Should I wait or invest

[ashg]

I was getting ready to startmy investment journey and build a 3 fund portfolio. Was going to invest 100K in in VTSAX (80%) and VTIAX (20%) in a taxable account. But given the steep rise in last 2 days, I am thinking should I wait? Will it matter in long run? I am very new to investing, timing the market is not my objective, but I also do not want to start investing at a time when market is over hyped.

Thoughts?

[Tamalak]

The top of 2000 was a historically bad time to invest. Over the next two decades the market got chopped in half twice, and nearly a third time with covid.

If you invested in 2000, at this point you still would have made 4% annualized real returns, that's 4% plus inflation ever year.

[retired@50]

I was getting ready to startmy investment journey and build a 3 fund portfolio. Was going to invest 100K in in VTSAX (80%) and VTIAX (20%) in a taxable account. But given the steep rise in last 2 days, I am thinking should I wait? Will it matter in long run? I am very new to investing, timing the market is not my objective, but I also do not want to start investing at a time when market is over hyped.

Thoughts?

You see the trouble here...??? You can only know if the market is "over hyped" with hindsight.

See link about dollar cost averaging versus lump sum investing: https://www.bogleheads.org/wiki/Dollar_cost_averaging

The issue has been discussed to death on the forum. My take is to invest, which ever way you can, so long as you invest. It's sort of like getting into a swimming pool, do you use the diving board or the stairs?

Regards,

[KlangFool]

I was getting ready to startmy investment journey and build a 3 fund portfolio. Was going to invest 100K in in VTSAX (80%) and VTIAX (20%) in a taxable account. But given the steep rise in last 2 days, I am thinking should I wait? Will it matter in long run? I am very new to investing, timing the market is not my objective, but I also do not want to start investing at a time when market is over hyped.

Thoughts?

ashg,

A) If you are not 100% stock, you would not need to ask this question. For example, if your Asset Allocation (AA) is 70/30, you would invest at a 70/30 ratio. Hence, you do not need to care whether the stock market is at a high.


B) If you need to ask this question, you are not ready to use the 3-funds portfolio. You need to "buy, hold, and rebalance". If you fail at buy, how could you pass the hold and rebalance test?


C) Use an all-in-one fund like a target-date retirement fund or Life Strategy Fund instead.

KlangFool

[Robdac]

Has the market gone up in the last two days? I hadn't even noticed.

[Triple digit golfer]

https://awealthofcommonsense.com/2014/0 ... ket-timer/

[galawdawg]

Another Boglehead started a thread in September, one thing he was contemplating was whether he should go ahead invest a large sum in VTSAX for retirement (20+ years away) since the market was high and he was concerned about short-term drops. That same Boglehead posted another thread earlier today asking the same thing. And while he sat on the sidelines since September concerned about short-term drops, VTSAX has risen over 22%.

If you are investing for the long-term, it doesn't matter whether the market drops or not. In fact, I guarantee that the market will drop at times. We just don't know when, how much, and for how long. We could be at a high point and it may drop tomorrow. Or, we could see double-digit gains for years to come. Nobody knows. If you don't invest now, then when?

[Coburn]

I was getting ready to startmy investment journey and build a 3 fund portfolio. Was going to invest 100K in in VTSAX (80%) and VTIAX (20%) in a taxable account. But given the steep rise in last 2 days, I am thinking should I wait? Will it matter in long run? I am very new to investing, timing the market is not my objective, but I also do not want to start investing at a time when market is over hyped.

Should you wait?...for what exactly?

If the market keeps rising, it may be harder for you to justify jumping in. And if it drops, will you really be prepared to dump money in and perhaps seeing it drop even lower if the market pulls back even more...would you panic and sell then?

After reading Tripledigitgolfer's link, understand that the majority of the time...the stock market rises and will reward you, if your investing timeline is sufficiently long and you are patient enough.

Let the magic of compounding interest do its thing as you steadily grow your nest egg.

[livesoft]

But given the steep rise in last 2 days, ...

What steep rise are you talking about?

[MishkaWorries]

I vote to wait. You need to wait until you know for sure what you are doing and why you are doing it. You say three fund portfolio but are 100%. You have $100,000 to invest in a taxable account. Why taxable?

Do you have a written investment plan?

Do you have tax advantaged space available?

Why 100% equities?

What is your risk tolerance?

What AA do you want?

[3funder]

I was getting ready to startmy investment journey and build a 3 fund portfolio. Was going to invest 100K in in VTSAX (80%) and VTIAX (20%) in a taxable account. But given the steep rise in last 2 days, I am thinking should I wait? Will it matter in long run? I am very new to investing, timing the market is not my objective, but I also do not want to start investing at a time when market is over hyped.

Thoughts?

ashg,

A) If you are not 100% stock, you would not need to ask this question. For example, if your Asset Allocation (AA) is 70/30, you would invest at a 70/30 ratio. Hence, you do not need to care whether the stock market is at a high.


B) If you need to ask this question, you are not ready to use the 3-funds portfolio. You need to "buy, hold, and rebalance". If you fail at buy, how could you pass the hold and rebalance test?


C) Use an all-in-one fund like a target-date retirement fund or Life Strategy Fund instead.

KlangFool

+1

[ruralavalon]

I was getting ready to startmy investment journey and build a 3 fund portfolio. Was going to invest 100K in in VTSAX (80%) and VTIAX (20%) in a taxable account. But given the steep rise in last 2 days, I am thinking should I wait? Will it matter in long run? I am very new to investing, timing the market is not my objective, but I also do not want to start investing at a time when market is over hyped.

Thoughts?

Don't wait.

It was always my policy to invest whenever I had extra money available for investing.

If you wait to invest you will never know if the next day, or next week, or next month, or even the next year might be better. Meanwhile the cash you hold onto will have a negative real return net of inflation and taxes.

[GerryL]

If you wait to invest you will never know if the next day, or next week, or next month, or even the next year might be better. Meanwhile the cash you hold onto will have a negative real return net of inflation and taxes.

Yes. The question in the header might as well be "Should I have waited or should I have invested." Much easier to answer in hindsight.

[ashg]

Thanks everyone for the responses. Like I said earlier, I am just getting started on investing...

To clarify a few aspects, I am building my portfolio as below and plan is to continue to maintain this AA for next few years.
Domestic Stock: 60% (majority (VTI and VTSAX) in Taxable,401K,HSA
International Stock: 20% ( majority VTIAX) in Taxable and 401K
Bonds :20% (majority VBTLX): in IRA, Roth and 401K

The reason I say majority is because 401K is in Target Date Vanguard Trust fund and HSA is at Fidelity where I do not have access to VTSAX, VTIAX and VTBLX

[David Jay]

Ash:

The first thing you need to internalize when investing for long term goals is: Don’t try to guess what the market is going to do in the short term future.

[yules]

I was getting ready to startmy investment journey and build a 3 fund portfolio. Was going to invest 100K in in VTSAX (80%) and VTIAX (20%) in a taxable account. But given the steep rise in last 2 days, I am thinking should I wait? Will it matter in long run? I am very new to investing, timing the market is not my objective, but I also do not want to start investing at a time when market is over hyped.

Thoughts?

In the past 2 days, VTSAX is up about 1.4% and VTIAX is up about 0.05%. Only you can decide if that is steep and overhyped over the long run. Do you feel lucky? Or do you **know** the market will decline soon? If yes to wither, than hang on for a few days/weeks/months before you invest.

If you don't know, then may as well just invest.

If you are super nervous, then Invest 25% of your total amount on each of 1/22, 2/22, 3/22, and 4/22.

But think of it like this: have you ever gone on a diet? The toughest part is getting started. But once you get started, staying on the diet is easier. Similar, the toughest part in your investing journey is putting in the first traunch because you have to make an active decision. Once you do that, automate your investing (through 401k deposits from your paycheck or automatic investments that Vanguard takes directly from your bank) so you don't have to think about it and doubt yourself.

Trust me, your old self will thank your young self!

Good luck!
Yules

[jason2459]

Exuberant times?

"Invest you must." ~Jack

https://youtu.be/3bf0Qgem_dQ

[ruralavalon]

For someone just starting a quick education in the basics is Dr. Bernstein's free pdf book "If You Can", and the wiki article "Bogleheads'® Investment Philosophy", link.

[Vtsax100]

...but I also do not want to start investing at a time when market is over hyped.

Thoughts?

The market is over hyped? What!?
Should I sell all my equities now?

[billfromct]

You need to stick with your plan & ignore the hype.

In my Investment Policy Statement (IPS) my asset allocation for my IRA is 60% stocks/40% fixed income. If the stock allocation falls to 50% if, I move 10% from fixed income to stocks & vice versa.

On 23 March 2020, my stock allocation fell to 49.8%. I was all set to rebalance the next day, March 24th.

When I logged on line to do transaction, the S&P 500 was up 4%-5% & I thought it was just a "dead cat bounce". Do I didn't pull the trigger.
The S&P 500 was up 8%-9% for the day. After that "dead cat bounce", I was back within my 10% asset allocation guideline.

Now my IRA is now about 65% stocks/35% fixed income. The bull market has treated me very well. I will rebalance if my IRA stock allocation gets up to 70%. Others recommend a 5% bandwidth, but my 10% bandwidth allows me to take advantage of the long term market trends. I have 8-10 years of RMDs in my IRA fixed income allocation so I should be able to ride out any bear market or correction.

My point, make a plan & stick to it & don't deviate when emotions guide you the other way; like what I did.

bill

[Trader Joe]

I was getting ready to startmy investment journey and build a 3 fund portfolio. Was going to invest 100K in in VTSAX (80%) and VTIAX (20%) in a taxable account. But given the steep rise in last 2 days, I am thinking should I wait? Will it matter in long run? I am very new to investing, timing the market is not my objective, but I also do not want to start investing at a time when market is over hyped.

Thoughts?

Start. Do not wait.

[Hector]

I would invest now.

[Toons]

Ditto Now
Time
NotTiming

[chasingfire2020]

I was getting ready to startmy investment journey and build a 3 fund portfolio. Was going to invest 100K in in VTSAX (80%) and VTIAX (20%) in a taxable account. But given the steep rise in last 2 days, I am thinking should I wait? Will it matter in long run? I am very new to investing, timing the market is not my objective, but I also do not want to start investing at a time when market is over hyped.

Thoughts?

Ashg, I've asked myself that question many times, and in many of those times I decided to wait. Almost always I was wrong, market went up and I didn't invest. Now I have more cash than I should, cash that hasn't been working for me, and that should have been invested long time ago.

I totally understand your instinct to time the market - it is hard to earn that money and you don't want to lose part of it if the market corrects tomorrow - but it is impossible to know what is going to happen. My emotional self tells me the same as yours, although my rational self knows that the right answer is to go ahead and invest.

If you are concerned about daily fluctuations, do DCA over a short period of time, but get it out there.

[ApeAttack]

If you are super nervous, then Invest 25% of your total amount on each of 1/22, 2/22, 3/22, and 4/22.

Pretty reasonable plan to help address OP's fears. If the market goes down in early March, then the purchases on 3/22 and 4/22 would be an even greater deal.

Or if this doesn't completely address OP's fears, then invest 1/12 of the funds each month for an entire year. Or invest half now and the other half over the next six months.

Klangfool's thoughts on investing everything now with an appropriate AA are pretty good too.

OP, since the future is unknowable and the market historically always goes up (over a long enough time period), not starting to invest now is the worst of all possible options.

[placeholder]

If I thought you should wait with lump of cash then I would also think that I should sell all the stock funds I have in tax advantaged accounts but I don't think either of those things.

[Triple digit golfer]

If you wait, or invest it over a year, what makes you think you won't have the same reservations at that time?

The market may never again go lower than it is right this minute.

You have a pile of money. How do you want it invested? If whatever you're thinking makes you nervous, select an allocation that is more conservative. Stick to it over time by rebalancing.

[averagedude]

Always invest according to your asset allocation when the funds are available. Follow this practice during your entire accumulation lifetime. It will likely reward you with higher returns and it will cause less stress in your investment life.

[arcticpineapplecorp.]

Q: When should I buy?
A: When you have the money.

Q: When should I sell?
A: When you need the money.

If you have the money but are not buying it is due to either fear (of future falling market) or greed (waiting for future falling market to buy lower). Are you being fearful, greedy or both?

investor, know thyself.

also see my signature (get a plan).

[ruralavalon]

Q: When should I buy?
A: When you have the money.

Q: When should I sell?
A: When you need the money.
. . . . .

This is an excellent pair of rules for investing.

[arcticpineapplecorp.]

Q: When should I buy?
A: When you have the money.

Q: When should I sell?
A: When you need the money.
. . . . .

This is an excellent pair of rules for investing.

thanks. can't take credit for it though. Heard it on Don MacDonald's (and Tom Cock) podcast (Talking Real Money). It was pithy and provided clarity amidst the uncertainty of market timing we so often hear.