📅 Last updated: 8 May 2026
· 🏷 Topic: Market timing, time in market, long term
· 🇧🇪 For: Belgian investors
An eternal debate: do you try to time the market (buying at the right moment, selling before crashes), or do you simply stay invested through every cycle? Research gives a fairly unambiguous answer.
The maths
S&P 500 return, ~30 years (1993-2022):
| Strategy | Average annual return |
|---|---|
| Fully invested, every day | ~9.7% |
| Invested, miss the 10 best days | ~5.5% |
| Invested, miss the 20 best days | ~2.9% |
| Invested, miss the 30 best days | ~0.5% |
(Source: Hartford Funds, comparable studies by Vanguard, Fidelity)
The problem: the best days sit close to the worst days. Anyone who panic-sells on a crash day often misses the rebound that follows shortly after.
The mathematical argument
You have to be right twice for market timing to work:
1. Step out of the market at the right moment (before the fall).
2. Step back into the market at the right moment (before the rise).
Research shows that even professional fund managers cannot do this structurally over the long term. For retail investors, the success rate is even lower.
The emotional argument
Anyone who sells everything during a 30% drawdown “feels better” — pain gone. Anyone who steps back in months later at a higher price locks in the loss and misses the recovery period.
This is what research (DALBAR studies in the US) shows about average retail return vs. fund return: retail investors typically earn 2-4% per year less than the funds they hold — by getting in and out at the wrong, emotional moments.
The Belgian perspective
TOB impact makes market timing even more expensive:
- Each buy-and-sell cycle on a Belgian-registered accumulating ETF (such as VWCE) costs 2.64% in TOB alone.
- Plus any withholding tax (roerende voorheffing) if you receive dividends along the way.
- Plus, since 2026, the capital gains tax if you realise net capital gains above €10,000.
Anyone who goes in and out of an equity ETF four times between 2020-2025: ~10% TOB+tax lost on top of any wrong timing.
When is “timing” actually sensible?
Not as active trading, but as life-cycle adjustment:
- Glide path to retirement: from age 50-55 onwards, gradually fewer equities, more bonds. No reaction to the market — a preventive shift.
- Rebalancing: if equities are 60% above target after a rally, back to 50% by buying more bonds (not selling equities — more expensive fiscally).
- Unexpected cash need: a planned sale for, say, a child’s studies, not a panic exit.
What to do INSTEAD?
Strategy 1 — Dollar-cost averaging (DCA): automatic monthly buying. No decisions, no emotions. See Dollar-cost averaging (NL).
Strategy 2 — Lump-sum + don’t touch: if you have €30,000, all in at once into a world ETF and don’t look at it again. Research shows this is on average better than DCA.
Strategy 3 — Periodic rebalancing: once a year, bring your portfolio back to your target allocation. No attempt at timing, just discipline.
What to do during a crash?
Nothing. Literally nothing. Or better: keep buying monthly according to your plan. Crashes are moments when equities are “on sale” — if your horizon is still 10+ years, this is not a problem but an opportunity.
💡 The best advice an investor can get: “The best time to start was 10 years ago. The second-best time is today. Stop overthinking and begin.”
🔗 See Behavioural finance (NL) and Compound interest (NL) for the broader context.
What a timing decision costs extra in Belgium
The missed-best-days statistic holds worldwide. In Belgium a further layer makes stepping out more expensive than the lost return alone:
- Stock-exchange tax twice. Exiting is a sale, returning is a purchase. Both are taxable, 0.12% to 1.32% depending on the fund. The full round trip therefore costs transaction tax twice, whether or not you were right.
- The exit itself may be taxable. Since 1 January 2026 a realised gain falls under the 10% capital-gains tax above the annual €10,000 exemption. Selling after years of accumulation “just to stand aside” can cross that threshold in a single move.
- Losses offset only within the calendar year. Sell at a loss in December and re-enter in March, and the loss falls in a different tax year from the gain that follows. The offset you expected does not arrive.
The effect is that market timing carries a higher bar in Belgium than elsewhere: you must not only pick the right moment but be right by enough to cover two rounds of stock-exchange tax plus a possible capital-gains charge.
The alternative that does work
If you want to reduce exposure, you can usually do it without selling: contribute less for a period, or direct new contributions to the defensive part of the portfolio. The weighting shifts without a single taxable event. It is the same reason rebalancing with new contributions is almost always cheaper after tax than rebalancing with sales.
Sources
- Hartford Funds — Cost of missing best days study
- SPIVA Europe — Active vs passive
- Wikifin — Time in the market
FIRE Strategy in Belgium: Tax Realities Guide
FIRE in Belgium: how a Belgian saver reaches financial independence with the 2026 capital-gains tax, mortgage decision and pillar-1 timing.
Belgian Savings Accounts: Compare Rates & Tax [2026]
Belgian savings account rates in 2026: regulated vs non-regulated, the €1,020 interest exemption, and how cash compares to short-duration bonds.
How to Determine Your Risk Profile (Belgium)
How to determine your risk profile as a Belgian investor: MiFID questionnaire, real risk capacity, and how to translate it into an asset allocation.
