Just putting money into the S&P 500?
I'm a young idiot. I want to get wealthy, but am happy doing it the slow way. Is there any reason I can't just through all my spare money into the S&P 500 from a risk perspective?
Trending Content
Career Resources
Actually, this isn't a bad way to do it. Really just keep dollar cost averaging and re-investing the dividend, and you should be fine. If you contribute enough (run your own calculation on that and figure out what is "enough") it should work out; if something happens to the S&P and it never gets to its current levels again, then you'll probably have bigger problems then retiring.
Also, seems like you're young, don't get caught up in trying to get rich quick, or invest in something that you don't understand, or do something just because someone told you to do it. It's the market for a reason, if another individual stock or investment get better risk adjusted returns, everyone would be in that and basically the advantage would be gone.
70-20-10
70% Stocks… S&P or globally diversified index
20% Bonds (would personally go BHYIX, everyone has different risk tolerance tho)
10% whatever your heart desires… might personally go physical gold/silver
Edit/Disclaimer: college kid with a lot higher risk tolerance than most
Just gotta watch the spread on BHYIX, relatively tight right now.
I would avoid junk bonds and particularly the lowest rated junk bonds like the plague right now. Credit conditions have tightened recently and there has not been a high yield bond issuance since early march. Hard for me to see how there aren't a lot of defaults in the near future especially in the lower rated bonds. Not sure how a lot of the lower rated issuers would even be able to refinance the bonds at maturity in the current conditions. For the last decade plus these junk issuers have been able to refi at lower and lower interest rates and that environment obviously no longer exists. take a look at ANGL fallen angel bond etf which is higher rated junk bonds with a still solid yield. I personally have my bond investments in IG corporate bonds (LQD) and short term t-bills. I also like agency MBS (VMBS) here trading at a steep discount so any prepayment activity is upside and essentially no credit risk so i think downside is limited given the fed is probably done hiking. I have become a big bond guy now that you can actually get some yield recently.
Fair enough… depends on the company I guess. Not that I have any ability to choose what bonds I invest in, but personally think there are lots of junk bonds that won’t have any issue repaying/ financing. Would avoid any tech bonds, little more bullish on HY for materials/energy/utilities. Some pretty solid companies trading at substantial discounts rn.
Sorry if this is a silly question, but why bonds/physical commodities in addition to just the S&P?
Higher risk higher reward?
Little diversification. Just pick something you think doesn’t have any significant default risk for bonds (not saying you have to go T-Bills but don’t go investing in Twitter debt).
As for physicals, wouldn’t expect much growth in this, but over 30-40 years it would be a good hedge against inflation/shit hitting the fan. Will always be able to get cash for gold at the end of the day.
he read it in a book written 50 years ago when bonds and physical commodities were doing well
If you are simply trying to just grow your wealth as much as possible for 40 years from now then yeah that approach probably makes the most sense. Not sure if you have been invested through last 5 years with some large draw downs so just be sure you can handle the losses without panic selling. However you need to consider any near term savings goals. If you want to buy a house, engagement ring, get an MBA in the next 5 years or so then i would advise to take less risk with that money you may need in the nearer term. For near term goals i would park that cash in tbills, IG corporate bonds, or some other fixed income investment that is lower on the risk spectrum.
No idea how smart it is, but I thought I'd let you know that is exactly what I am doing. Granted, I have less than 100k in savings, but I have thrown it all into SPY and continue to just buy shares whenever I have extra cash to send to my brokerage account.
Veritatis voluptatem amet ex quasi voluptatem molestiae. Aperiam pariatur est aut.
Est ea eaque fugit. Laudantium rem et omnis ratione inventore non id. Enim aut ut est eius aut. Est sit rem quo est est. Et eum animi ab qui. Eum beatae sed tenetur ut labore eveniet at.
Voluptatum deserunt enim iste itaque qui voluptas. Expedita minima facilis nisi aut aut. Necessitatibus voluptate amet cumque. Dolorem dolores sit labore eos. Ipsam sit consectetur rem quia culpa tempora. Dolorum sunt exercitationem asperiores suscipit quod.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...