If You Make Just 1 Investing Move Right Now, History Says It Should Be This

The U.S. stock market is giving investors multiple reasons to remain cautious. The S&P 500 (SNPINDEX: ^GSPC) closed at 7,718.41 on Sept. 4, just 1% below its record high on Aug. 13. The 10-year Treasury yield stood at around 4.78%. Wall Street now sees roughly 60% probability of the Federal Reserve hiking interest rates in this month.

Despite these challenges, if I had cash already set aside for long-term investing, I would make one move right now. I would put it into a low-cost S&P 500 index fund instead of waiting for the next market correction.

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History favors early investing

The case for investing now does not depend on predicting where stocks will move this month. In a 2023 study, Vanguard compared investing a lump sum immediately with spreading the same investment over three months. Using MSCI World Index data from 1976 through 2022, Vanguard found that the lump-sum strategy outperformed the gradual investing approach 68% of the time over the following year.

Waiting for a market correction is also a form of market timing. Vanguard found that from 1976 through 2022, U.S. stocks outperformed cash in 76% of one-year periods. Hence, keeping money in cash while waiting for a better entry point can also mean giving up potential market returns.

Investing near record highs has also worked well historically. Dimensional analyzed more than 1,000 monthly closing levels for the S&P 500 index from 1926 through 2022. The research publication found that 30% of those levels were new market highs. Yet the index was higher one year later 81% of the time and five years later 86% of the time.

According to Fidelity Investments, the S&P 500 has generated an average total return of 12.7% in the 12 months following an all-time high, compared with 12.6% during other 12-month periods from 1950 to 2024. Hence, waiting simply because stocks are near record highs has historically offered little advantage.

Waiting for a correction has a hidden problem

The S&P 500 has fallen at least 10% in 48% of calendar years from 1980 to 2025. Yet waiting for that drop does not guarantee a cheaper entry. For example, if a stock first rises 20% and then falls 10%, it will still trade 8% above the starting level.

A Coutts study reinforces this point. Using S&P 500 total returns from 1990 through 2024, investing on the first trading day of each year produced an average 12.1% return, versus 6.6% for waiting for a 10% correction. And only about half of those 35 years produced such a sell-off.

According to J.P. Morgan Wealth Management, a unit of JPMorgan Chase, 7 of the S&P 500's 10 best days from June 2006 through June 2026 occurred within 15 days of its 10 worst days. Hence, waiting for market conditions to feel safer can also increase the risk of missing a sharp rebound.

The stock market is not cheap. Vanguard expects U.S. equities to return only 4.2% to 6.2% annually over the next decade, partly because of stretched valuations. However, high valuations do not tell investors when the next correction will occur. If you're intending to stay invested for years, buying a low-cost S&P 500 index fund now still seems better than waiting.

JPMorgan Chase is an advertising partner of Motley Fool Money. Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase and MSCI. The Motley Fool has a disclosure policy.