Comment by alecco
3 years ago
This is terrible advice BTW. I got it in 2007, also HN and FT forums convinced me. So I put significant savings in a couple of index funds. I lost 40% within months. Left it there and recovered only after 8 years (and that's not even adjusting for inflation or MM rate). Please be a bit more self-aware. I spent many years in finance and the more I learned, the more I realized how much I don't know.
I don't think I'm following, you didn't "lose" anything if you didn't sell.
Even if you invested in 2007 at the peak and lost 50% of a 100% S&P500 portfolio by 2009, by now you'd be extremely wealthy, adjusting for inflation.
A $10k investment in 2007 is now worth $27k and that assumes you didn't contribute another penny for 16 years.
> I don't think I'm following, you didn't "lose" anything if you didn't sell.
This is the same reasoning as Banks avoiding mark-to-market.
If you're investing a chunk of every paycheck, you'll keep plowing money into the index fund through every dip, which historically makes up for the money you add at peaks. You can spend a few years derisking as you approach retirement, which is similarly not that susceptible to recessions.
> This is a terrible moment for index funds.
I meant to put money in index funds right now. Not ongoing investment over a long time.
And going back further to my original point, if I had money in funds now I'd move it to Money Market accounts because the risk of a stock market downturn is big (1987/2001/2008 style). You are not Soros/Buffett/Munger or a multi-billion dollar hedge fund.