Don't Try to Time the Market

Attempting to avoid losses or chase returns can affect your long-term retirement savings.

With the financial markets seemingly on an endless rollercoaster during this period of uncertainty, you might be tempted to get out of the markets to avoid potential losses or just to not have to worry about it anymore. However, nobody really knows the "right" time to get out or back in, and missing the eventual rebound can have an unfavorable impact on your longer-term performance.

In just a 15-day span, from March 9 through March 24, 2020, the S&P 500® Index experienced three of its eight worst daily percentage declines and three of its seven best daily percentage gains over the past 35 years.

"Trying to pick the perfect day to shift your asset allocations when the market is going up or down is impossible and will likely have a negative impact on your retirement savings over time," said Stephen Rich, President and Chief Executive Officer, Mutual of America Capital Management LLC.*

As the chart highlights, missing out on the best market days can affect your potential savings over the long term. For example, if you had a $10,000 investment in the market for "All Days" as shown, it would have grown to $418,797 at an annualized rate of return of 11.3%. However, missing just the five best days would have reduced your annualized rate of return to 9.9% and total savings to $268,726, a difference of $150,071.

Source: FactSet financial data and analytics

This chart is for illustrative purposes only and does not represent the performance of any investment or group of investments. Past performance is no guarantee of future results. The S&P 500 Index is an unmanaged stock index generally considered to be representative of the U.S. stock market. It is not possible to invest directly in an index.

Compounding of returns over time is a powerful force for achieving retirement goals. That's why it's important to think long term and focus on the length of time in the market instead of trying to time moving in and out of the market.

"Investing for retirement should be looked at like running a marathon," said Rich. "In this context, investment performance in any one month, or months, is just a very small part of the journey. In fact, for long-term investors, maintaining your discipline can be advantageous during this time in that you are buying stocks at current lower prices, which could increase the potential return over the long term."

If you have questions about your retirement plan, we can help. Please contact your local Mutual of America representative.

*Mutual of America Capital Management LLC is a registered investment adviser and an indirect, wholly owned subsidiary of Mutual of America Life Insurance Company. This material is for informational purposes only and does not and should not constitute or be construed as a solicitation or offer, or recommendation, to buy or sell any security.


You should consider the investment objectives, risks, and charges and expenses of the variable annuity contract and the underlying investment funds carefully before investing. This and other information is contained in the contract prospectus or brochure and underlying funds prospectuses and summary prospectuses, which can be obtained by calling 1-800-468-3785 or visiting mutualofamerica.com. Read them carefully before investing.

Mutual of America's group and individual retirement products are variable annuity contracts and are suitable for long-term investing, particularly for retirement savings. The value of a variable annuity contract will fluctuate depending on the performance of the Separate Account investment options you choose. Upon redemption, you could receive more or less than the principal amount invested. A variable annuity contract provides no additional tax-deferred treatment of benefits beyond the treatment provided to any qualified retirement plan or IRA by applicable tax law. You should consider a variable annuity contract's other features before making a decision.




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