Should I invest $100K in S+P 500: my time horizon is 5 years

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ethicalbuddhist
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Should I invest $100K in S+P 500: my time horizon is 5 years

Post by ethicalbuddhist »

Dear Bogleheads,
I am a very aggressive investor who does not get rattled when investing in Vanguard's S and P 500 index fund. I say this factually, not to show off, and have coped for years with wild swings without any problem. I have always, always stayed the course and ended up making very good returns. In short, I have US $100,000 I wish to invest in the S and P 500 but I definitely need access to this sum in 5 years. If I suffer a loss on this investment after waiting 5 years, I am screwed. Should I go for it?
Warm Regards, Ethical Buddhist
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Scott S
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Post by Scott S »

If you will need every cent back, then of course not. Your ability to take risk is zero.

- Scott
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CABob
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Post by CABob »

No.
There is no one here or anywhere else that would indicate is not possible that a 5 year investment to lose money.
Bob
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nisiprius
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Post by nisiprius »

ethicalbuddhist wrote:If I suffer a loss on this investment after waiting 5 years, I am screwed. Should I go for it?
Assuming you can't tolerate the risk of being screwed, no. Simple as that.

Come on, you should know the answer for yourself. If you'd invested $100,000 in the S&P 500 in March of 2009 minus 5 = March of 2009, then five years later, after waiting 5 years, you'd have had $70,000. You'd have been screwed.

If you think "Oh, but it can't happen again, not that soon," then you ought to look at what happened in 1936, just when everyone thought the market had finally recovered. It crashed again. If you'd put $100,000 into the S&P 90 at year-end 1936, after waiting five years, at year-end 1941 you'd have had $68,000. Screwed.

I'm too cheap to update my copy of the SBBI yearbook so this doesn't even include anything past 2004, but it says that for 5-year rolling periods, from 1926 through 2004, a 100% stocks portfolio made money only 65 times out of 75. So, 10 times out of 75, after waiting five years, all together now: screwed.

Even after waiting 10 years, screwed, 2 times out of 70. Same odds as rolling snakeeyes.
Last edited by nisiprius on Thu Apr 28, 2011 4:33 pm, edited 7 times in total.
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touchdowntodd
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Post by touchdowntodd »

u basically tell us you wanna do it... so go for it, and report back as to how you did..

personally, for 5 years.. i would max out Ibonds, high yield savings accounts with special rates for the first $25k, etc...

i wont invest anything i even MIGHT need in the next 10 years in the market... let alone that large of a chunk into 1 specific stock index...
tryin to do this right... thanks guys
YDNAL
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Re: Should I invest $100K in S+P 500: my time horizon is 5 y

Post by YDNAL »

ethicalbuddhist wrote:In short, I have US $100,000 I wish to invest in the S and P 500 but I definitely need access to this sum in 5 years. If I suffer a loss on this investment after waiting 5 years, I am screwed. Should I go for it?
Not if I was investing!

But, then again, it is YOU investing. :wink:
Landy | Be yourself, everyone else is already taken -- Oscar Wilde
jmbkb4
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Post by jmbkb4 »

nisiprius wrote:
ethicalbuddhist wrote:If I suffer a loss on this investment after waiting 5 years, I am screwed. Should I go for it?
Assuming you can't tolerate the risk of being screwed, no. Simple as that.

Come on, you should know the answer for yourself. If you'd invested $100,000 in the S&P 500 in March of 2009 minus 5 = March of 2009, then five years later, after waiting 5 years, you'd have had $70,000. You'd have been screwed.

If you think "Oh, but it can't happen again, not that soon," then you ought to look at what happened in 1936, just when everyone thought the market had finally recovered. It crashed again. If you'd put $100,000 into the S&P 90 at year-end 1936, after waiting five years, at year-end 1941 you'd have had $68,000. Screwed.

I'm too cheap to update my copy of the SBBI yearbook so this doesn't even include anything past 2004, but it says that for 5-year rolling periods, from 1926 through 2004, a 100% stocks portfolio made money only 65 times out of 75. So, 10 times out of 75, after waiting five years, all together now: screwed.

Even after waiting 10 years, screwed, 2 times out of 70. Same odds as rolling snakeeyes.
Your posts are so good. Completely agree.

If the OP can't tolerate any risk, he should not be investing in stocks.
boglestan
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Post by boglestan »

S&P seems like an obviously risky choice over 5 years.

Perhaps short-term bonds might be reasonable?

Then again, if you'll really be "screwed" by any loss, then maybe you should just save it instead of investing it.
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joe8d
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Post by joe8d »

In short, I have US $100,000 I wish to invest in the S and P 500 but I definitely need access to this sum in 5 years. If I suffer a loss on this investment after waiting 5 years, I am screwed. Should I go for it?
No!!.Use online savings accounts,CD's and maybe a portion in a short term bond fund.
All the Best, | Joe
E-M-H
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Post by E-M-H »

You're asking whether there is any risk of loss after five years? Why wouldn't there be?
Manbaerpig
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Post by Manbaerpig »

a 20/80 portfolio would probably be better
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interplanetjanet
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Re: Should I invest $100K in S+P 500: my time horizon is 5 y

Post by interplanetjanet »

ethicalbuddhist wrote:If I suffer a loss on this investment after waiting 5 years, I am screwed. Should I go for it?
Define "screwed". Is this "the mafia will break all your fingers and then shoot you" screwed, or "your interest rates might go higher if you can't make a balloon payment" screwed? Do you need $100k real or nominal?

Everything has risk. Getting out of bed in the morning has risk. Then again, so does staying in bed. ;)

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verygoodthings
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Post by verygoodthings »

Well, since you are "not showing off", you should go for it! You sound very educated on the topic. Hahaha.
555
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Post by 555 »

Is it my imagination or has there been an upswing in goofy posts by new posters lately?
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