Timing Is Everything. How to Buy and Sell Funds at the Right Time.

Successful investing is counterintuitive. Unlike, say, an action film, you want your investments to be as boring as possible. The ideal funds in today’s volatile markets aren’t those sexy tech or aggressive growth ones, but staid, predictable balanced or allocation funds that are well-diversified between stocks and bonds.

A number of studies indicate that most investors have terrible timing when it comes to buying and selling mutual funds, and the more volatile the fund is, the worse their timing. One reason is psychological. Investors do better in steady-Eddie balanced funds because they don’t chase performance to their detriment. “You don’t get the FOMO from seeing, ‘Oh, my God, it went up 60%, I better get in,’” says Russ Kinnel, Morningstar’s director of manager research, referring to the Fear of Missing Out. “And you don’t have to panic” when a low-risk balanced fund falls a modest amount.