So, I am in my 20s and I am maxing out my 401k and roth each year and don't think twice about it. It is such a good deal with the tax free dividends that it is a no-brainer.
But when it comes to taxable accounts, I can never stick to the plan because I always have this overwhelming feeling that I am missing out or setting myself up for failure. I ended up trading funds in my brokerage account every few months in 2013 and 2014 and it worked out great, mostly due to luck. I had to pay taxes too obviously. I ended up selling all of my taxable funds when S&P 500 first went over 2100 so it was a great profit. In my taxable account, I mostly held blended index funds like FFNOX and VASGX.
But since then I have been sitting on the sidelines twiddling my thumbs and not getting any dividend money besides 1% from the bank. I didn't buy into anything in this Greece/China fueled dip when I should have. I am having trouble jumping into this pricey market because I am still having trouble believing that timing the market is for suckers.
I could easily get another 3-500/month into a taxable account, more on some occasions. I have a feeling most people will say "You're 27, just buy some index funds and not check them for a decade." I guess what I am looking for is to see if anyone else has trouble with this, and what you did to get past it. I am usually a very disciplined person who is good with delayed gratification, but I feel like opening up taxable funds in this market is overly risky. What motivated you to jump in when it feels that odds are stacked up against you?
Do you drink milk, I like milk so that's the example I'm going to use.
I can buy a gallon of milk right now, and it will likely cost $5 and I will enjoy it, in eggs, on cereal, or as chocolate milk after a good work out. I could also stick that $5 in my sock drawer and I will never get to enjoy any milk. That's what you're doing with your money out of the market. Except in 10 years, your $5 won't even buy you a gallon of milk. Maybe one of those little milk cartons we got in elementary school lunch, not even a full pint!
Or you could keep your money invested, no matter what the price of the market is, and in 10 years you can take out
<insert cost of a gallon> and enjoy it, with a cookie. Oatmeal Raisin!
If you think the market is expensive now, then it will be much more expensive as you get older, the only way to keep up with that is to invest as soon as you have funds available to invest. The milk only gets more expensive. Sometimes you'll buy a market dip, that's a sale, it will be like buying yesterdays bread from the bakery, other days you'll buy high. Today's price will not matter in 10 years when everything costs much more, but you're money will lose value if you don't keep it invested. Remember that candy bar your dad used to by for a nickel... a nickel doesn't even buy a piece of Dubble Bubble from the counter at my favorite hot dog shop. That's $.10
Index Funds are not for short term speculation and gambling. Funds are for long term investing. Invest in funds you plan on holding for the rest of your life. And if you invest, plan on holding it for more than 5 years.
edit;
One more thing. While you've been out of the market with your 1% interest on cash, we invested 10k into VTIAX on Friday May 1, crappy timing right? Since then it has come down ~4.5% and has gone down as much a 9%. However, the dividend paid on June 25 for $103, beats your 1% interest significantly. In only 55 days we earned 1% on investment, your 1% is APY and takes 12 months. And it's even better when you consider that $103 dividend bought 3.7 more shares and we've invested an extra $130 while it's been 'on sale'. You're losing money keeping cash... no matter what the price of a share is.