Is NOW a good time to start ETF saving journey?

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wiserabbit
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Is NOW a good time to start ETF saving journey?

Post by wiserabbit » Sat Nov 10, 2018 8:07 am

Hi everyone!
Thanks for keeping this forum active - it helps us newbies to wrap our heads around investing theory and practice :happy

I'm 30 yo, resident of Ukraine. Got some savings but never dealt with any kind of securities. I studied ETF topic for quite a while and kind of made GO decision on them. I understand that this decision implies decades long journey and I believe I'm up to that. I plan to use InteractiveBrokers platform.
I got two questions, which somewhat hold me off starting now:

#1 Is NOW a good time to start accumulating ETFs? I remember that the best time to plant a tree was 20 years ago, the second best time is now. However, given current market hopping up and down wouldn't it be better to wait for few months and start from more stable ground?
#2 Does "cornerstone" portfolio (BND/VTI/VXUS/VNQ - 30/30/30/10) make sense as a long term plan for lazy, risk tolerant investor?

It feels a bit intimidating to make first step, so any advice would be highly appreciated.
Thank you!
Last edited by wiserabbit on Mon Nov 12, 2018 5:37 am, edited 2 times in total.

PFInterest
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Re: Is NOW a good time to start ETF saving journey?

Post by PFInterest » Sat Nov 10, 2018 9:06 am

wiserabbit wrote:
Sat Nov 10, 2018 8:07 am
I remember that the best time to plant a tree was 20 years ago, the second best time is now. However, given current market hopping up and down wouldn't it be better to wait for few months and start from more stable ground?
go back and read that sentence again.
a few months from now im hoping for the market to be significantly lower. ive been hoping for this for the past half decade. but since i cannot see the future, i invest monthly anyways.
wiserabbit wrote:
Sat Nov 10, 2018 8:07 am
#2 Does "cornerstone" portfolio (BND/VTI/VXUS/VNQ - 30/30/30/10) make sense as a long term plan for lazy, risk tolerant investor?
thats fine. depends on what accounts you have available (401k, IRA, taxable, etc).
read the wiki on tax efficient placement first as it sounds like you are going to buy these in a taxable account, and 2 of these should not go there.

onourway
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Re: Is NOW a good time to start ETF saving journey?

Post by onourway » Sat Nov 10, 2018 9:11 am

The most important thing is to start investing now, and continue to do so regularly ignoring what the market is doing. This way you will buy some high, buy some medium, and buy some low. Everyone wishes that they could buy everything at what, in retrospect, turned out to be the low point, but the reality is that as it is happening, it is impossible to tell when that low point is occurring, and when it’s really low, most people are too frightened to invest a lot of money at that point (because the market has likely been going down for months or years, so any money you invest today will likely be worth less tomorrow).

I would suggest that you make an automatic contribution at least every month. For this reason mutual funds would likely be a better choice than ETF’s where you must make the purchase manually.

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ruralavalon
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Re: Is NOW a good time to start ETF saving journey?

Post by ruralavalon » Sat Nov 10, 2018 11:34 am

Welcome to the forum :) .

In my opinion any investing question including the words "now" or "time" is probably the wrong question.


wiserabbit wrote:
Sat Nov 10, 2018 8:07 am
Hi everyone!
Thanks for keeping this forum active - it helps us newbies to wrap our heads around investing theory and practice :happy

I'm 30 yo, got some savings but never dealt with any kind of securities [emphasis added]. I studied ETF topic for quite a while and kind of made GO decision on them. I understand that this decision implies decades long journey and I believe I'm up to that.
I got two questions, which somewhat hold me off starting now:

#1 Is NOW a good time to start accumulating ETFs? I remember that the best time to plant a tree was 20 years ago, the second best time is now. However, given current market hopping up and down wouldn't it be better to wait for few months and start from more stable ground?
You answered your own question, the time to start investing is now.

You should start by using tax-advantaged accounts.

Is there a work-based plan (like a 401k, 403b, 457, SIMPLE IRA, TSP, etc.) offered at your job? Is there an employer match offered in the plan? If so what is it? Are you contributing to the plan? How much do you contribute annually to the plan? What funds are offered in the plan? Please give fund names, tickers and expense ratios.

Do you have an IRA at a low cost provider like Vanguard or Fidelity? How much do you contribute annually?

You can simply add this to your original post using the edit button (the pencil icon near the upper right corner of your post), it helps a lot if all of your information is in one place.


#2 Does "cornerstone" portfolio (BND/VTI/VXUS/VNQ - 30/30/30/10) make sense as a long term plan for lazy, risk tolerant investor?

It feels a bit intimidating to make first step, so any advice would be highly appreciated.
Thank you!
in my option 30% in bonds is within the range of what is reasonable at age 30.

I usually suggest around 20-30% of stocks in international stocks.

In my opinion it's reasonable to include an allocation to a real estate index fund.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

wiserabbit
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Re: Is NOW a good time to start ETF saving journey?

Post by wiserabbit » Sat Nov 10, 2018 11:54 am

Thank you for replies. It looks like indeed the time is now :)

I'm sorry I did not mention that I'm not US resident. But you raised important topic of taxes, which I did not take into consideration before. I will study tax implications for my country.

Nate79
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Re: Is NOW a good time to start ETF saving journey?

Post by Nate79 » Sat Nov 10, 2018 3:17 pm

wiserabbit wrote:
Sat Nov 10, 2018 11:54 am
Thank you for replies. It looks like indeed the time is now :)

I'm sorry I did not mention that I'm not US resident. But you raised important topic of taxes, which I did not take into consideration before. I will study tax implications for my country.
Since you are not a US resident I suggest you post your country of residence to get more specific recommendations. What funds you should be buying based on tax situation specific to your country. Just buying the ETFs you read on here could be a huge tax mistake.

Who is your brokerage you will be using?

B4Xt3r
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Re: Is NOW a good time to start ETF saving journey?

Post by B4Xt3r » Sat Nov 10, 2018 3:23 pm

wiserabbit wrote:
Sat Nov 10, 2018 8:07 am
...for lazy, risk tolerant investor?
Just an observation, and I only intend to help you discover yourself a bit better. I am not sure that you can state that you are risk-tolerant given.
wiserabbit wrote:
Sat Nov 10, 2018 8:07 am
However, given current market hopping up and down wouldn't it be better to wait...

It feels a bit intimidating to make first step...
Your portfolio is "not wrong" but have you answered what is your need/williness/ability to take risk?

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ruralavalon
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Re: Is NOW a good time to start ETF saving journey?

Post by ruralavalon » Sat Nov 10, 2018 3:24 pm

Nate79 wrote:
Sat Nov 10, 2018 3:17 pm
wiserabbit wrote:
Sat Nov 10, 2018 11:54 am
Thank you for replies. It looks like indeed the time is now :)

I'm sorry I did not mention that I'm not US resident. But you raised important topic of taxes, which I did not take into consideration before. I will study tax implications for my country.
Since you are not a US resident I suggest you post your country of residence to get more specific recommendations. What funds you should be buying based on tax situation specific to your country. Just buying the ETFs you read on here could be a huge tax mistake.

Who is your brokerage you will be using?
You could also edit the title of your thread to show this, so that members knowledgeable on such issues can see the issue and reply.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

ttjt_99
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Re: Is NOW a good time to start ETF saving journey?

Post by ttjt_99 » Sat Nov 10, 2018 8:33 pm

Look at the DOW historical chart for the past 30 years. Even the financial crises in 09 looks like a mere wiggle in an otherwise steady upward track. Invest, diversify, and don’t sell when it drops.

wiserabbit
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Re: Is NOW a good time to start ETF saving journey?

Post by wiserabbit » Mon Nov 12, 2018 5:39 am

Sorry for delayed reply - there was an issue with my account.

I'm resident of Ukraine and I plan to use Interactive Brokers. I have updated original post correspondingly.

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nisiprius
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Re: Is NOW a good time to start ETF saving journey?

Post by nisiprius » Mon Nov 12, 2018 7:44 am

wiserabbit wrote:
Sat Nov 10, 2018 8:07 am
I remember that the best time to plant a tree was 20 years ago, the second best time is now.
I was actually going to quote that saying when I read your thread title.
However, given current market hopping up and down wouldn't it be better to wait for few months and start from more stable ground?
No. The stock market always hops up and down. There is never stable ground. That's the nature of the stock market.

Until you actually start reading old financial news, you will not realize just how often people say "this is uncharted territory," "these are not normal times," "a new normal," "heralds a new era," etc. The times when the stock market was "normal" never existed. It's just another myth of a past golden age. You somehow need to look at what the risk of the stock market is, and decide what percentage of your retirement savings you are willing to risk in it, rather that it is risky for everybody else but that you can avoid the risk by waiting for "stable ground."

The stock market has risk, uncertainty. It is not purely a gamble but it has an element of gambling in it. It is better than a casino because in a casino, chance fluctuations are waves on a tide that always goes out, while in the stock market, they are waves on a tide that we believe will come in as long as businesses exist and make money.

I believe that the stock market is a good gamble, and a good long-term investment, because statistics show that in the past, even if you had only bought at peaks, you still would have earned a decent return.

Obviously if you could time the market, never buy at the peaks, and always buy at the bottoms, you could do better, but personally I don't think this is possible--at least not in the way people imagine. There are some who think you can make a small improvement by adjustments that buy stocks slowly when valuations are high and rapidly when they are low. The almost complete failure of the "tactical asset allocation funds" that tried to do this proves to me that it is much harder than it looks.

If you just blindly buy, then over the course of an investing lifetime you will sometimes be buying stocks at bad times and sometimes at good times, and hopefully it will average out. It would be better to buy only at good times if only you knew which times those were... just as it would bet better to buy just the good stocks if only you knew which ones those were.
Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness; Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery.

Valuethinker
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Re: Is NOW a good time to start ETF saving journey?

Post by Valuethinker » Mon Nov 12, 2018 8:14 am

wiserabbit wrote:
Sat Nov 10, 2018 8:07 am
Hi everyone!
Thanks for keeping this forum active - it helps us newbies to wrap our heads around investing theory and practice :happy

I'm 30 yo, resident of Ukraine. Got some savings but never dealt with any kind of securities. I studied ETF topic for quite a while and kind of made GO decision on them. I understand that this decision implies decades long journey and I believe I'm up to that. I plan to use InteractiveBrokers platform.
I got two questions, which somewhat hold me off starting now:

#1 Is NOW a good time to start accumulating ETFs? I remember that the best time to plant a tree was 20 years ago, the second best time is now. However, given current market hopping up and down wouldn't it be better to wait for few months and start from more stable ground?
#2 Does "cornerstone" portfolio (BND/VTI/VXUS/VNQ - 30/30/30/10) make sense as a long term plan for lazy, risk tolerant investor?

It feels a bit intimidating to make first step, so any advice would be highly appreciated.
Thank you!
Just keep buying. If you are worried about your risk exposure, have a higher bond weighting (as below). You should not be below 20% bonds in any case - I don't think anyone should be (with some exceptions).

You should check the threads re European investors. Taxes will be important - whether you hold Accumulating or Distribution funds, for example. Do you hold Irish ETFs? Or US? Or something else?

A European investor should hold:

- a global equity index portfolio, not just USA. USA is 55% of world markets, that's plenty of exposure for a non American

- a global government bond portfolio. Usually we say hedged into Euros - however with Ukraine US dollar would probably also be alright - Emerging Markets tend to have US dollar correlation/ exposure

Really you only need the 2 funds. I would suggest a 60/40 split, or at most 70/ 30 equities/ bonds. Thus in the inevitable bear markets you can ride the shock waves - when equity markets drop 30-50% in a bear market it is a testing time (in emerging markets like Ukraine, they can drop 90%).

Being as you are in the Ukraine, if you have the spare funds, I would want to hold an account at a Swiss or German bank outside the country -- to give you funds if Ukraine ever slams on exchange controls/ has another devaluation etc. I don't know if that is feasible but it would be my gut instinct

You are in an Emerging Market and although they are all different, I don't think there is any great need for you to hold an EM weighting *except* if your chosen global index ETF happens to have them.

We could argue that holding a Russia ETF is a good hedge on Ukraine (;-)). Sorry that's my version of that bleak Eastern European wisdom-humour, my doctor is from Kharkov ;-).

wiserabbit
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Re: Is NOW a good time to start ETF saving journey?

Post by wiserabbit » Mon Nov 12, 2018 1:58 pm

Emerging markets are indeed interesting :) You can witness (like I did) real estate prices growing 10x in a decade, then lose half of value in a year and so on...

So (from Vanguard ETFs prospective) you suggest holding just BNDW and VT, correct?

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Earl Lemongrab
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Re: Is NOW a good time to start ETF saving journey?

Post by Earl Lemongrab » Mon Nov 12, 2018 5:09 pm

Other than taxes, there's no difference between not buying and selling. Anyone who sees a difference is anchoring on the present situation. If you have say $20k in cash and "wait" then it's the same as me selling 20k worth in an IRA and waiting. We both end up with $20k in cash and not holding that amount of ETFs.

There's this common myth that you can tell when the market is "stable". The market is NEVER stable.
This week's fortune cookie: "Your financial life will be secure and beneficial." So I got that going for me, which is nice.

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