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How to invest in an overvalued market?

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  • #16
    Originally posted by JBME View Post

    no. the usual recommendation is that you shouldn't invest money you need in 5 years. I would lump sum invest it today and in 5 years see where you are at in terms of how you are feeling about this semi-retirement, and where the market is at. Then decide whether you want to take some of this money off the risk table and put it into a more secure investment
    I like that
    what if I go with a target fund that matures in 5 yrs let’s say ?

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    • #17
      Tough call. I do like the suggestion of lump summing it in now and hoping for the best, the data behind that approach is solid.

      That said, I can’t bring myself to do it either. What about putting a plan together to invest over the next year? Perhaps a balanced fund could be good - something like the balanced index, Wellington or Wellesley? And you auto invest 1/12 of your lump sum on the first of the month for the next year?

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      • #18
        Keep some "rainy day" funds in a low risk, low yield investment, and dump the rest into the market at your asset allocation.

        It is ok to think in terms of different buckets of money. And it would be ok, actually prudent, to have some conservative, low risk investments with some of your savings. Yes, this will reduce your likely long term yield, but it will also be safe and will let you sleep at night. Generally speaking, some balance is good in these types of decisions. There is a lot of recency bias right now because many of the younger folks have not experienced anything like a 10 year long bear market. Once they experience that, their tune will change.

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        • #19
          I will also suggest invest long term per your usual AA.

          If you believe the market will be underwater in 10 years are you planning on shorting it?

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          • #20
            GOLD

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            • #21
              If you are planning on a sabbatical in 10 years as your semi-retirement I would set aside enough to cover that as it approaches. If your semi-retirement is just going to part time/spending more i would just plan to stop investing as much (or maybe at all depending on how the financial needs balance out) during that time and just continue investing as per your AA.

              I would rethink planning on living on survival mode only after age 65, your 66 y.o. self may disagree

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              • #22
                Originally posted by Lordosis View Post
                I will also suggest invest long term per your usual AA.

                If you believe the market will be underwater in 10 years are you planning on shorting it?
                If your AA is suitable, why would you do otherwise? That is the most important question. Everything else doesn’t really matter.

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                • #23
                  Originally posted by White.Beard.Doc View Post
                  Keep some "rainy day" funds in a low risk, low yield investment, and dump the rest into the market at your asset allocation.

                  It is ok to think in terms of different buckets of money. And it would be ok, actually prudent, to have some conservative, low risk investments with some of your savings. Yes, this will reduce your likely long term yield, but it will also be safe and will let you sleep at night. Generally speaking, some balance is good in these types of decisions. There is a lot of recency bias right now because many of the younger folks have not experienced anything like a 10 year long bear market. Once they experience that, their tune will change.
                  Bingo
                  and that may or may not happen

                  what do you think will be good investments if we do get into a long bear market ?

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                  • #24
                    Originally posted by nastle View Post
                    what do you think will be good investments if we do get into a long bear market ?
                    Something that doesn't go down as much or maybe even goes up a little. I can tell you after it happens.

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                    • #25
                      Originally posted by Anne View Post
                      If you are planning on a sabbatical in 10 years as your semi-retirement I would set aside enough to cover that as it approaches. If your semi-retirement is just going to part time/spending more i would just plan to stop investing as much (or maybe at all depending on how the financial needs balance out) during that time and just continue investing as per your AA.

                      I would rethink planning on living on survival mode only after age 65, your 66 y.o. self may disagree
                      I know my 66 yo self is a unknown quantity for now
                      im afraid he might have health problems and not be able to enjoy life too much

                      my plan for 50 to 58
                      just reduce enough hours to keep my health insurance
                      cut out all unnecessary expenses altogether
                      like extreme austerity
                      just focus on my hobbies

                      I may or may not be married then , if I am then awesome more help ( hopefully) if not oh well I can still handle it myself

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                      • #26
                        Originally posted by CordMcNally View Post

                        Something that doesn't go down as much or maybe even goes up a little. I can tell you after it happens.
                        Right ! That’s why I like the portfolios that prepare for all economic climates

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                        • #27
                          Originally posted by legobikes View Post
                          GOLD
                          Have about 7% in case of extreme inflation
                          afraid to increase to 25% as permanent portfolio requires
                          its yield in 10 yrs likely abysmal, its more insurance than investment

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                          • #28
                            Originally posted by Lordosis View Post
                            I will also suggest invest long term per your usual AA.

                            If you believe the market will be underwater in 10 years are you planning on shorting it?
                            If I invest everything 25 yr horizon and 10 yrs later( when I really need bulk of my funds) I’m underwater what should I do ?

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                            • #29
                              Originally posted by nastle View Post

                              If I invest everything 25 yr horizon and 10 yrs later( when I really need bulk of my funds) I’m underwater what should I do ?
                              Don't invest funds you need in 10 years on a 25 year horizon.

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                              • #30
                                Originally posted by CordMcNally View Post

                                Don't invest funds you need in 10 years on a 25 year horizon.
                                But that is what I’m asking where should I invest the funds I need in a 10 yrs horizon ?
                                Target date fund that matures in 10 yrs from now ?

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