New Investor...Should I Just Wait?

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staynatural
Posts: 16
Joined: Wed Sep 22, 2021 5:32 am

New Investor...Should I Just Wait?

Post by staynatural »

Hello, everyone. This is my first post after many hours of reading the forums. I'm looking for some personalized advice.

Background: I'm a 27 year old unemployed student, probably have 2-3 years left until graduation. Wife makes about 45k a year. About a month ago I received a windfall of 150k and a piece of land. With the 150k I paid off wife's student loans so we became debt free, and I invested 120k into a three fund portfolio (55% vtsax / 35% vtiax / 10% vbtlx).

I'm highly regretting investing when I did. All the advice I read said invest as soon as possible, but the market seems incredibly inflated to me. I've already lost several thousand by investing in August 21, and it seems reasonable that the market will continue to fall. I'm not going to sell any investments, but I'm bummed out and confused.

I have sold the land and just received the payment, another 200k. I do not feel comfortable investing any more while the market is in decline. What is the best course of action to properly manage this new 200k?

Thank you all for taking the time to read this and offer help!

Edit: Thanks again to everyone for the replies. The two questions I'm seeing repeated are:

1. What is this money for?
- Retirement and possibly a home downpayment in the mid future (probably 7-10 years). Part of the 55% vtsax is in IRAs for 2021. I will definitely be holding another 12k for next years IRA contributions.

2. What is your risk tolerance?
- I thought a good bit about this before investing and I think 90/10 makes the most sense. I'm not going to be using most if any of this money for 35+ years.I fully understand that there will be ups and downs. The part that is frustrating for me is that in Feb 2020 vtsax all time high was ~$84, and then a year and a half later was ~$113. There has never been a jump so large in the history of that mutual fund. I'd love to hear from an economist on this, but rapid increases on that scale don't seem sustainable. I'm just concerned that it was stupid to invest when the market appeared to be inflated. From the replies I'm gathering that this is not a valid concern, but I'd love to hear your thoughts.
Last edited by staynatural on Wed Sep 22, 2021 6:26 pm, edited 1 time in total.
waterwell
Posts: 26
Joined: Sun Aug 17, 2014 7:12 am

Re: New Investor...Should I Just Wait?

Post by waterwell »

I’m in my early 30s and from 2015 to 2018 I sat on the sidelines with 100k in cash because at the time I thought the market was at an all time high. In hindsight, I should have been more aggressive and invested sooner.

You’re young. Figure out what amount you’ll need in the short term, invest the rest and don’t look at it for the next 20+ years (I know, easier said than done).
MrJedi
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Re: New Investor...Should I Just Wait?

Post by MrJedi »

Sounds like you need to better understand your risk tolerance. And also realize 1-2% loss today is just noise compared to the big picture in 30+ years. The market dropped down to levels from 2 months ago; the sky is not falling.
sjt
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Location: NC

Re: New Investor...Should I Just Wait?

Post by sjt »

When do you need the money? In a few years for a down payment? In 30 years for retirement?

Here's someone who bought at the market peak last year - seems to be turning out OK so far

viewtopic.php?t=307247




Here's a simplified case study of someone who only invested at market peaks:

https://awealthofcommonsense.com/2014/0 ... ket-timer/
"The one who covets is the poorer man, | For he would have that which he never can; | But he who doesn't have and doesn't crave | Is rich, though you may hold him but a knave." - Wife of Bath tale
RXfiles
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Location: Birmingham, AL

Re: New Investor...Should I Just Wait?

Post by RXfiles »

>I'm highly regretting investing when I did. All the advice I read said invest as soon as possible, but the market seems incredibly inflated to me. I've already lost several thousand by investing in August 21, and it seems reasonable that the market will continue to fall. I'm not going to sell any investments, but I'm bummed out and confused

Seems like you need to reevaluate your risk tolerance. Surely you understood you could be down a couple percent in a month? That's nothing in the long run.
gonefishing01
Posts: 352
Joined: Wed Aug 19, 2015 9:09 pm

Re: New Investor...Should I Just Wait?

Post by gonefishing01 »

You did the right thing. I know its not easy but the best thing you can do is stay the course right now. It’s a bummer to see the market turn right after you put money in, but these are long term investments and the odds are in your favor if you are patient. Future you will thank yourself one day for investing that money the way you did.
If you need any of the 200k for anything in the next 5 years keep that in a high yield savings account. If you really can’t stomach another lump sum or DCA into the portfolio for the rest, consider increasing the bond allocation for the time being.
Best of luck.
Last edited by gonefishing01 on Wed Sep 22, 2021 6:38 am, edited 1 time in total.
whatdoIknow
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Re: New Investor...Should I Just Wait?

Post by whatdoIknow »

Most investors don't start off with a windfall like that. So over time, they get used to see a little go up and down as it slowly grows.
Maybe not the best financial decision, but maybe to help adjust emotionally to having this amount of money available, hold that extra amount and watch the market over the next year with the 150 currently there and see what happens. then as you gain more experience of what you are comfortable with DCA into your account.
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ruralavalon
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Re: New Investor...Should I Just Wait?

Post by ruralavalon »

Welcome to the forum :)

staynatural wrote: Wed Sep 22, 2021 5:52 am Hello, everyone. This is my first post after many hours of reading the forums. I'm looking for some personalized advice.

Background: I'm a 27 year old unemployed student, probably have 2-3 years left until graduation. Wife makes about 45k a year. About a month ago I received a windfall of 150k and a piece of land. With the 150k I paid off wife's student loans so we became debt free, and I invested 120k into a three fund portfolio (55% vtsax / 35% vtiax / 10% vbtlx).

I'm highly regretting investing when I did. All the advice I read said invest as soon as possible, but the market seems incredibly inflated to me. I've already lost several thousand by investing in August 21, and it seems reasonable that the market will continue to fall. I'm not going to sell any investments, but I'm bummed out and confused.

I have sold the land and just received the payment, another 200k. I do not feel comfortable investing any more while the market is in decline. What is the best course of action to properly manage this new 200k?

Thank you all for taking the time to read this and offer help!
It is good that you used $30k and "paid off wife's student loans so we became debt free". Congratulations on that.

One month is far too short of a time to be a test of any investing strategy. Be patient. Invest for the long-term, not for the to short-term. Warren Buffets' ideal holding period for an investment is "forever". At age 27 one month of market activity, whether up or down, is meaningless no matter how it feels at this moment. I am sure that it feels bad right now.

You made good fund choices for the $130k, they are very broadly diversified (to reduce risk) and have very low expense ratios (to increase net returns).

1) For the rest ($200k), first do this. Completely turn off all financial news --TV, radio, print, internet, everything. Do anything else but financial news. So concentrate on your studies at school, read a book, watch a movie, go for walk, ride a bike, exercise, take your wife out to dinner, do anything at all other than financial news.

2) Don’t tell anyone about this windfall;

3) take your time, there is no rush;

4) temporarily park the money for a short time in a very safe place, such as federally insured savings accounts or federally insured short term CDs. A good resource for comparing rates is http://www.bankrate.com;

5) educate yourself first. Here is a wiki article you could read to start educating yourself: "Bogleheads® investment philosophy. For a quick overview of investing basics for the new person read Dr. Bernstein's short book, "If You Can". I suggest reading one or two books on general investing. Wiki article, "Books: recommendations and reviews";

6) beware of anyone (family, friend, neighbor, co-worker, broker, banker, insurance salesperson, anyone at all) trying to sell anything (real estate, stocks, bonds, insurance, annuity, CDs, mutual fund, ETF, anything at all); and

7) make a plan first, then act.

8) because your wife has $45k annual employment income the next investing step should include opening two Roth IRAs one for each of you at a low cost fund provider like Vanguard, Fidelity or Schwab. You can contribute up to $6k each annually. So contribute $6k each soon and then another $6k each in January 2022, for a total of $24k. Just buy a money market fund in the Roth IRAs temporarily if you can't decide in what else to do.

9) Please see the wiki article, "Managing a Windfall".

I tried to stretch the list out to be a 12-step program :wink: , but ran out ideas for you :D .

Edited for grammar, punctuation and spelling.
Last edited by ruralavalon on Wed Sep 22, 2021 7:51 am, edited 4 times in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
daheld
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Re: New Investor...Should I Just Wait?

Post by daheld »

First, on the $120k you already invested. Forget it. It's been a month. It might be worth $75k in a year. Or it might be worth $220k in a year. Nobody knows. If you invested it with a long time horizon, say, 30 years, in mind then you're....through month one of 360. Long way to go. If your plan is to let it ride then stop paying attention to the noise and let it ride.

Second, on the $200k you now have available to invest from the land sale. Figure out what your risk tolerance is. Invest according to that. Then read the first paragraph again. Time IN the market beats TIMING the market.

Finally, I'd encourage you to keep in mind that these are really great problems to have. You just got a huge boost and head start to your retirement savings. In one month you received a cash infusion that's roughly eight times your gross yearly income. Set some aside for a healthy emergency fund, invest the rest according to your investment plan and tune out the noise.

Edited to add: A personal anecdote: My wife and I were married in April, 2016. Shortly thereafter we combined all our finances and accounts and had a lot of cash to invest that we'd both accumulated as single folks. I graduated college in 2008 and had watched as the stock market slowly recovered since--for example, the Dow Jones was up about 120% at the time of our marriage from it's 2009 low. I was convinced the market was at it's peak and investing six figures in 2016 was stupid and I'd pretty quickly lose a ton of money. But we invested it all. The Dow has gained 100% since our wedding. Invest it in accordance with your plan and move on.
Last edited by daheld on Wed Sep 22, 2021 8:02 am, edited 2 times in total.
fortunefavored
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Re: New Investor...Should I Just Wait?

Post by fortunefavored »

I agree with "take your time and establish a written plan" - but many people have come before you and had the same feelings.

In your life, you'll likely experience another 3 or 4 cyclical bull/bear markets. That means a long period of either under or over performance. So you will spend 10 to 15 years questioning your strategy and then 10 to 15 years thinking you're a genius. Many many people have only experienced the bull part of these cycles (basically since 2008!)

Here's the thing though: bears are where riches are made. spending 10 or 15 years regularly investing during a series of flat/down markets, and then when the bull returns.. all that money multiplies.

So if we ARE headed into a long bear of down/sideways markets, you're set up perfectly.
livesoft
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Re: New Investor...Should I Just Wait?

Post by livesoft »

Since the future is unknown you will learn in a few months, years, or decades what the best course of action for this week would have been.

All you can do is not wait and do something and learn to live with your decisions. Good luck!

See also: viewtopic.php?t=132098

I will add that with Investing, you will always have some regrets, so please get used to it.
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homebuyer6426
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Re: New Investor...Should I Just Wait?

Post by homebuyer6426 »

OP, I felt the same when I first started investing in 2012. I bought a popular tech stock and ending up selling it after a few months. If I had held it until today, I would have made a 7 times return on my principal in 9 years.

Two points:
- Stock funds aren't for money you expect to need in the next few years.
- The longer you invest, the more you will understand how much volatility you are comfortable with. And you may find yourself comfortable with a much higher volatility level after some experience, as I did.
45% Total Stock Market | 52% Consumer Staples | 3% Short Term Reserves
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retiredjg
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Re: New Investor...Should I Just Wait?

Post by retiredjg »

Welcome to the forum. :happy

This is exactly what the market does. You are just not accustomed to it yet. That will come with time.

Paying off the debt was an excellent idea! Investing is also an excellent idea once you set some aside as an emergency fund.

You didn't mention what kind of account you invested the money in. It sounds like putting money into Roth IRA might be a good choice. You can each contribute to Roth IRA based on your wife's salary.

Here is an idea to consider. Since you are new to investing and a little spooked by the market, I suggest you invest the rest of the money that is sitting around (after setting aside an emergency fund), but in a more conservative asset allocation (stock to bond ratio). In other words, start at something like 60% stock and 40% bonds for now. This will make your portfolio less volatile as you are starting out.

After a few years, as you get accustomed to what the market does and how you feel about it, increase your stock to bond ratio back to 80/20 (my suggestion) or 90/10 (your original goal). There is nothing to lose by doing this because a small portfolio does not grow much from what it is invested in. This is a drop in the bucket when looking at your situation from a long term perspective.
Wanderingwheelz
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Re: New Investor...Should I Just Wait?

Post by Wanderingwheelz »

None of us sold everything on August 21st so, in effect, we all bought on that day too. We’ve “suffered” right along side you.

I wouldn’t have minded taking some chips off the table a couple or weeks ago armed with the knowledge I have today. Unfortunately, that’s not how this game is played.

That’s why most of us here are resigned to choosing a suitable asset allocation and holding it through up markets as well as down. Some hard lessons have taught us that there are few if any better ways to invest.
Being wrong compounds forever.
Jovby
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Re: New Investor...Should I Just Wait?

Post by Jovby »

You did the right thing. Waiting for it to drop is a loosing game. What would you do if it’s still up in 1 year? 3 years? 5 years? Keep waiting? When it drops 10% will you buy In then, or wait for it to drop further? It’s impossible to know the “right” move in advance, best not to try.

My father in law was so excited that he got out right before the March 2020 drop. Unfortunately he didn’t get back in at the “right” time and so lost out. I just stayed in right through it and did much better.

You didn’t mention what this money is for. That’s the most important part of investing. If it’s for retirement, do what others have said and just invest and forget about it. Yes the market WILL drop by 30% (or maybe 50% or more) sometime between now and when you retire in 30ish years. That’s fine, that’s how it works. Over the long haul it will be up.

If this new money is foe something more short term, say buying a house, relocating, starting a business when you graduate then you shouldn’t invest it.
JBTX
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Re: New Investor...Should I Just Wait?

Post by JBTX »

Typically market watch is mostly financial porn, but I found this interesting.

https://www.marketwatch.com/story/buy-t ... 1632245567

The point is hanging around and waiting for a dip over the long term is a losing strategy. If the current modest dip is bumming you out you really need to change your outlook. How long is the money going to be invested? If we are talking decades a 5, 10, 20% etc drop now is completely irrelevant

Having said that if you want to take your second chunk of money and invest on a pre-determined fixed schedule, in order to make you feel better, that is fine. Just figure out the schedule and stick to it.
mr_brightside
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Re: New Investor...Should I Just Wait?

Post by mr_brightside »

a lot of people here will just say dump it all in at once and cite data to support that especially when the time horizon is long (10+ years). and of course the charts will say that -- because the market now is -- you guessed it -- quite a bit higher than it was 3, 5 and 10 years ago.

but personally I am a fan of developing a DCA strategy that works for you. there is a mental component to investing. we have to be true to our individual thought processes. what one person feels comfortable with -- another person might feel tortured by the risk...

seeing an investment drop 10%+ soon after you buy it is very painful. even if it will likely recover and do well longer term.

i'd probably do something like $10K / month going forward. if we had a major drop -- i'd invest more on that dip. no one can predict the future of course.

---------------------------------------------------------
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CyclingDuo
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Re: New Investor...Should I Just Wait?

Post by CyclingDuo »

staynatural wrote: Wed Sep 22, 2021 5:52 am Hello, everyone. This is my first post after many hours of reading the forums. I'm looking for some personalized advice.

Background: I'm a 27 year old unemployed student, probably have 2-3 years left until graduation. Wife makes about 45k a year. About a month ago I received a windfall of 150k and a piece of land. With the 150k I paid off wife's student loans so we became debt free, and I invested 120k into a three fund portfolio (55% vtsax / 35% vtiax / 10% vbtlx).

I'm highly regretting investing when I did. All the advice I read said invest as soon as possible, but the market seems incredibly inflated to me. I've already lost several thousand by investing in August 21, and it seems reasonable that the market will continue to fall. I'm not going to sell any investments, but I'm bummed out and confused.

I have sold the land and just received the payment, another 200k. I do not feel comfortable investing any more while the market is in decline. What is the best course of action to properly manage this new 200k?

Thank you all for taking the time to read this and offer help!
If you are highly regretting investing when you did, then IMO you have not read enough of the BH forums, the Wiki or watched the instructional videos. :shock:

You should not be investing if you cannot handle typical market "action" and live by the index card rules...

Image
https://www.focusfinancialadvisors.com/ ... orrection/

Clarification: the first bullet point about a -14% decline is meant to be an intra-year decline.

Do markets suffer, on average, a -14% intra-year decline? Let's take a look at just the past decade to show you what most of us have been through in the most recent decade of investing and survived - in spite of all the ups and downs that are typical...

2020 - Market dropped -33.9% during the Covid drop, and again dropped -9.5% in the autumn of 2020
2019 - Market dropped -6.8% in the Spring/Summer
2018 - Market dropped -19.8% in the latter months of the year, and -10.2% in the early months of the year
2017 - Market didn't meet the usual index card drop
2016 - Market dropped -13.3% in the latter month of 2015 and the early months of 2016
2015 - Market dropped -12.4% in the summer months
2014 - Market dropped -7.4% in the autumn months and -5.8% in the early months
2013 - Market dropped -5.8% in the summer months
2012 - Market dropped -7.2% in the autumn months and -9.9% in the spring
2011 - Market dropped -9.8% in the autumn months and -19.8% in the spring/summer/early fall months
2010 - Market dropped -16% in the spring early summer
https://www.yardeni.com/pub/sp500corrbear.pdf

That's the schtick. That's the game. That's what is involved for longer term investors. Don't allow yourself to be whipsawed into oblivion.

Check out the story of Tiffany, Brittany, and Sarah. Learn to be like Sarah for your investing decades. :beer
https://www.personalfinanceclub.com/how ... he-market/

CyclingDuo
"Save like a pessimist, invest like an optimist." - Morgan Housel | "Pick a bushel, save a peck!" - Grandpa
exodusNH
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Re: New Investor...Should I Just Wait?

Post by exodusNH »

staynatural wrote: Wed Sep 22, 2021 5:52 am Hello, everyone. This is my first post after many hours of reading the forums. I'm looking for some personalized advice.

Background: I'm a 27 year old unemployed student, probably have 2-3 years left until graduation. Wife makes about 45k a year. About a month ago I received a windfall of 150k and a piece of land. With the 150k I paid off wife's student loans so we became debt free, and I invested 120k into a three fund portfolio (55% vtsax / 35% vtiax / 10% vbtlx).

I'm highly regretting investing when I did. All the advice I read said invest as soon as possible, but the market seems incredibly inflated to me. I've already lost several thousand by investing in August 21, and it seems reasonable that the market will continue to fall. I'm not going to sell any investments, but I'm bummed out and confused.

I have sold the land and just received the payment, another 200k. I do not feel comfortable investing any more while the market is in decline. What is the best course of action to properly manage this new 200k?

Thank you all for taking the time to read this and offer help!
I understand how frustrating and frightening this must feel.

Please keep in mind that you have ~40-50 years of working in front of you -- that's 480 - 600 months. What happens in 1 month will have no impact on the remaining 479-599.

You absolutely made the right decision to invest! You chose a reasonable starting asset allocation (i.e. stock/bond split) for someone with that kind of horizon.

But maybe your tolerance for market volatility is not quite at that level. And that's fine. Everyone has a stock/bond split that makes them comfortable. Maybe 80/20 to 75/25 would be better for you. I would not recommend, at 27, being more conservative than that since you need the stocks for growth.

Unfortunately, with that growth comes volatility. But again, you need to focus on this being 1 month out of ~500.

I really like the other poster's suggestion regarding the Roth IRAs. These are fantastic options. Like they said, take $12,000 now and invest in a Roth IRA for 2021 and on January 3, invest another $12,000 in two IRAs. (Assuming your wife will also be earning around $45,000 next year.) IRAs are use-it-or-lose-it. As the poster said, you can just put the money into the "money market" option in the IRA if you're still feeling a bit apprehensive. If this seems overwhelming, keep in mind that you actually have until April 2022 to make 2021's IRA contribution.

That takes care of $24,000 of your $200K.

For the balance, figure out what 24 months of your expenses are. By this, I mean figure out how much you spend on everything -- cell phones, utilities, rent, cars, gas, insurance, groceries, clothes, gym memberships, drinks with friends, date nights, coffee. This is your emergency fund. Take that money and put it in a FDIC insured savings account. Many people on this board use Ally. I use Vio Bank.

24 months is a lot for an emergency fund, but my logic here is that since you're going to be in school (and so have limited income) that you want a cushion here, especially since you are struggling with your past decision.

On top of that 24 months of espenses, estimate what you have remaining on tuition and books. Put that money into the account as well.

Once you've know that you've got two years of living expenses AND your school costs covered until you graduate, I think you'll feel a lot better.

Now, take the balance of that money and invest it into your taxable brokerage account at the asset allocation you're comfortable with. You will probably find that you become more comfortable over time. Once you start working, you'll probably also find that you're comfortable with a 12-month or even 6-month emergency fund.

Ignore the news. Reporting "nothing bad happened today" doesn't get people to watch / click / interact. They're there to rile you up to sell advertising.

Finally, you didn't say how you came into the money. One thing to keep in mind is that you might need to reserve some of this money to cover income tax. If you inherited this land, the tax would be due on the difference between the market value of the land on the date of death and what you sold it for.
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Candor
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Re: New Investor...Should I Just Wait?

Post by Candor »

A 90/10 AA seems like a great idea while the market is going up and it almost certainly is for long-term investments at 27 yo. It loses a little luster when the market declines but that is something you have to come to terms with. You need to take a good long hard look at your risk tolerance. You could very well 'lose' 10's of thousands if the market does have a significant correction but if you have faith in the market then that 'loss' is just temporary and is a buying opportunity with the rest of your windfall if it is your intention to invest that for the long term. Determine an AA you can live with, come what may, and get to investing. Lump sum, 50% now and dca the rest or dca the whole amount over a set number of months, and execute. Easy. :)
The fool, with all his other faults, has this also - he is always getting ready to live. - Seneca Epistles < c. 65AD
ROIGuy
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Re: New Investor...Should I Just Wait?

Post by ROIGuy »

You have the greatest investment tool of all available to you, being young. Do you think the market is going to be higher in 30 years? Unless you say no you're investing at a great time. Even if you invested in the peak of the market in 2007 within 5 years you would have been backed even. You have at least 30 years. Invest early, invest often.
LittleMaggieMae
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Re: New Investor...Should I Just Wait?

Post by LittleMaggieMae »

To the OP: take a breath. I'm guessing the reason you invested the money involved something long term - as in at least 10 years or more into the future (maybe even "early" retirement in 25 to 30 years). Now is the time to Hold the Line with the $$ you have invested.

For the new cash - looks like investments are on Sale! who doesn't love a sale? It's not a bad time to invest. :)

When I first started investing and watching the ups and downs - I found it helpful to remind myself that it's only a loss if I sell. It's only a gain if I sell. And to remind myself that I had confidence in the way my money was invested because I understood what I invested in and why I invested in the first place. And a final part of the reminder was to confirm that I was in it for the "long haul" - my current finances were fine. It didn't matter if my long term investments bounced up and down from month to month - it had YEARS or DECADES to grow. I continued to invest monthly (via my paycheck).

And here I am 30 years later and it's worked out very nicely.
At your young age and far out in the future horizon - don't go all "super conservative" because you had a down month the first month. Hold the line. Do not change your allocation. Realize you are looking at a very short time - and actually you haven't "lost" anything - you haven't sold any shares. Give it a year. Hold the Line. You executed a "good plan" with what you did with your windfall. This is where you Hold the Line - stick to your convictions.

I'd also recommend continuing your financial education. Your financial path/plans will change over time - as life happens, as you get older, as your income goes up (or goes down). Stay informed. Keep planning.
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arcticpineapplecorp.
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Re: New Investor...Should I Just Wait?

Post by arcticpineapplecorp. »

staynatural wrote: Wed Sep 22, 2021 5:52 am I invested 120k into a three fund portfolio (55% vtsax / 35% vtiax / 10% vbtlx).

I'm highly regretting investing when I did. All the advice I read said invest as soon as possible, but the market seems incredibly inflated to me. I've already lost several thousand by investing in August 21, and it seems reasonable that the market will continue to fall. I'm not going to sell any investments, but I'm bummed out and confused.
welcome to the forum.

one thing to keep in mind is that generally speaking if you hold any amount of bonds you will do better overall than the stock market does when the declines in the stock market come. The more you have in bonds, the less bad you will do.

My mother was upset a few years ago when the market fell 10%. But when I pointed out that her portfolio only fell by 3% (because she only had 30% of her money in stocks) she felt smart having "beat" the market by 7%. (the opposite is also true unfortunately, in that when the market goes up 10% she only makes 3%). So having bonds helps you do better than the stock market in declines, but worse when stocks advance. Life's full of tradeoffs. You will have to determine how much in returns you are willing to forego in exchange for reducing losses. There's no way around this tradeoff.

So if stocks fall 10% and you have 90% in stocks, you are likely to lose 9%, not 10% because of the bonds you hold. If you want to lose less, you have to hold more bonds. But that will lower returns over time. If stocks go up 10% will you have regrets for only making 9%?

You should determine if your asset allocation is appropriate, because if you're having regrets, you probably are too aggressive if the market falls a couple of percentage points and that bums you out.

So I recommend five things for you to do:
1. develop an IPS and review it regularly. This is meant to be a long term plan so you don't abandon course everytime the market moves or something happens in the world. Reviewing it should remind you why you have the portfolio you have and help to stay the course.
https://www.bogleheads.org/wiki/IPS

2. read managing a windfall. It might help you think of things you hadn't considered. At the least, it reminds you to slow down and get a plan (see step #1):
https://www.bogleheads.org/wiki/Managing_a_windfall

3. Look at losses that are possible when the stock market has fallen 50% in past times. You should always be prepared to lose half of the money you invest in stocks. What that translates into losses OVERALL will depend on how much or little of your money you invest in stocks (see below). So figure out what your maximum pain point is (what losses you can tolerate overall) and choose your allocation by design rather than by default (10% bonds is similar to a target date fund for your age, but portfolios should not be age based, but rather designed to allow you to stay the course. So you have to understand how market losses translate into overall losses:

Image

4. read up and learn about how your need, ability and willingness to take risk informs you of your allocation to stocks:

https://www.cbsnews.com/news/asset-allo ... -you-take/

https://www.cbsnews.com/news/asset-allo ... tolerance/

https://www.cbsnews.com/news/asset-allo ... -you-need/

https://www.cbsnews.com/news/asset-allo ... ing-goals/

5. understand that the stock market falls on average 14% in any given year. Be prepared. You'd only lose 14% on average if you invest 100% in stocks. If you invest 50%, your loss would be half as much (7%). But also see that losses are temporary unless you sell after losses occur. Last year was a great example of that. It's an example of how tied risk and return are. The reason you made 20% in the total US stock market in 2020 is because you took the risk of losing 32% of your money between Feb-March 2020 (chart below slightly different returns/risk because it's showing S&P500, not total market). if you put your money instead in a bank acct in 2020 you would have only made 0.50%. Why? Because you took no risk (except inflation risk). Risk and return are inextricably linked. As has been said in order to get the return of the market, you really do have to take the risk. People want high returns, but low/no risk. That's living in fantasy land. Be realistic. If you want high returns, you have to accept high risk. If you don't want high risk, you have to accept lower returns. That's life.

Also see that even though losses occurred every single year since 1980, the market ended the year (as it did in 2020) higher 75% of the time. So if you buy and hold you get the return over time for having taken the risk. No guts, no glory. Investing is a marathon, not a sprint.

Image

thoughts?
Last edited by arcticpineapplecorp. on Fri Mar 11, 2022 6:21 pm, edited 1 time in total.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
BogleFan510
Posts: 1039
Joined: Tue Aug 04, 2020 2:13 pm

Re: New Investor...Should I Just Wait?

Post by BogleFan510 »

I would ask what is the time horizon for when you feel you will need to use the money? That should dictate asset choices and timeline for evaluating performance.
Topic Author
staynatural
Posts: 16
Joined: Wed Sep 22, 2021 5:32 am

Re: New Investor...Should I Just Wait?

Post by staynatural »

Thanks again to everyone for the replies. The two questions I'm seeing repeated are:

1. What is this money for?
- Retirement and possibly a home downpayment in the mid future (probably 7-10 years). Part of the 55% vtsax is in IRAs for 2021. I will definitely be holding another 12k for next years IRA contributions.

2. What is your risk tolerance?
- I thought a good bit about this before investing and I think 90/10 makes the most sense. I'm not going to be using most if any of this money for 35+ years.I fully understand that there will be ups and downs. The part that is frustrating for me is that in Feb 2020 vtsax all time high was ~$84, and then a year and a half later was ~$113. There has never been a jump so large in the history of that mutual fund. I'd love to hear from an economist on this, but rapid increases on that scale don't seem sustainable. I'm just concerned that it was stupid to invest when the market appeared to be inflated. From the replies I'm gathering that this is not a valid concern, but I'd love to hear your thoughts.
wolf359
Posts: 3207
Joined: Sun Mar 15, 2015 8:47 am

Re: New Investor...Should I Just Wait?

Post by wolf359 »

staynatural wrote: Wed Sep 22, 2021 5:52 am Hello, everyone. This is my first post after many hours of reading the forums. I'm looking for some personalized advice.

Background: I'm a 27 year old unemployed student, probably have 2-3 years left until graduation. Wife makes about 45k a year. About a month ago I received a windfall of 150k and a piece of land. With the 150k I paid off wife's student loans so we became debt free, and I invested 120k into a three fund portfolio (55% vtsax / 35% vtiax / 10% vbtlx).

I'm highly regretting investing when I did. All the advice I read said invest as soon as possible, but the market seems incredibly inflated to me. I've already lost several thousand by investing in August 21, and it seems reasonable that the market will continue to fall. I'm not going to sell any investments, but I'm bummed out and confused.

I have sold the land and just received the payment, another 200k. I do not feel comfortable investing any more while the market is in decline. What is the best course of action to properly manage this new 200k?

Thank you all for taking the time to read this and offer help!
Welcome to the forum!

What's your timeframe for investing? Are you planning on investing for a year, and then you're done? Or are you planning on investing for 30 years or more?

If it's the latter, why don't you take a look at a stock market chart with VTSAX or VTIAX on it. Set the timeframe to Max (or 30 years or whatever appropriate timeframe.)

What you will see is that the dips that are looming large right now are only big when you are looking at a 1-year timeframe. But if you don't need the money for 30+ years, then you should use a longer view. On that scale, those dips vanish. It's almost a straight diagonal line heading up.

Yes, the market can drop tomorrow, and continue dropping for 5 years in a row. If you are on a 30+ year timeframe, that is fantastic. You have a 5 year timeframe to scoop up as many shares at low prices as possible. The goal is to buy low, sell high.

I realize that you're worried that you bought at a high point in the market, and you might have done better to wait. What causes the most losses in the market is not the investment vehicle you select, but investor behavior. Humans have a tendency to buy and sell at the worst moment. The reason is that your competition is other humans, who are feeling the same emotions and reacting to the same news at the same time as you.

So what should you do? You invest according to your chosen asset allocation. If you are not comfortable with your risk, then raise your amount of bonds. If the market drops enough, you rebalance, selling from the bonds, and buying the stocks at a low.

The fact that you're asking this question means that you do not have a written investing plan. Also known as an Investor Policy Statement (IPS), it is something you create during the calm days before a market crash. You should describe your investing plan, what you're buying, how much you're buying, and why. You should also project what situations you will face and how you will react when they occur. Then follow that plan.
HombrePeludo
Posts: 134
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Re: New Investor...Should I Just Wait?

Post by HombrePeludo »

When I started investing at the end of 2019 / beginning of 2020 I thought the same thing. I went into it thinking I was surely going to lose money. And for a while I did. Kept DCA. Fast forward to today and WOW. 2020 crash certainly helped....

The thing is at 27, you could lose everything tomorrow and be fine, what you invest now will be chump change over your lifetime of investing, and in 30 years time it is highly likely that you wish you had bought more of the S&P500 at ~4400.

For what it's worth I'm 100% stock and share your sentiment to a degree. But at the end of the day the rational choice is to create a good plan, and stick to it.
Zeno
Posts: 1042
Joined: Wed Sep 12, 2018 10:44 am

Re: New Investor...Should I Just Wait?

Post by Zeno »

staynatural wrote: Wed Sep 22, 2021 5:52 am Hello, everyone. This is my first post after many hours of reading the forums. I'm looking for some personalized advice.

Background: I'm a 27 year old unemployed student, probably have 2-3 years left until graduation. Wife makes about 45k a year. About a month ago I received a windfall of 150k and a piece of land. With the 150k I paid off wife's student loans so we became debt free, and I invested 120k into a three fund portfolio (55% vtsax / 35% vtiax / 10% vbtlx).

I'm highly regretting investing when I did. All the advice I read said invest as soon as possible, but the market seems incredibly inflated to me. I've already lost several thousand by investing in August 21, and it seems reasonable that the market will continue to fall. I'm not going to sell any investments, but I'm bummed out and confused.

I have sold the land and just received the payment, another 200k. I do not feel comfortable investing any more while the market is in decline. What is the best course of action to properly manage this new 200k?

Thank you all for taking the time to read this and offer help!

Edit: Thanks again to everyone for the replies. The two questions I'm seeing repeated are:

1. What is this money for?
- Retirement and possibly a home downpayment in the mid future (probably 7-10 years). Part of the 55% vtsax is in IRAs for 2021. I will definitely be holding another 12k for next years IRA contributions.

2. What is your risk tolerance?
- I thought a good bit about this before investing and I think 90/10 makes the most sense. I'm not going to be using most if any of this money for 35+ years.I fully understand that there will be ups and downs. The part that is frustrating for me is that in Feb 2020 vtsax all time high was ~$84, and then a year and a half later was ~$113. There has never been a jump so large in the history of that mutual fund. I'd love to hear from an economist on this, but rapid increases on that scale don't seem sustainable. I'm just concerned that it was stupid to invest when the market appeared to be inflated. From the replies I'm gathering that this is not a valid concern, but I'd love to hear your thoughts.
57 year old BH'er here

I feel like I'm writing a letter to a future mini-me for burial in a time capsule that won't be opened until the year 2050

OP: Set an investment statement, then set an AA

For a youngster such as yourself, I'd pile it all into a broad market ETF with an AA of 100/0 (but also have an EF), but AA's are personal so yours may and will be different. Then keep doing that. Then check back in in three decades

At some level, this isn't hard, at least for long-term investors
niagara_guy
Posts: 1168
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Re: New Investor...Should I Just Wait?

Post by niagara_guy »

I started investing 30 years ago with a 401k, all in the market , now retired with a nice nest egg. Many downs in the market since (think 2009, 2020, …) but I stayed the course. One dollar I invested 30 years ago in s&p 500 is now about $25 (with dividends reinvested). Of course, no guarantee what will happen down the road. I think it's impossible to time the market, so have to ride out the bumps. As others have said, latest bumps will probably not affect your long term investments.
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arcticpineapplecorp.
Posts: 15080
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Re: New Investor...Should I Just Wait?

Post by arcticpineapplecorp. »

staynatural wrote: Wed Sep 22, 2021 5:27 pm The part that is frustrating for me is that in Feb 2020 vtsax all time high was ~$84, and then a year and a half later was ~$113. There has never been a jump so large in the history of that mutual fund. I'd love to hear from an economist on this, but rapid increases on that scale don't seem sustainable. I'm just concerned that it was stupid to invest when the market appeared to be inflated. From the replies I'm gathering that this is not a valid concern, but I'd love to hear your thoughts.
$84 to $113 is a 34% increase. You say in a year and a half.

did you look at the chart I provided? You should. I'll show it again. What do you see?

Image

What I see is the market grew 34% in 1995.

So it did happen again and less than a year and a half.

There were other big moves in single years too and some multi year big moves as well:
26% 1980
26% 1985
27% 1989
26% 1991
34% 1995
20% 1996
31% 1997
27% 1998
20% 1999
26% 2003
23% 2009
30% 2012
19% 2017
29% 2019
20% 2020 (source: http://quotes.morningstar.com/chart/fun ... 2%3A955%7D)

Boy oh boy. if you had been out of the market those years because you thought a prior year pushed the market too high, you would have missed out.

thoughts?
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
namajones
Posts: 778
Joined: Sat Aug 08, 2020 12:41 pm

Re: New Investor...Should I Just Wait?

Post by namajones »

staynatural wrote: Wed Sep 22, 2021 5:52 am 1. What is this money for?
- Retirement and possibly a home downpayment in the mid future (probably 7-10 years). Part of the 55% vtsax is in IRAs for 2021. I will definitely be holding another 12k for next years IRA contributions.
The problem is that you're watching the balance too closely.

See this: https://www.cnbc.com/2021/09/23/how-inv ... -time.html
Doctor Rhythm
Posts: 3061
Joined: Mon Jan 22, 2018 2:55 am

Re: New Investor...Should I Just Wait?

Post by Doctor Rhythm »

staynatural wrote: Wed Sep 22, 2021 5:27 pm The part that is frustrating for me is that in Feb 2020 vtsax all time high was ~$84, and then a year and a half later was ~$113. There has never been a jump so large in the history of that mutual fund.
Not sure where you’re coming to that conclusion.

You picked and arbitrary length of time with arbitrary start and end dates. If I did that, I would look at the price of VTSAX right before Christmas 2018 and compare that to its price on Christmas Eve 2019. I believe that was a greater (36%) rise than your example in only two-thirds of the time. If I picked February 2020 as my end date, I would show you a 43% rise - again over a shorter period. Or you could go back to the recession and pick the 18 months that started in March 2009.
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ruralavalon
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Location: Illinois

Re: New Investor...Should I Just Wait?

Post by ruralavalon »

namajones wrote: Thu Sep 23, 2021 10:48 am
staynatural wrote: Wed Sep 22, 2021 5:52 am 1. What is this money for?
- Retirement and possibly a home downpayment in the mid future (probably 7-10 years). Part of the 55% vtsax is in IRAs for 2021. I will definitely be holding another 12k for next years IRA contributions.
The problem is that you're watching the balance too closely.

See this: https://www.cnbc.com/2021/09/23/how-inv ... -time.html
+1. Ignore daily, weekly, monthly, quarterly etc. returns and account balances.

Maintain regular IRA contributions every pay period if your wife still has employment income.

When you graduate and become employed start an account with any employer plan offered, if any decent investments are offered in the plan. Contribute regularly every pay period increasing contributions whenever that is practical.

Establishing a high rate of contributions is the most important investing decision you can make, forum discussion.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
fatherjames
Posts: 64
Joined: Sat Dec 05, 2020 11:01 am

Re: New Investor...Should I Just Wait?

Post by fatherjames »

I started investing in the mid-90's. It was extremely frustrating to look at my investments as the market basically skidded sideways during what they call the lost decade in 2000-2009. I was just dollar cost averaging away into a diversified group of mutual funds. I had a few lump sums come my way via bonus and I promptly plunked those into the market as well. But at the end of the decade I was pretty much looking at a total balance that equaled just my contributions...no gains to speak of. It was upsetting me so I decided I am a long term investor and the best course of action was to ignore it all. So I left the contributions on auto pilot and went about my life. That worked out really well for me and I am happy I did it. You could always split your pot of money you want to invest in half. Put half to work now and the other half dollar cost average over the next two years until you are making a salary.

Good luck and prepare yourself mentally for the inevitable market drops that you will live through. For me the best solution was to ignore it and worry about staying employed and married.

Good luck!

James
Topic Author
staynatural
Posts: 16
Joined: Wed Sep 22, 2021 5:32 am

Re: New Investor...Should I Just Wait?

Post by staynatural »

It’s some months later now and I am down a significant amount. I think a lot of people have generalized advice that is good but was not appropriate for my situation. I always had a feeling that it was a bad time to invest and now I have lost 30k and counting because of it. Probably shouldn’t have trusted the internet.
colddeadfish
Posts: 250
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Re: New Investor...Should I Just Wait?

Post by colddeadfish »

staynatural wrote: Fri Mar 11, 2022 3:44 pm It’s some months later now and I am down a significant amount. I think a lot of people have generalized advice that is good but was not appropriate for my situation. I always had a feeling that it was a bad time to invest and now I have lost 30k and counting because of it. Probably shouldn’t have trusted the internet.
If you've been invested for 6 months, you should expect to be down. Check back in 5 or 10 years and tell us how you feel.

Cheers
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HMSVictory
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Re: New Investor...Should I Just Wait?

Post by HMSVictory »

You are too focused on the short term loss in value of 3-4% of your investment. Focus on the 10-15 year periods of time and you will be fine.

It's hard when you receive a windfall because you did not slowly build the pile of money up (DCA style) into the investment. Its like jumping out into traffic at 60mph. Stop second guessing yourself. You did exaclty the correct thing and you will grow this money doing what you did. I would put aside some cash out of the $200k and invest the rest into your AA.

You do realize with a 400k net worth and zero debt you are ahead of 99.99999% of your peers? Your going to be a millionaire by your mid 30s if you play it cool. Play it cool! :sharebeer
Stay the course!
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FoundingFather
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Re: New Investor...Should I Just Wait?

Post by FoundingFather »

staynatural wrote: Fri Mar 11, 2022 3:44 pm It’s some months later now and I am down a significant amount. I think a lot of people have generalized advice that is good but was not appropriate for my situation. I always had a feeling that it was a bad time to invest and now I have lost 30k and counting because of it. Probably shouldn’t have trusted the internet.
Let me share an analogy with you that might help:

Think back to when you were about 11 months old, and taking your first steps 😉... Remember that time you tripped over your own feet, fell over, and hit your head straight into the floor? How did that make you feel? Do you remember the regret you felt at trying such a crazy thing, the betrayel you felt that gravity enforced itself on your oversized toddler head so rudely, and all the things that you realized would have been a better use of your time than foolishly trying to walk when all the indications were that you would immediately fall? (I just realized that inflated P/E ratios are analogous to a toddler's high head to body ratio - both cause things to temporarily fall before they take off again.)

I assume that you don't remember any of those things, because you did what every kid does - you looked around, saw that others were walking, and said "I want that." So you tried again, and again, and again. Eventually, it worked for you, and you are glad that you pushed through those first few difficult months.

That is what you are going through now. The reason we are all encouraging you that you did the right thing is because we are all walking proof that investing works, especially when done into well diversified index funds, exactly as you did.

Please don't sell. Stay the course. Remember this post and check back in a few years when your money has grown significantly to remind yourself what your first steps in investing felt like - it'll probably make you smile.

Founding Father
"I do not think myself equal to the Command I am honored with." -George Washington (excerpt from Journals of the Continental Congress, 16 June 1775)
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Elric
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Re: New Investor...Should I Just Wait?

Post by Elric »

You've gotten great advice from other posts. Let me just add links to two items that may help you feel more at ease. I'm surprised no one has introduced you to Bob. Bob has terrible luck investing, always investing right before large dips. But he doesn't sell what he's invested. See how Bob does over his career: https://awealthofcommonsense.com/2014/0 ... ket-timer/ Spoiler: he ends up a millionaire, but would have done even better if he hadn't spent so much time scared and not investing new money for long periods.

The second is one of many articles on what happens after the market hits an all time high. This one has nice graphs, and even a link to a market timing game you can try using actual market performance data: https://engaging-data.com/market-all-time-high/
"No man is free who must work for a living." (Illya Kuryakin)
yules
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Re: New Investor...Should I Just Wait?

Post by yules »

staynatural wrote: Fri Mar 11, 2022 3:44 pm It’s some months later now and I am down a significant amount. I think a lot of people have generalized advice that is good but was not appropriate for my situation. I always had a feeling that it was a bad time to invest and now I have lost 30k and counting because of it. Probably shouldn’t have trusted the internet.
If you expect anyone, whether "the internet" or "not the internet", to be right all the time, well, you are going to live a life full of disappointment.

Yules
SilverSmurfer
Posts: 163
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Re: New Investor...Should I Just Wait?

Post by SilverSmurfer »

staynatural wrote: Fri Mar 11, 2022 3:44 pm It’s some months later now and I am down a significant amount. I think a lot of people have generalized advice that is good but was not appropriate for my situation. I always had a feeling that it was a bad time to invest and now I have lost 30k and counting because of it. Probably shouldn’t have trusted the internet.
TLH and chill
CaptainT
Posts: 641
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Re: New Investor...Should I Just Wait?

Post by CaptainT »

Deep breath

Ok so you are saving for something that is more then your lifetime so far away. Keep investing!!
Buy index funds and just keep squirrelling away ideally every single paycheck not only when you get massive windfalls. Don't check daily or weekly. Check no more then once per month ideally once a season or once a year. Buy and Hold and stay the course the biggest mistake is not investing and the next biggest is watching to much. You need this in 25 + years maybe 50 years just be patient.
Channel Yoda
"Patience you must have my young Padawan"
invest2bfree
Posts: 1279
Joined: Sun Jan 12, 2020 8:44 am

Re: New Investor...Should I Just Wait?

Post by invest2bfree »

staynatural wrote: Wed Sep 22, 2021 5:52 am Hello, everyone. This is my first post after many hours of reading the forums. I'm looking for some personalized advice.

Background: I'm a 27 year old unemployed student, probably have 2-3 years left until graduation. Wife makes about 45k a year. About a month ago I received a windfall of 150k and a piece of land. With the 150k I paid off wife's student loans so we became debt free, and I invested 120k into a three fund portfolio (55% vtsax / 35% vtiax / 10% vbtlx).

I'm highly regretting investing when I did. All the advice I read said invest as soon as possible, but the market seems incredibly inflated to me. I've already lost several thousand by investing in August 21, and it seems reasonable that the market will continue to fall. I'm not going to sell any investments, but I'm bummed out and confused.

I have sold the land and just received the payment, another 200k. I do not feel comfortable investing any more while the market is in decline. What is the best course of action to properly manage this new 200k?

Thank you all for taking the time to read this and offer help!

Edit: Thanks again to everyone for the replies. The two questions I'm seeing repeated are:

1. What is this money for?
- Retirement and possibly a home downpayment in the mid future (probably 7-10 years). Part of the 55% vtsax is in IRAs for 2021. I will definitely be holding another 12k for next years IRA contributions.

2. What is your risk tolerance?
- I thought a good bit about this before investing and I think 90/10 makes the most sense. I'm not going to be using most if any of this money for 35+ years.I fully understand that there will be ups and downs. The part that is frustrating for me is that in Feb 2020 vtsax all time high was ~$84, and then a year and a half later was ~$113. There has never been a jump so large in the history of that mutual fund. I'd love to hear from an economist on this, but rapid increases on that scale don't seem sustainable. I'm just concerned that it was stupid to invest when the market appeared to be inflated. From the replies I'm gathering that this is not a valid concern, but I'd love to hear your thoughts.
The problem is you cannot handle the pain but you thought you could.

Did you think you are investing in a checking account?

HAve you looked at Japanese stock MArket down after 30 years.

I dont want to freak you out but we could just be going into a prolonged bear market lasting 3 yaers or we could just turn around and hit new all time highs.
36% (IRA) - Individual LT Corporate Bonds , 33%(taxable) - schy, 33%(taxable) - SCHD Dividend Growth
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arcticpineapplecorp.
Posts: 15080
Joined: Tue Mar 06, 2012 8:22 pm

Re: New Investor...Should I Just Wait?

Post by arcticpineapplecorp. »

staynatural wrote: Fri Mar 11, 2022 3:44 pm It’s some months later now and I am down a significant amount. I think a lot of people have generalized advice that is good but was not appropriate for my situation. I always had a feeling that it was a bad time to invest and now I have lost 30k and counting because of it. Probably shouldn’t have trusted the internet.
Actually when the market is down that's a great time to invest.

If you don't understand that maybe you shouldn't invest.

There are many who have lost far more than $30k and they're not sullen like you are. What do you suppose accounts for the difference?

The goal as i stated before is to determine your maximum pain point (how much can you stand to lose) and choose the allocation that keeps you at those losses but not greater.

Image

If you weren't prepared to lose x% then why did you choose the allocation you did?

Losses are inevitable. Look at the chart. Even 0% in stocks had a drawdown in the great recession. It's unavoidable no matter what you do with your money. If you shun investing and keep your money in a bank account do you not think you'll lose money? Have you heard of inflation? Savings accounts guarantee losses.
It's hard to accept the truth when the lies were exactly what you wanted to hear. Investing is simple, but not easy. Buy, hold & rebalance low cost index funds & manage taxable events. Asking Portfolio Questions | Wiki
260chrisb
Posts: 1281
Joined: Wed Apr 28, 2010 7:26 pm

Re: New Investor...Should I Just Wait?

Post by 260chrisb »

staynatural wrote: Wed Sep 22, 2021 5:52 am Hello, everyone. This is my first post after many hours of reading the forums. I'm looking for some personalized advice.

Background: I'm a 27 year old unemployed student, probably have 2-3 years left until graduation. Wife makes about 45k a year. About a month ago I received a windfall of 150k and a piece of land. With the 150k I paid off wife's student loans so we became debt free, and I invested 120k into a three fund portfolio (55% vtsax / 35% vtiax / 10% vbtlx).

I'm highly regretting investing when I did. All the advice I read said invest as soon as possible, but the market seems incredibly inflated to me. I've already lost several thousand by investing in August 21, and it seems reasonable that the market will continue to fall. I'm not going to sell any investments, but I'm bummed out and confused.

I have sold the land and just received the payment, another 200k. I do not feel comfortable investing any more while the market is in decline. What is the best course of action to properly manage this new 200k?

Thank you all for taking the time to read this and offer help!

Edit: Thanks again to everyone for the replies. The two questions I'm seeing repeated are:

1. What is this money for?
- Retirement and possibly a home downpayment in the mid future (probably 7-10 years). Part of the 55% vtsax is in IRAs for 2021. I will definitely be holding another 12k for next years IRA contributions.

2. What is your risk tolerance?
- I thought a good bit about this before investing and I think 90/10 makes the most sense. I'm not going to be using most if any of this money for 35+ years.I fully understand that there will be ups and downs. The part that is frustrating for me is that in Feb 2020 vtsax all time high was ~$84, and then a year and a half later was ~$113. There has never been a jump so large in the history of that mutual fund. I'd love to hear from an economist on this, but rapid increases on that scale don't seem sustainable. I'm just concerned that it was stupid to invest when the market appeared to be inflated. From the replies I'm gathering that this is not a valid concern, but I'd love to hear your thoughts.
Welcome to the forum! Take a deep breath, you're going to be fine. I get over thoughts of whether the market is high, low, oversold, likely to go down, regrets of my timing when investing money, this time it's different, etc. by looking at what these investments have done historically. You're young and are in a much better spot than most and have substantially more assets than nearly anyone else did at 27. Look at your recent financial accomplishments; you've invested some of the money (smart), you paid off student loans (smart), you're debt free (smart), you're planning to fund IRAs (smart), you're thinking about retirement (smart).......seems to be a trend here........park the 200K for now and just let it be until you come up with an asset allocation that you can live with. In my opinion 90/10 ain't it but at your age should be. If you're not comfortable investing some of it now then don't but don't regret it if the market goes up 15% before the end of the year, or 10% next year. Keeping some of the money on the sidelines to buy a house instead of simply for a down payment would be okay as well. Think long term, take your time, you're gonna be fine!
KyleAAA
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Re: New Investor...Should I Just Wait?

Post by KyleAAA »

Markets fluctuate. In the long term, these short-term fluctuations are completely meaningless. Ignore them.
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princetontiger
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Re: New Investor...Should I Just Wait?

Post by princetontiger »

Down $1m+ in the recent correction. Am I sweating? Nope! VT and chill. :)
pkcrafter
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Re: New Investor...Should I Just Wait?

Post by pkcrafter »

staynatural wrote: Fri Mar 11, 2022 3:44 pm It’s some months later now and I am down a significant amount. I think a lot of people have generalized advice that is good but was not appropriate for my situation. I always had a feeling that it was a bad time to invest and now I have lost 30k and counting because of it. Probably shouldn’t have trusted the internet.
Wow, those comments show your inexperience and lack of understanding in how markets work. Worst loss was about 80%. What comes across very clearly is your AA (asset allocation) is too aggressive, at least for now and until you get used to volatility. Maybe drop the AA down to 60% equity and continue to invest.

Allocations and performance--


https://investor.vanguard.com/investor- ... allocation


Paul
Last edited by pkcrafter on Sat Mar 12, 2022 9:19 am, edited 1 time in total.
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
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Re: New Investor...Should I Just Wait?

Post by placeholder »

I spent several months researching and devising my target portfolio then implemented it with my 401k and a bunch of cash in taxable just in time to catch the crash that started in late 2007 but I had a plan and stayed with it by tax loss harvesting and rebalancing and things eventually got better.
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AnnetteLouisan
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Re: New Investor...Should I Just Wait?

Post by AnnetteLouisan »

JBTX wrote: Wed Sep 22, 2021 9:09 am Typically market watch is mostly financial porn, but I found this interesting.

https://www.marketwatch.com/story/buy-t ... 1632245567

The point is hanging around and waiting for a dip over the long term is a losing strategy. If the current modest dip is bumming you out you really need to change your outlook. How long is the money going to be invested? If we are talking decades a 5, 10, 20% etc drop now is completely irrelevant

Having said that if you want to take your second chunk of money and invest on a pre-determined fixed schedule, in order to make you feel better, that is fine. Just figure out the schedule and stick to it.
This is a very good explanation of why buying the dip doesn’t bear DCA. thank you for posting the link.
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