Historically, September is one of the worst months in the stock market year, but the current mood is quite black so don't expect this to be just another September month. One of the possible outcomes of the debt ceiling story may be that it will be raised in a series of steps each of which is linked to a deficit reduction target. This plus the upcoming U.S. election in 2012 would create a lot of investor insecurity and thus poor overall market performance.
So, we're not in a hurry. Say we have $5000 to invest. With a discount brokerage fee of $10 per transaction, even splitting this money up into 10 investments of $500 would result in a commission rate of 2% which is less than that of a full service broker not counting minimum commissions. I suggest to use slightly larger chunks of $1000 and thus a commission rate of 1%. Start buying your first tranche coming Tuesday and the next one the following Friday. This should be at the most intense level of fracas. Then slow down your pace and make your next investment say in early September (1st week), the fourth at the end of September and the last $1000 in the 2nd half of October.
Usually, stock markets pick-up in October and this year that may be the case as well. Markets climb around 4 to 5% typically between the lows of September and year-end (see figure below). Funny, you remember the expression "Sell in May and go away"? Yeah right look at the graph.
Secondly, if you make a one-time purchase during a market lows, say at a 20% discount of the average market valuation (P/E), your annual return is 12.1% using an earlier 30 year stock market simulation based on U.S. stocks versus 10.3% if you bought at a market peak. So it matters somewhat whether you buy at a market peak or low but a regular contribution plus reinvestment of dividends and no selling is your best long term approach.
It is hard to admit that most of us do not outperform the markets. Many professional mutual fund managers with every piece of desirable data at their fingertips including teams of analysts do not help you to outperform the market especially when you have to pay for their management expenses (MER and commissions). So, do not think that you are any different in that regard
Overall, you will not become rich or stinking filthy wealthy from just saving and putting money in the market. You will do fine and you will become financially comfortable, but to reach the stinking filthy level you need special breaks such as the ones described earlier in the year. But how do you recognize those breaks? You see, that is where your investment knowledge and acumen comes in. You not only need breaks; you also need to recognize them!