boom and doubts about future AI profits made stocks feel unusually risky. Those concerns can encourage investors to pause 401(k) contributions, delay an IRA deposit or hold brokerage cash while waiting for prices to fall.
Five hypothetical investors received $2,000 at the beginning of each year. One bought at the S&P 500’s lowest closing level every year, another invested on the first trading day, a third spread purchases across 12 monthly installments, a fourth bought at each annual high and the fifth stayed in Treasury bills.
Dollar-cost averaging can help investors contribute regularly and reduce the regret associated with investing a lump sum, but it cannot guarantee a profit or prevent losses during a decline. The historical comparison instead shows that postponing investment indefinitely carries its own opportunity cost.
For investors using regular contributions, the practical distinction is between money intended for long-term stock exposure and cash needed for nearer-term expenses. Once an investor has chosen an allocation consistent with personal goals and risk tolerance, the evidence favors putting long-term money to work promptly or following a regular schedule rather than waiting for a reliably identifiable market bottom.
A low-cost S&P 500 fund such as VOO is designed to track large-cap U.S. Its prospectus also warns that the fund can lose money, fluctuate sharply and become concentrated in sectors that grow heavily within the index. Past returns therefore cannot establish what investors will earn next, even though the long-term record makes time invested a central part of the strategy.