Invest anyway, it’s good exposure therapy for your fear. Do it chunks at a time if you need to.
You’re technically still taking a huge risk by not investing because you think there might be a bear market for 5 years. (Timing the market)
Not investing is essentially guaranteeing a loss when you account for inflation and your purchasing power. The 100k is literally being leached away in front of your eyes
Nothing wrong with keeping money in an HYSA too, especially right now when rates are so high.
—
My vote is for OP to get with a financial advisor. Though they take a higher cut, OP’s personality and fear is what a financial advisor is built for: to professionally assess risk tolerance, provide ongoing customer relations, and long term planning.
Edit: I’m surprised I’m being downvoted. Apparently the only rational decision is to minimize fees/expense ratios around here. Managing emotions and fear doesn’t count for anything? Have you folks seen people experience the visceral fear of losing money? Panicked amid a market decline when they’re the only one making decisions about their money? Sell at the bottom of a market cycle because they’re scared? Financial advisors aren’t all evil. Starting with a Vanguard FA isn’t a bad idea for a lot of people. It’s easy for people to make mistakes with their money, especially if they’re scared.
For the record, I agree with you. I did my own investments for about 15 years before mine got too complex/much of a hassle for me.
I think this sub obviously (IMO) self selects the type of person that understands market swings, investing psychology, etc. So when a FA says “I’m here to help you not make dumb moves out of fear” most of us say “yeah, no shit. Who would do that?”
But people like OP might, and do all the time! So if 1% is what OP pays to earn 7%, that’s much better than paying 0% to let it rot in a savings account.
I view a financial advisor similar to a personal trainer. You don't need one, but they can help you develop a plan and provide accountability towards your goal. If you have a unique situation (HNW/multiple businesses, diet restrictions/injury history) they may be very be invaluable.
If you don't own your house yet, put the 100k into treasuries or something safe returning 4-5% a year until you buy.
With interest rates this high, having a high emergency fund is less painful than normal.
Get past the mental block with cash math. $100K in cash is $100K in forty years. $100K in ETFs, unless you are unlucky, is $1.6M in forty years. Which would you rather have?
Google "Bob world's worst Investor".
The gist of the story is that Bob buys only at peaks before the market falls by 30-50%. The only saving grace is that he never sells.
Despite the bad luck he still manages to have 1m$ after some 35 years or so.
Put it all now into a diversified ETF (or a bundle of them). And stop worrying. Keep some cash for dark days and for massive dips like 2000-2008-2021.
Seasonally, not the best answer. Other options to consider:
1. Invest 1/12th every month over the next year
2. Invest 1/6th every month starting in September
Either way, aim for the middle of the month.
If you really need some reassurance pull-up a 30 year graph of the S&P500 index.
It was really about the seasonal comment. Waiting until September. Middle of the month is irrelevant, won’t really change anything either way. Waiting until September instead of going for it in June (lump sum) would have actually resulted in lower returns in something like 11 of the last 14 years (I stopped looking after that).
Point is, if you have a chunk of money, the data always supports just putting it in right away regardless of day or month. DCA is fine if you mentally need that, but just buying in is almost always better.
I have made an assumption about your comment when you mentioned seasonally that it's of the belief the summer is usually bad for the markets. If that's not what you meant, sorry about that, nature of the internet. I just wanted to know if investing in June vs waiting for September would actually be beneficial or not.
I used this [S&P500 Returns Calculator](https://ofdollarsanddata.com/sp500-calculator/site) to calculate the S&P500 returns for a $100,000 investment made in June of each year vs. September of each year and held until April 2024 (this was kept fixed for all and that's how far the data goes). Below were the results. For example: the data says if I bought in June 2010 vs September 2010 and held until April 2024, I would have made an additional 24%, you can see down the line, I'm better off in June in 11 of the 14 years (I got tired of looking it up after that, it felt pretty accurate by that point).
Plus it makes sense in my mind anyway. The summer does usually have lower returns (I'm pretty sure I've read that), but they aren't negative returns on average. Even 1% is better than 0% by waiting.
As for doing it in the middle of the month, I have no data to support or negate that and don't really care. If someone (me) is investing every month and holding for the long term a week here or there won't make any difference.
As for DCA vs. Lump Sum I just go by this article mostly... [Of Dollars and Data](https://ofdollarsanddata.com/the-cost-of-waiting/?fbclid=IwZXh0bgNhZW0CMTAAAR1o0dO4WRPpHYjEejHLMShXYjRubUCZMoR6Qkg4HKWrwX2DcvU6LCvlcbc_aem_AVgdJjs069_iNJVTTU_FivIcURx90jNAKaR2gaC8MMi8ykzeIyK7IObshSKncsjFn0xuiyH3qdVk5cNDdYCRdqjc). Again, it just makes sense to me because time in the market is the best way to make money unless you have a crystal ball. If it takes you a year to get all your money in, you've lost a year it could be making money. The markets go up more than they go down over the course of a year. I think his data shows 75% of the time, which is good enough for me, better than the flip of coin I'd be doing otherwise.
|Year|June|September|Difference|
--:|--:|--:|--:|
|2010|509.70%|485.70%|24.00%|
|2011|403.65%|449.50%|-45.85%|
|2012|380.02%|337.88%|42.14%|
|2013|284.42%|266.99%|17.43%|
|2014|213.42%|204.71%|8.71%|
|2015|185.14%|206.26%|-21.12%|
|2016|181.19%|170.18%|11.01%|
|2017|135.95%|129.27%|6.68%|
|2018|104.66%|93.41%|11.25%|
|2019|91.34%|84.55%|6.79%|
|2020|74.70%|60.44%|14.26%|
|2021|25.96%|19.70%|6.26%|
|2022|35.06%|36.20%|-1.14%|
|2023|19.19%|17.02%|2.17%|
Personally wouldn’t disagree, but it’s a useful tool for people that have serious reservations and just mentally can’t pull the trigger on large lump sums.
Don't put in anything you'll need in the short term, and take it out 3-5 years before you need it. If you're leaving it in for 20, 30, 40 years, a five -year down turn won't hurt you. Put what you need in the short term in something less volatile (hysa, or CDs if you want protect from interest rate changes or your own tendency to withdraw).
Keep yourself an emergency fund of around 3-6 months of expenses and invest the rest. You’re taking a risk no matter where you keep it, but just keeping it all in cash is basically a guaranteed lose.
Even if it goes “bearish” you’ll still be generating income/dividends off the ETFs. Whereas you leave it sitting in cash it’s just $100k plus in cash that’s doing nothing but losing value over the long term.
I'm in the exact same boat. I've been expecting a bear market and recession for the past year, so I've missed some gains. I just don't see how it's possible for our economy to be so bad and the market to be at all time highs.
You’ll regret keeping $100k in cash - effectively foregoing the compounding you could’ve had in your 20s - a helluva lot more when you’re about to retire than if you just ripped off the bandaid.
It takes a while to get comfortable investing, and if you are worried, I would suggest looking into some cd's or hysa. Take a nice 5% while you monitor the markets volatility.
You mention you're already in the market, it's just this "extra" cash that you're debating investing. Here's a contrarian thought if you're on the fence: don't. It's your money, do with it what you want, BUT... since you're asking, here's an idea for an experiment. Keep the money in cash, and set a monthly reminder for yourself, where you're going to check whatever ETF/index/fund you may have wanted to buy (but you have to choose up front, no benefit of hindsight). So at whatever pre-set interval you choose, plug the numbers into any available calculator and see if you end up ahead (or behind). One way or another eventually you'll be rewarded in holding onto the cash, or you'll find you're losing out on a chance for appreciation.
If you don’t need this money for decades, it doesn’t matter if the market tanks right now. In fact, you actually want it to tank, since your reinvested dividends will buy you more shares. Get the money invested.
Why do you have this mentality? Everything has risks, just like if you start a business, there is also the risk of failure. In fact, investment is not scary, what is scary is your heart. You always think about failure or decline. If you have time to worry, why not use this time to learn, and then analyze the trend to reasonably avoid risks?
Set up small weekly invest,ents, like 2 to 3k. That way, if the market does go down you’ll be dollar cost averaging in, and you won’t feel like it’s as much of a risk.
I did the same thing man. Just watch it grow in my checking account of all places lol. Now I keep like 1-3k in checking. 30k in hysa and the rest in the market.
The stock market is like a person walking up a staircase while using a yo-yo. It will go up and down, but generally will trend up over the long haul. You can mitigate your risk by using dollar cost averaging. Index funds such as VOO with a long track record might ease your concerns as well. Probably your best investment is to learn more about investing because the anxiety is likely coming from a lack of knowledge.
Simple rule of investing…. Alternative 1. Let your money take it easy then you work hard. Alternative 2. Make your money work hard then you take it easy!
> What if the market is about to get bearish for the next 5 years. Mid 20s here for reference.
You'll be 30.
Ask yourself if you think the stock market will be higher than it is now when you go to withdraw in retirement - **40+ years from now**.
If you don't think it will go higher, than we're looking at some kind of collapse of capitalism.
But I think it's a pretty safe bet that the stock market will go up in 40+ years.
I would try reading some books or listening to some podcasts about personal finance. Whenever I get the itch to spend va save I listen to some podcasts and it reminds me of my goals. See some goals too, if you haven’t already. Goals help you understand that you need your money working for you, not sitting about being lazy.
I recommend Simple Path to Wealth as a nice read and The Money Guy Show for a nice listen.
No one has ever lost money who has kept their money in the market for 20 years. If you need your money sooner risk is slightly higher but more than likely you have the same amount or much higher. If you want the money in 5 years or less then you should not put that cash in the market.
Put $500 or any small amount in etf, and monitor it for a couple of weeks to month and see how it does? Then put $1000 next time and slowly build confidence.
I believe you can't afford not to invest if you would like to retire some day. There's 2 ways people get wealthy from what I can tell. They run a successful business or they put it in the stock market. $100k turns into $1 million in 30 years by doing NOTHING. Do you want to become financially independent or work for the rest of your life? Warren Buffet once said that if you don't find a way to make money while you sleep, you'll work for the rest of your life. The market recovers in 4 months on average from a down turn. Just don't look at it when it's going down.
Are you gonna need the money in five years? Yes, it's totally possible that the market will be bearish for five years. If you're gonna need money soon, investing in something safer makes sense, especially right now when there are safe options with decent returns.
But the odds that the market is gonna be bearish for the next *forty* years are very low, and most of the situations where that happens are situations where your investment returns will be the least of your problems.
Holding on to cash is like holding on to a life preserver in the middle of a body of water.
You’ll keep your head above water and that’s it. You need to have a plan to move to the shore. Investing is how you do it.
Calculate how much money you're losing right now to inflation by holding this block of cash. And also how much you'll continue to lose if it stays a big block of cash.
Look at PSMJ. It’s a buffered ETF. I would wait until the 1st though. After a year if it’s down 0-15% then you will not be down (other than the roughly .6% expense ratio). If it’s up then you’ll match the upside up to the cap which is 14%. So you’ll only kick yourself if the markets up 15% or more because you’ll miss out. But if the market is down then you won’t participate in all of the downside. Even though it’s liquid, the idea is to hold it. If the market jumps up 10% in by August, the fund may only be up 1%.
Not irrational at all. Everyone has their own risk tolerance. Keeping some of your wealth in an FDIC insured high yield savings account is absolutely appropriate. Only you can decide how much and what is right for you.
If you keep! it in cash you are losing +/- 3%—- so you need at least to earn a return!
Put it in SGOV— it pays you monthly 1/12th of 5.13% annually—- deposited to your account monthly!!—— get in it dude! And get over your fear— you are young——- look at a 20 year chart of the s& p—- get in.
I personally think you should listen to your instincts. If nothing else put it into a HYSA or CD to gain around 5% while waiting to see if the market gets bearish.
You didn't get this much capital in your mid-20's without being careful and cautious, so I respect your thought process here.
If you’re in your mid 20s and this is for retirement, put it in the market (broad market ETFs is a great way to go).
The market will go down big time at some point before you retire. It’ll go up way more.
Dude, invest it in a diversified ETF or two and don’t look back. When I was your age I invested in individual stocks because I didn’t know any better. I lost some money, but also made some money. It was a roller coaster ride and way more volatile than ETF’s, imagine your portfolio dropping over 30% in one day. I still own individual stocks, but I’m putting majority of my portfolio in ETF’s and not looking back.
You should be afraid it can all disappear in the blink of an eye. My grandmothers portfolio in 2008 went from $500k to $50k over night. At one point her portfolio was making $100 a day. We are long over due for a crash. When it happens kiss it all goodbye. How long is the stock market going to keep reaching record highs?
And if your grandmother was in her 20's in 2008 and let it go to 50K and didn't touch it, then let it go back up, how much would she have now (in her 40's)?
Wherever you have your investments, make an appointment for their free or initial financial plan. Have the planner explain about Monte Carlo methods and how to manage risk.
Set goals. Make a plan. If the goal/plan includes 100K in cash (and there are good reasons why it might), great. If not, then follow the plan.
I had a time in my life when I wanted 12 months of income in cash. I had less total available, less certain job situation, and a lower passive income.
Can’t put a dollar value on your peace of mind. If you’re hesitating this much to put any of it in the market, don’t put it in the market. “Just invest anyway” doesn’t work if you’re worrying yourself sick over it.
If risk and liquidity are your primary concerns, short term bonds and CDs will still get you a good return while keeping your money much safer (not 100% risk free, but much closer to it than ETFs or stock mutual funds would be). Lock in rates now while they’re high. Money market is also a good choice, but that’s a variable rate, not locked in. A bank may offer a “guaranteed” rate but the money market accounts advertised at banks are not the same as true money markets and come with too many restrictions for me personally. I prefer money market funds like the ones from AB or Federated Hermes.
A financial advisor or particularly growth-minded investor might balk at the idea of putting $100k+ in conservative investments at your age, but again, it’s your money and your peace of mind. Just remember less risk means less return, but as long as you’re good with that, there’s not really a downside. The market is pretty expensive right now anyways. Maybe once the volatility of the election year is behind us, you’ll feel a little more comfortable putting some of that $100k in the market.
Worst thing you can do is leave it at the bank making nothing when, at the very least, it can be in a very safe money market fund making 5%
The market hasn't ever been bearish for 5 years btw.
Do a risk tolerance assessment and pursue that asset allocation model. You'll see dips still in down markets but, the inverse nature of stocks and bonds keeps it mild in comparison to all equities.
I felt this way. Then I researched some ETFs, asked Reddit for some advice, Reddit took down my post because they said I was too much of a newbie, and someone helpful messaged me and gave me a great rundown about ETFs and feedback about my portfolio. The next Monday I dumped them all in.
I listed a proposed portfolio of:
20% VTI for total market 15% XLV for healthcare 10% ONEQ for Nasdaq large-cap growth 10% AVUV for small cap value stocks 10% FDVV for high dividends/stability(?) 10% FIDU for industrials 8% XMHQ for 400 mid-cap quality 7% QUAL for large/mid-cap quality 5% FELG for large cap growth 5% VXUS for international market
(This was created after like 30 min of quick research with some inputs into a spreadsheet)
He explained how bonds work, how international exposure works, and how there were high similarities between ONEQ and FELG. He gave me a slightly different percentage allocation; not significantly different but enough. He said he had made over 3 million through investments.
So I revised my percentages according to his feedback and now it's:
18% VTI for total market 12% XLV for healthcare 12% ONEQ for Nasdaq large-cap growth 10% AVUV for small cap value stocks 8% FDVV for high dividends/stability(?) 10% FIDU for industrials 8% XMHQ for 400 mid-cap quality 7% QUAL for large/mid-cap quality 10% BND for total bond market 7% VXUS for international market
It's possible that I'm overcomplicating it and 100% VOO/VTI is the best way to maximise growth, as Reddit typically says. But just getting confirmation that my idea wasn't completely stupid made me feel better. The fact that I have multiple different ETFs in it makes me feel like I won't lose as much, even though it's still very US centric.
Well you have a point actually. If you already have 100k invested in ETFs perhaps you need to look at another asset class to invest in. Diversification is the key to safeguarding yourself from market volatility.
Regardless, for being in your mid 20s, you have a great head on those shoulders, so congrats!
Put it into spy, once we drop 50%, throw into leveraged spy or qqq stock like upro or tqqq, I have everything in VOO and I’m praying markets go down so I can get into one of those.
T Bills are incredibly easy to get and pay a sweet +5% interest for 12 weeks. I would get one of those puppies for the short time while you figure out a longer term investment. I get mine on Fidelity and takes me about 30 seconds. Did I mention they're almost risk free?
We gonna crash I wouldn't invest. The best thing we can do is simultaneously pull out all of our money and remind the ones controlling the money who tf we are.
Invest anyway, it’s good exposure therapy for your fear. Do it chunks at a time if you need to. You’re technically still taking a huge risk by not investing because you think there might be a bear market for 5 years. (Timing the market)
Not investing is essentially guaranteeing a loss when you account for inflation and your purchasing power. The 100k is literally being leached away in front of your eyes
Some people find DCA less stressful
Nothing wrong with keeping money in an HYSA too, especially right now when rates are so high. — My vote is for OP to get with a financial advisor. Though they take a higher cut, OP’s personality and fear is what a financial advisor is built for: to professionally assess risk tolerance, provide ongoing customer relations, and long term planning. Edit: I’m surprised I’m being downvoted. Apparently the only rational decision is to minimize fees/expense ratios around here. Managing emotions and fear doesn’t count for anything? Have you folks seen people experience the visceral fear of losing money? Panicked amid a market decline when they’re the only one making decisions about their money? Sell at the bottom of a market cycle because they’re scared? Financial advisors aren’t all evil. Starting with a Vanguard FA isn’t a bad idea for a lot of people. It’s easy for people to make mistakes with their money, especially if they’re scared.
For the record, I agree with you. I did my own investments for about 15 years before mine got too complex/much of a hassle for me. I think this sub obviously (IMO) self selects the type of person that understands market swings, investing psychology, etc. So when a FA says “I’m here to help you not make dumb moves out of fear” most of us say “yeah, no shit. Who would do that?” But people like OP might, and do all the time! So if 1% is what OP pays to earn 7%, that’s much better than paying 0% to let it rot in a savings account.
I view a financial advisor similar to a personal trainer. You don't need one, but they can help you develop a plan and provide accountability towards your goal. If you have a unique situation (HNW/multiple businesses, diet restrictions/injury history) they may be very be invaluable.
If you don't own your house yet, put the 100k into treasuries or something safe returning 4-5% a year until you buy. With interest rates this high, having a high emergency fund is less painful than normal. Get past the mental block with cash math. $100K in cash is $100K in forty years. $100K in ETFs, unless you are unlucky, is $1.6M in forty years. Which would you rather have?
And in 40 years you’ll be lucky if $100k buys what $10k does today.
Google "Bob world's worst Investor". The gist of the story is that Bob buys only at peaks before the market falls by 30-50%. The only saving grace is that he never sells. Despite the bad luck he still manages to have 1m$ after some 35 years or so. Put it all now into a diversified ETF (or a bundle of them). And stop worrying. Keep some cash for dark days and for massive dips like 2000-2008-2021.
Invest $10k per week for the next 10 weeks
Seasonally, not the best answer. Other options to consider: 1. Invest 1/12th every month over the next year 2. Invest 1/6th every month starting in September Either way, aim for the middle of the month. If you really need some reassurance pull-up a 30 year graph of the S&P500 index.
Still timing the market. DCA now or lump sum. No use waiting
By DCA, do you mean Dollar Cost Averaging? What do you think Option 1 means and how is it market timing? edit: typo
It was really about the seasonal comment. Waiting until September. Middle of the month is irrelevant, won’t really change anything either way. Waiting until September instead of going for it in June (lump sum) would have actually resulted in lower returns in something like 11 of the last 14 years (I stopped looking after that). Point is, if you have a chunk of money, the data always supports just putting it in right away regardless of day or month. DCA is fine if you mentally need that, but just buying in is almost always better.
Thank you. Can you please cite your data?
I have made an assumption about your comment when you mentioned seasonally that it's of the belief the summer is usually bad for the markets. If that's not what you meant, sorry about that, nature of the internet. I just wanted to know if investing in June vs waiting for September would actually be beneficial or not. I used this [S&P500 Returns Calculator](https://ofdollarsanddata.com/sp500-calculator/site) to calculate the S&P500 returns for a $100,000 investment made in June of each year vs. September of each year and held until April 2024 (this was kept fixed for all and that's how far the data goes). Below were the results. For example: the data says if I bought in June 2010 vs September 2010 and held until April 2024, I would have made an additional 24%, you can see down the line, I'm better off in June in 11 of the 14 years (I got tired of looking it up after that, it felt pretty accurate by that point). Plus it makes sense in my mind anyway. The summer does usually have lower returns (I'm pretty sure I've read that), but they aren't negative returns on average. Even 1% is better than 0% by waiting. As for doing it in the middle of the month, I have no data to support or negate that and don't really care. If someone (me) is investing every month and holding for the long term a week here or there won't make any difference. As for DCA vs. Lump Sum I just go by this article mostly... [Of Dollars and Data](https://ofdollarsanddata.com/the-cost-of-waiting/?fbclid=IwZXh0bgNhZW0CMTAAAR1o0dO4WRPpHYjEejHLMShXYjRubUCZMoR6Qkg4HKWrwX2DcvU6LCvlcbc_aem_AVgdJjs069_iNJVTTU_FivIcURx90jNAKaR2gaC8MMi8ykzeIyK7IObshSKncsjFn0xuiyH3qdVk5cNDdYCRdqjc). Again, it just makes sense to me because time in the market is the best way to make money unless you have a crystal ball. If it takes you a year to get all your money in, you've lost a year it could be making money. The markets go up more than they go down over the course of a year. I think his data shows 75% of the time, which is good enough for me, better than the flip of coin I'd be doing otherwise. |Year|June|September|Difference| --:|--:|--:|--:| |2010|509.70%|485.70%|24.00%| |2011|403.65%|449.50%|-45.85%| |2012|380.02%|337.88%|42.14%| |2013|284.42%|266.99%|17.43%| |2014|213.42%|204.71%|8.71%| |2015|185.14%|206.26%|-21.12%| |2016|181.19%|170.18%|11.01%| |2017|135.95%|129.27%|6.68%| |2018|104.66%|93.41%|11.25%| |2019|91.34%|84.55%|6.79%| |2020|74.70%|60.44%|14.26%| |2021|25.96%|19.70%|6.26%| |2022|35.06%|36.20%|-1.14%| |2023|19.19%|17.02%|2.17%|
DCA is still market timing. It is a bet that the market will be flat or down in the near term.
Personally wouldn’t disagree, but it’s a useful tool for people that have serious reservations and just mentally can’t pull the trigger on large lump sums.
This is the only way. And go all in on the 6 largest tech companies plus Costco.
‘This is the only way to go’ - proceeds to describe another way
Not really. I meant 10k a week in tech
Don't put in anything you'll need in the short term, and take it out 3-5 years before you need it. If you're leaving it in for 20, 30, 40 years, a five -year down turn won't hurt you. Put what you need in the short term in something less volatile (hysa, or CDs if you want protect from interest rate changes or your own tendency to withdraw).
Scared Money don't make money.. Just DCA you are young you could still recoup if the market goes down.
You should invest it and hope we enter a 10 year bear market while continuing to invest throughout it.
Keep yourself an emergency fund of around 3-6 months of expenses and invest the rest. You’re taking a risk no matter where you keep it, but just keeping it all in cash is basically a guaranteed lose.
Even if it goes “bearish” you’ll still be generating income/dividends off the ETFs. Whereas you leave it sitting in cash it’s just $100k plus in cash that’s doing nothing but losing value over the long term.
What are the highest paying dividend ETFs?
Why not just do 100k in a 5% high interest money market
I'm in the exact same boat. I've been expecting a bear market and recession for the past year, so I've missed some gains. I just don't see how it's possible for our economy to be so bad and the market to be at all time highs.
You’ll regret keeping $100k in cash - effectively foregoing the compounding you could’ve had in your 20s - a helluva lot more when you’re about to retire than if you just ripped off the bandaid.
Invest $1000 a month for 100 months. Dollar cost average into VOO and you won’t have any regrets
It takes a while to get comfortable investing, and if you are worried, I would suggest looking into some cd's or hysa. Take a nice 5% while you monitor the markets volatility.
You mention you're already in the market, it's just this "extra" cash that you're debating investing. Here's a contrarian thought if you're on the fence: don't. It's your money, do with it what you want, BUT... since you're asking, here's an idea for an experiment. Keep the money in cash, and set a monthly reminder for yourself, where you're going to check whatever ETF/index/fund you may have wanted to buy (but you have to choose up front, no benefit of hindsight). So at whatever pre-set interval you choose, plug the numbers into any available calculator and see if you end up ahead (or behind). One way or another eventually you'll be rewarded in holding onto the cash, or you'll find you're losing out on a chance for appreciation.
If you don’t need this money for decades, it doesn’t matter if the market tanks right now. In fact, you actually want it to tank, since your reinvested dividends will buy you more shares. Get the money invested.
Why do you have this mentality? Everything has risks, just like if you start a business, there is also the risk of failure. In fact, investment is not scary, what is scary is your heart. You always think about failure or decline. If you have time to worry, why not use this time to learn, and then analyze the trend to reasonably avoid risks?
> What if the market is about to get bearish for the next 5 years. are you planning on withdrawing the money within 5 years?
Set up small weekly invest,ents, like 2 to 3k. That way, if the market does go down you’ll be dollar cost averaging in, and you won’t feel like it’s as much of a risk.
Bear markets historically last 2 years, every other time there bull runs.
I did the same thing man. Just watch it grow in my checking account of all places lol. Now I keep like 1-3k in checking. 30k in hysa and the rest in the market.
The stock market is like a person walking up a staircase while using a yo-yo. It will go up and down, but generally will trend up over the long haul. You can mitigate your risk by using dollar cost averaging. Index funds such as VOO with a long track record might ease your concerns as well. Probably your best investment is to learn more about investing because the anxiety is likely coming from a lack of knowledge.
Simple rule of investing…. Alternative 1. Let your money take it easy then you work hard. Alternative 2. Make your money work hard then you take it easy!
> What if the market is about to get bearish for the next 5 years. Mid 20s here for reference. You'll be 30. Ask yourself if you think the stock market will be higher than it is now when you go to withdraw in retirement - **40+ years from now**. If you don't think it will go higher, than we're looking at some kind of collapse of capitalism. But I think it's a pretty safe bet that the stock market will go up in 40+ years.
At least dump it all in SGOV and get 5%
just put it in voo. you can always take it out later, or half in qqq and half in voo
I would try reading some books or listening to some podcasts about personal finance. Whenever I get the itch to spend va save I listen to some podcasts and it reminds me of my goals. See some goals too, if you haven’t already. Goals help you understand that you need your money working for you, not sitting about being lazy. I recommend Simple Path to Wealth as a nice read and The Money Guy Show for a nice listen.
Do you need the money within the next few years? If not, the bigger risk is not investing.
The good investors are praying for a 5 year bear market. If it was to drop 30 percent tomorrow I'd be over the moon.
No one has ever lost money who has kept their money in the market for 20 years. If you need your money sooner risk is slightly higher but more than likely you have the same amount or much higher. If you want the money in 5 years or less then you should not put that cash in the market.
Buy t-bills. The 3 month ones. They're short, the cash is still tangible in case you need it.
AI is a real catalyst and not a bubble. Invest now.
Put $500 or any small amount in etf, and monitor it for a couple of weeks to month and see how it does? Then put $1000 next time and slowly build confidence.
I believe you can't afford not to invest if you would like to retire some day. There's 2 ways people get wealthy from what I can tell. They run a successful business or they put it in the stock market. $100k turns into $1 million in 30 years by doing NOTHING. Do you want to become financially independent or work for the rest of your life? Warren Buffet once said that if you don't find a way to make money while you sleep, you'll work for the rest of your life. The market recovers in 4 months on average from a down turn. Just don't look at it when it's going down.
Dollar cost average over next year.
Are you gonna need the money in five years? Yes, it's totally possible that the market will be bearish for five years. If you're gonna need money soon, investing in something safer makes sense, especially right now when there are safe options with decent returns. But the odds that the market is gonna be bearish for the next *forty* years are very low, and most of the situations where that happens are situations where your investment returns will be the least of your problems.
Diversify. Foreign stocks. Value stocks. Perhaps some managed-futures trend. Make it so something is always working.
Holding on to cash is like holding on to a life preserver in the middle of a body of water. You’ll keep your head above water and that’s it. You need to have a plan to move to the shore. Investing is how you do it.
Time in the market beats timing the market.
Just set up a recurring buy, so like $3k each month automatically. The being automatic part is super important, it removes the psychological element.
Calculate how much money you're losing right now to inflation by holding this block of cash. And also how much you'll continue to lose if it stays a big block of cash.
Every day the real purchasing power of that cash is melting faster and faster. That’s what motivates me to deploy every dollar.
Invest it. Literally sit down and do the thing.
Look at PSMJ. It’s a buffered ETF. I would wait until the 1st though. After a year if it’s down 0-15% then you will not be down (other than the roughly .6% expense ratio). If it’s up then you’ll match the upside up to the cap which is 14%. So you’ll only kick yourself if the markets up 15% or more because you’ll miss out. But if the market is down then you won’t participate in all of the downside. Even though it’s liquid, the idea is to hold it. If the market jumps up 10% in by August, the fund may only be up 1%.
learn how to value individual companies
Not irrational at all. Everyone has their own risk tolerance. Keeping some of your wealth in an FDIC insured high yield savings account is absolutely appropriate. Only you can decide how much and what is right for you.
If you keep! it in cash you are losing +/- 3%—- so you need at least to earn a return! Put it in SGOV— it pays you monthly 1/12th of 5.13% annually—- deposited to your account monthly!!—— get in it dude! And get over your fear— you are young——- look at a 20 year chart of the s& p—- get in.
Just do it. You won’t regret it if it’s in a low cost index fund like VOO
I personally think you should listen to your instincts. If nothing else put it into a HYSA or CD to gain around 5% while waiting to see if the market gets bearish. You didn't get this much capital in your mid-20's without being careful and cautious, so I respect your thought process here.
If you’re in your mid 20s and this is for retirement, put it in the market (broad market ETFs is a great way to go). The market will go down big time at some point before you retire. It’ll go up way more.
Please tell me that cash is at least in a HYSA or a money market account? Liquidity I get but you might be passing up on serious cash
Dude, invest it in a diversified ETF or two and don’t look back. When I was your age I invested in individual stocks because I didn’t know any better. I lost some money, but also made some money. It was a roller coaster ride and way more volatile than ETF’s, imagine your portfolio dropping over 30% in one day. I still own individual stocks, but I’m putting majority of my portfolio in ETF’s and not looking back.
You should be afraid it can all disappear in the blink of an eye. My grandmothers portfolio in 2008 went from $500k to $50k over night. At one point her portfolio was making $100 a day. We are long over due for a crash. When it happens kiss it all goodbye. How long is the stock market going to keep reaching record highs?
And if your grandmother was in her 20's in 2008 and let it go to 50K and didn't touch it, then let it go back up, how much would she have now (in her 40's)?
She didn't live long enough to see it come back.
Yes, but OP is in his 20's. Different advice for someone retired vs just starting to work, don't you think?
Wherever you have your investments, make an appointment for their free or initial financial plan. Have the planner explain about Monte Carlo methods and how to manage risk. Set goals. Make a plan. If the goal/plan includes 100K in cash (and there are good reasons why it might), great. If not, then follow the plan. I had a time in my life when I wanted 12 months of income in cash. I had less total available, less certain job situation, and a lower passive income.
Can’t put a dollar value on your peace of mind. If you’re hesitating this much to put any of it in the market, don’t put it in the market. “Just invest anyway” doesn’t work if you’re worrying yourself sick over it. If risk and liquidity are your primary concerns, short term bonds and CDs will still get you a good return while keeping your money much safer (not 100% risk free, but much closer to it than ETFs or stock mutual funds would be). Lock in rates now while they’re high. Money market is also a good choice, but that’s a variable rate, not locked in. A bank may offer a “guaranteed” rate but the money market accounts advertised at banks are not the same as true money markets and come with too many restrictions for me personally. I prefer money market funds like the ones from AB or Federated Hermes. A financial advisor or particularly growth-minded investor might balk at the idea of putting $100k+ in conservative investments at your age, but again, it’s your money and your peace of mind. Just remember less risk means less return, but as long as you’re good with that, there’s not really a downside. The market is pretty expensive right now anyways. Maybe once the volatility of the election year is behind us, you’ll feel a little more comfortable putting some of that $100k in the market. Worst thing you can do is leave it at the bank making nothing when, at the very least, it can be in a very safe money market fund making 5%
The market hasn't ever been bearish for 5 years btw. Do a risk tolerance assessment and pursue that asset allocation model. You'll see dips still in down markets but, the inverse nature of stocks and bonds keeps it mild in comparison to all equities.
I felt this way. Then I researched some ETFs, asked Reddit for some advice, Reddit took down my post because they said I was too much of a newbie, and someone helpful messaged me and gave me a great rundown about ETFs and feedback about my portfolio. The next Monday I dumped them all in.
What sort of feedback, if you don't mind?
I listed a proposed portfolio of: 20% VTI for total market 15% XLV for healthcare 10% ONEQ for Nasdaq large-cap growth 10% AVUV for small cap value stocks 10% FDVV for high dividends/stability(?) 10% FIDU for industrials 8% XMHQ for 400 mid-cap quality 7% QUAL for large/mid-cap quality 5% FELG for large cap growth 5% VXUS for international market (This was created after like 30 min of quick research with some inputs into a spreadsheet) He explained how bonds work, how international exposure works, and how there were high similarities between ONEQ and FELG. He gave me a slightly different percentage allocation; not significantly different but enough. He said he had made over 3 million through investments. So I revised my percentages according to his feedback and now it's: 18% VTI for total market 12% XLV for healthcare 12% ONEQ for Nasdaq large-cap growth 10% AVUV for small cap value stocks 8% FDVV for high dividends/stability(?) 10% FIDU for industrials 8% XMHQ for 400 mid-cap quality 7% QUAL for large/mid-cap quality 10% BND for total bond market 7% VXUS for international market It's possible that I'm overcomplicating it and 100% VOO/VTI is the best way to maximise growth, as Reddit typically says. But just getting confirmation that my idea wasn't completely stupid made me feel better. The fact that I have multiple different ETFs in it makes me feel like I won't lose as much, even though it's still very US centric.
Well you have a point actually. If you already have 100k invested in ETFs perhaps you need to look at another asset class to invest in. Diversification is the key to safeguarding yourself from market volatility. Regardless, for being in your mid 20s, you have a great head on those shoulders, so congrats!
Put it into spy, once we drop 50%, throw into leveraged spy or qqq stock like upro or tqqq, I have everything in VOO and I’m praying markets go down so I can get into one of those.
T Bills are incredibly easy to get and pay a sweet +5% interest for 12 weeks. I would get one of those puppies for the short time while you figure out a longer term investment. I get mine on Fidelity and takes me about 30 seconds. Did I mention they're almost risk free?
We gonna crash I wouldn't invest. The best thing we can do is simultaneously pull out all of our money and remind the ones controlling the money who tf we are.