is passively investing in the S&P 500 and holding for 40+ years the best way for average joes to invest? is it risk free? redpilled?
Passive investing?
Gavin Gomez
Cameron Lopez
For the average joe, yes.
Its not risk free but the probability of permanant capital loss decreases based on a lower price paid for your ETF and a longer holding period.
Is it redpilled? Well if you just want to save for a comfy retirement, sure but you won't get rich.
Mason Ortiz
This is what I have been trying to figure out lately. So far I'm leaning towards the idea that buy and hold can fuck you over if there is a long term downtrend.
realinvestmentadvice.com
Leo Mitchell
Yes, like I said it depends on the price you pay compared to underlying value (which is a function of unpredictable long term trends). Its much easier to assess risk/reward in a single stock than the entire index. If interest rates are mostly
Jacob Bennett
A single stock may be easier to assess, but that's still an extremely risky play. Even the Amazon's of the world got destroyed in the dot com bubble. I've tried picking individual stocks before and I'm terrible at it.
It seems like stocks are pretty high right now based on things like the Shiller PE.
multpl.com
Jose Ortiz
If you're buying consistently over time then most of your money is still up even during long term downtrends, but that guy's graphs ignore that fact. He just looks at it as if all the money was put in at the peak.
Play around with different values on firecalc.com and you'll see how well the buy and hold strategy actually works for the long term at different points in history.
Dylan Ward
I would diversify more than just the s&p500, but its a relatively safe way to build up net worth over time
Caleb Thompson
how likely is it for the american stock market to get nikkei minajed though?
Charles Davis
Even his own picture shows exponential growth once you include dividend returns
Benjamin Torres
Evan Green
Vti nigga
Justin Hernandez
Equity markets are essentially dumping ground for "smart money" (VC / PE / Family Office). For average Joe, unless an Apple or Google wave was caught early, it's hard to make substantial wealth and loss of capital is likely as you don't have informational asymmetry enjoyed by institutional investors or HNIs. Thus it's hard to value equities in general (retail level) unless it pays dividends.
Thus beyond broad ETFs, a good strategy may be -
1. 10%-15%: BioTech / Solid Crypto ("make-it or break it")
2. 90%-85%: Dividend-paying bluechips with strong competitive advantages (aristocrates) + some niche (recession-proof: agedcare / childcare etc.) equity REITs
3. Reinvest dividends and push a small part to #1 (bioTech / Crypto).
Other than this, without dividends, investing in most of the micro/small-cap/mid-cap is basically gambling.
Brayden Miller
youch pic related
Jordan Gray
>Loses
Yeah, not about to take advice from that guy.
Zachary Watson
what is a mutual fund and will investing in it save me when we turn to cannibalism
Oliver Garcia
>person involved in financial management and active funds tells people not to invest passively
huh really niggled my noggin there
Adam Hill
invest globally, done right it barely affects returns and lowers volatility
bogleheads.org
the stock markets take a 50% dump every 20 years on average.
even then what you should actually be worried about is missing out on another market passing the S&P in growth.
Chase Murphy
This is unironically THE way to invest, and none of the idiots on this board understand that. It's so fucking easy to get rich and takes no luck or skill, just discipline.
The vast majority of traders aren't profitable, and the ones that are rarely beat the S&P 500 long term. Plus you spend your life stressed af watching squiggly lines on your computer monitor. Oh, and you're a brainlet, but refuse to admit it, so you don't realize you're just fish food for actual people who know what the fuck they're doing.
The other hidden secret: you get to live your fucking life. Another giant crash? Who fucking cares, just keep investing. You don't have to worry about this shit, you can go have fun and enjoy yourself.
Charles Garcia
Thats probably because
Henry Harris
>sure but you won't get rich
yeah but you probably won't get JUST'ed either and lose 99%
Angel Hill
>Thats probably because
Jack Butler
>tfw scientist
>tfw know I'm not high iq enough to invest on my own
>tfw just invest via S&P500 index funds
>tfw don't even care about muh gainz because it's the dividends I care about.
>tfw never going to retire because I love my career (How I feel currently, may change when I become old af)
Noah Scott
Here's a graph comparing buy and hold vs moving out of the market whenever the S&P 500 declines below the 12-month moving average. Both start with $100k and add $625 a month. It's adjusted for inflation and dividends. A decade long period of no growth will completely wreck you.
Elijah Price
Most investors don't have that long of a time frame. If you have say 30 solid years to invest, 13 years of no growth would fuck you.
Aaron Reyes
You are hoping to roll good RNG when you withdraw. It's gambling at the end of the day and those dips cant be predicted.
Leo Perry
yes of course.
the stock market will compound forever.
Hunter Rogers
I'd be way more skeptical of that blog post. there's a much larger body of research showing that timing the market isn't effective. and it's not that hard to find a strategy that works retroactively.
that graph isn't showing 13 years of no growth, it's 13 years to get back to even. unless you're investing in a single lump sum, your regular contributions are growing at a decent rate.
Matthew Bennett
I agree you can't call everything correctly, but what you're trying to do is find the long term trend. If the market starts to move up you can get back in. You don't have to be right 100% of the time.
Maybe there are better methods than what he showed in that example, but it's hard for me to accept that there is no way to deal with the inevitable long term bear market. I learned my lesson about hodl in crypto.
Brody Scott
exponential DCA. you buy increasingly more the more down the market is.
Christopher Reed
>I'd be way more skeptical of that blog post. there's a much larger body of research showing that timing the market isn't effective. and it's not that hard to find a strategy that works retroactively.
I will keep researching, maybe you are right.
>that graph isn't showing 13 years of no growth, it's 13 years to get back to even. unless you're investing in a single lump sum, your regular contributions are growing at a decent rate.
Sure, you could be doing okay if you have your money in other places, but if you're 60/40 stocks like a lot of people recommend it's still going to be ugly. A period like that will end a ton of retirement hopes.
Xavier Watson
Is that a real thing that people recommend? I wouldn't have the cash for it anyway.
Daniel Allen
even if you invest right before the crash, buy and hold still averages out to ~7-10% growth over the long run. timing on the other hand risks missing out on growth altogether along with side stepping market losses, statistically you're no better off.
and market timing is something a lot of people spend a lot of money trying to figure out. and there's no evidence a single method can reliably pull it off.
awealthofcommonsense.com
lump sum, or investing as soon as possible is statistically your best bet, but most people aren't comfortable with it.
Ryder Scott
>is it risk free?
No. The stock market is capable of going down and staying down for decades. For example, Japan's Nikkei 225 index still hasn't re-achieved the highs it set back in the 1980s.
>redpilled?
Fuck no, it is an extremely normie investment. The only investment that is even bluer pilled would be a mutual fund with a stock/bond mix that auto-balances based on your age.
>is passively investing in the S&P 500 and holding for 40+ years the best way for average joes to invest?
No, but it is a damn good one. You could reduce your risk without sacrificing much in the way of gains by diversifying into international and mid-cap stocks. You may also want to consider diversifying into bonds if your risk tolerance drops as you age.
Kayden Green
Look at using options for setting up collar strategies, you can manage it yourself and limit your risk to only 2-5% of your investment while still being able to collect dividends. At this point, most of the risk is credit risk - whether or not the company is able to remain solvent.
Elijah Ortiz
Also check out gold/silver mines. When the dollar hyperinflates from QE4, mine valuations go up in multiples.