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Yahoo
a day ago
- Yahoo
Does Timing the Market Actually Work? Charles Schwab Weighs In
In theory, timing the stock market to maximize your profits sounds great. If it all goes according to plan, you'll buy stocks at just the right time and price, and then sell them at the right time and price to ensure the highest return. I'm a Financial Advisor: Learn More: The problem is, things rarely go according to plan — even for the most seasoned investors. That's why many investment firms and advisors warn against trying to time the market. One of those firms is Charles Schwab, which recently addressed the topic with an analysis from the Schwab Center for Financial Research. Does timing the market really work? Read on to learn what Charles Schwab had to say about it. Better Now Than Later In its report, Schwab brought up the example of getting a year-end bonus or income tax refund and weighing whether to invest the money now or wait until you think you'll get a better return on your money. This might happen if the stock markets had recently hit high all-time highs (as they have lately). Should you wait until the markets soften and stocks are cheaper to buy? The answer is probably 'no' — at least according to Schwab. Its research found that the cost of waiting for the 'perfect' moment to invest exceeds the benefit, mainly because timing the market perfectly is 'nearly impossible.' Schwab's recommendation was to avoid timing the market and instead invest 'as soon as possible.' Check Out: Different Strategies To illustrate its findings, Schwab laid out five basic investing scenarios and the likely results. In each case, the investor received $2,000 at the beginning of every year for the 20 years ending in 2024 and left the money in the stock market, as represented by the S&P 500 Index. Here's a quick look: 'Peter' aimed to invest his $2,000 at the market's lowest closing point each year, which essentially means timing the market perfectly. 'Ashley' took a simple approach in which she invested her $2,000 on the first trading day of each year. 'Matthew' adopted a dollar-cost averaging strategy. This involved dividing his yearly $2,000 allotment into 12 equal portions, which he invested at the beginning of every month. 'Rosie' had the bad luck to invest her $2,000 each year at the market's peak. 'Larry' opted to leave his money in cash investments rather than put it into the stock markets. Even 'Perfect' Timing Isn't That Beneficial So how did each investor do? Here's what Schwab found: Peter had the best results, eventually accruing $186,077 over the 20 years. But again, he had to time the market perfectly every year, which is all but impossible in the real world. Ashley came in second with $170,555 — only $15,522 less than Peter — using the simplest strategy. Matthew's dollar-cost-averaging approach netted $166,591 at the end of 20 years. This was mainly because in a typical 12-month period, the market has increased more than 75% of the time. Even though Ashley had the bad luck to invest at the top of the market each year, she still had a return of $151,343 because of the market's steady growth from one year to the next. Larry's return was by far the lowest at $47,357. The interest from his cash investments simply couldn't keep up with the stock market's much stronger return over two decades. Based on the above results, Schwab concluded that timing the market is too difficult for most investors — and doesn't net that much benefit, anyway. Instead, you're better off investing immediately or at least using the dollar-cost averaging approach. More From GOBankingRates 5 Old Navy Items Retirees Need To Buy Ahead of Fall How Far $750K Plus Social Security Goes in Retirement in Every US Region This article originally appeared on Does Timing the Market Actually Work? Charles Schwab Weighs In Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
a day ago
- Yahoo
12 Best Places in the Midwest To Retire With $500K in Savings
The majority of Americans believe they need $1.8 million to retire, according to the 2024 401(k) Participant Study by Charles Schwab, but there are several Midwest cities where you can enjoy your golden years with just $500,000 in savings. Explore More: See Next: Known for its affordable housing, relaxed vibe and friendly communities, the Midwest might be your sweet spot when it comes to getting the most out of your retirement savings. To better understand where seniors can affordably settle down for the next chapter, GOBankingRates analyzed U.S. cities with data from the 2023 5-year U.S. Census American Community Survey and compiled a list of places to retire in the Midwest without blowing your budget. Here are the top 10 spots. Canfield, Ohio Livability: 87 Annual cost of living: $44,563 Cost of 20 years of retirement (after Social Security): $410,679 Find Out: Learn More: Fairlawn, Ohio Livability: 86 Annual cost of living: $44,023 Cost of 20 years of retirement (after Social Security): $399,890 Be Aware: Lathrup Village, Michigan Livability: 86 Annual cost of living: $45,786 Cost of 20 years of retirement (after Social Security): $435,147 Frankenmuth, Michigan Livability: 86 Annual cost of living: $44,688 Cost of 20 years of retirement (after Social Security): $413,188 North Canton, Ohio Livability: 84 Annual cost of living: $40,666 Cost of 20 years of retirement (after Social Security): $332,744 That's Interesting: Glendale, Wisconsin Livability: 84 Annual cost of living: $47,979 Cost of 20 years of retirement (after Social Security): $479,010 Middleburg Heights, Ohio Livability: 83 Annual cost of living: $40,788 Cost of 20 years of retirement (after Social Security): $335,188 Chesterland, Ohio Livability: 83 Annual cost of living: $47,492 Cost of 20 years of retirement (after Social Security): $469,262 Discover More: Cortland, Ohio Livability: 82 Annual cost of living: $37,456 Cost of 20 years of retirement (after Social Security): $268,551 Ludington, Michigan Livability: 82 Annual cost of living: $39,746 Cost of 20 years of retirement (after Social Security): $314,352 Princeton, Illinois Livability: 81 Annual cost of living: $33,821 Cost of 20 years of retirement (after Social Security): $195,842 For You: Lyndhurst, Ohio Livability: 81 Annual cost of living: $37,213 Cost of 20 years of retirement (after Social Security): $263,688 Editor's note: Photos are for representational purposes only and might not reflect the exact locations listed. Methodology: Data is sourced from the 2023 5-year U.S. Census American Community Survey, Sperling's BestPlaces, the Bureau of Labor Statistics Consumer Expenditure Survey, Zillow Home Value Index for June 2025, Federal Reserve Economic Data and the Social Security Administration's Monthly Statistical Snapshot. All data was collected on and is up to date as of Aug. 7, 2025. More From GOBankingRates New Law Could Make Electricity Bills Skyrocket in These 4 States I'm an Economist: Here's When Tariff Price Hikes Will Start Hitting Your Wallet 5 Strategies High-Net-Worth Families Use To Build Generational Wealth 10 Cars That Outlast the Average Vehicle This article originally appeared on 12 Best Places in the Midwest To Retire With $500K in Savings
CNBC
a day ago
- CNBC
How much money you need to be considered wealthy across the U.S.—it's over $2 million in most places
To be considered wealthy in the U.S., Americans say you need a net worth of $2.3 million in 2025 — but that number can be even higher depending on where you live. It's down from $2.5 million last year, according to Charles Schwab's latest Modern Wealth Survey, which polled 2,000 adults nationwide between April 24 and May 23. While the wealth benchmark has decreased, nearly two-thirds of respondents say it feels harder to reach. Inflation, high interest rates and broader economic uncertainty were the most commonly cited reasons. Here's how much Americans say you need to be considered wealthy, by region: You need the highest net worth to be considered rich in Western states, including California, Washington and Colorado. That may be unsurprising given the region's high cost of living — especially in California, where major cities like San Francisco and Los Angeles are among the most expensive places in the country, especially for housing costs. Schwab's survey defines wealth in terms of net worth, which is a measure of your total assets minus your debts and liabilities. However, many Americans have a broader view of what it takes to be rich. When asked what being wealthy means to them, 45% said happiness, nearly equal to the 44% who cited the amount of money they have. Others cite physical and mental health, strong relationships and free time. That helps explain why many Americans say they already feel wealthy in non-financial ways. About 4 in 5 say they feel rich when it comes to their relationships, happiness and free time, according to Schwab. The threshold for feeling financially comfortable is lower — $839,000 on average in the U.S., up from $778,000 last year, according to the survey. As with wealth, a comfortable net worth varies by region: Schwab's data suggests that financial comfort feels more within reach than wealth. Nearly half of respondents say they're already financially comfortable or on the path to get there. Another 25% say it's possible, but only with lifestyle changes, which could include reducing spending or increasing income.
