We will cover both the "what" and the "why". This is where your human emotions start to work very hard against you, so it's important to stay strong!
What should I do?
The first step is very simple. When you have money set aside to invest (inside your tax-advantaged accounts) buy low-cost index funds right away. Don't wait for the right time, just buy.
The second step is even more important: don't sell. It doesn't matter if there's a recession, a depression, or a war: don't sell. If your investments skyrocket or crash: don't sell. Simple.
Why does it matter?
Trying to guess when to buy or sell will destroy your investment returns. Research shows if you try to sell before things get bad and then buy in before they're good again, you will probably guess wrong. It's not your fault, it's how human psychology works.
How much will trying to time the market cost you? On average, 1.17% per year (full article from Morningstar). In case you've already forgotten the example on our low-cost index funds page, 1.17% is a huge difference. Enter your current age and your yearly investment amount to see how much you will probably lose by trying to time the market. Remember, this is not worst case scenario, this is the average: what you should expect to lose if you don't buy and hold.
Current Age Annual Investment Contribution