Is it too late to get into the market now?
I'm a relatively recent graduate with about $40K sitting in cash and I make about $120K/yr at MBB. I grew up in a poor family so I honestly never learned the importance of investing early and everything. Did some basic personal finance learning (IRA, 401K, etc) this month and now I feel like I fucked myself by sitting out this massive bull market.
Is it too late now / do I wait for the dip everyone says is coming? I know "time in the market" wins...but it feels incredibly irresponsible to invest at these prices.
Any advice on what do with my money would be much appreciated.
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Could go up, could go down, could go sideways.
If you're putting in your money and forgetting about it for the next 40 years then you should be fine DCA'ing it in right now.
Right and that's definitely my plan with each future paycheck (max out Roth IRA and 401K), but I'm not sure what to do with the 40K lump I'm sitting on.
Just divide it by some period of time that makes you comfortable (12-24 months for example) and invest it in index funds of your choice for the long-term. Time in the market > timing the market.
Put in buy limit orders instead of just DCA'ing.I personally believe the market will tend to fall below a ATH by 20-30%.I have 3 months in cash savings specifically in checkings always, and some other random shit I keep which is badically cash. I have buy limit orders for S&P and other ETF / market indices at different price points. The other 3 months of savings you're supposed to have I put at $275.5, 5k at $300, 10 at 325, the rest at $350 and I scale how much those positions I increase every few months by how much money I have. So if there's a 30% or more correction I'm happy.I max pre tax contributions so get current market exposure that way, still invest a little every month into traditional DCA method, and also invest in crypto etc which I think is a better investment in the current market for finance peopel (who can't clear trades without annoying compliance). So good enough for me. Paid off during the pandemic when prices dipped and as prices rose I put money back into limit orders at different price points and as I make more they scale up.In my opinion, I put enough in investments and have exposure on the upside in bull market to offset inflation etc on the limit orders and when they do fill I will be able to take advantage of the outsized returns then. Overall I think the logic checks out and you get to have the best of both worlds. I never really understood why people were so ‘pro’ riding the bull wave if prices eventually corrext back anyway. Those are just paper gains. In my opinion it’s ok to structure investments like this because when things do eventually fall you can be in a good position to take advantage of it without trying too hard to time the market etc. but you never know how much things will correct.
How are you so certain we will see such a fall any time soon? The MOST I could see this year is hovering around 5% under ATH. There would need to be another black swan COVID style event otherwise. Too much buying pressure, no where else to park cash, and no taper has been confirmed this year at least. You’re better off buying now.
Yeah I've been thinking about that. I think w money supply expansion asset values going up 20-30% is actually fair and there's quite a bit of crowding out For investments with more and more retail investors.I'm thinking of changing up / sizing up. I was gonna edit my comment and add that I was gonna put a lot more in smaller potential dips (5-10%) and update them as the market goes up (so not fixed to a certain number) but would take too much effort.I think that it's important to be invested, but I think long term even if you miss out on bull run gains e.g. next recession is when it hits 7k, it would drop down to 4-5 and my numbers will be adjusted respectively. So the fact that you are missing out on the rise up when it will come back down isn't significant. Obviously there are no guarantees it will correct 30% if it hits 7k after another crazy run, but that's what being invested in things like crypto and high beta assets can help with too, along with simply investing some DCA and pretax contributions. Thoughts?At the end of the day we’re only talking about 200-400 income in the next few years probably so a lot is spent anyway DCA if I’m doing a few grand each month in base alone. The big thing I didn’t mention that’s actually extremely important and might edit my first comment is treating the bonus w this strategy more than base.
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