Do you Continue to invest even in down market??

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greg24
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Joined: Tue Feb 20, 2007 10:34 am

Re: Do you Continue to invest even in down market??

Post by greg24 » Thu Mar 22, 2018 3:26 pm

When the market goes up, I'm happy that my portfolio is bigger.

When the market goes down, I'm happy that I'm buying at lower prices.

Pdub
Posts: 65
Joined: Sat Oct 21, 2017 6:10 am

Re: Do you Continue to invest even in down market??

Post by Pdub » Thu Mar 22, 2018 8:01 pm

Grt2bOutdoors wrote:
Tue Mar 20, 2018 6:24 am
randomizer wrote:
Tue Mar 20, 2018 1:46 am
I keep investing until I get laid off.
+1. Best time to buy is when there is a sale. If investments were a good buy at $68 per share, then a markdown to $64 will be a bargain. I’ll admit no one likes to see the value of their investment decline, but if you have an investment time horizon of 7 years plus, I’d keep buying and ignore those who say they are going to “cash”.
What if your time frame was 2-3 years out and not greater than 7 years? Is there a change to whether or not one chooses to invest in a down market when they are near retirement? Maybe wait to see how "down" down actually goes for a bit?

I guess the same question applies to investing in a Bond market during rising interest rates when you have 2-3 years to go prior to retirement. Does it make sense to wait and keep your money in cash until things even out and then lump sum into the bond fund?

Grt2bOutdoors
Posts: 18454
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Do you Continue to invest even in down market??

Post by Grt2bOutdoors » Thu Mar 22, 2018 10:02 pm

Pdub wrote:
Thu Mar 22, 2018 8:01 pm
Grt2bOutdoors wrote:
Tue Mar 20, 2018 6:24 am
randomizer wrote:
Tue Mar 20, 2018 1:46 am
I keep investing until I get laid off.
+1. Best time to buy is when there is a sale. If investments were a good buy at $68 per share, then a markdown to $64 will be a bargain. I’ll admit no one likes to see the value of their investment decline, but if you have an investment time horizon of 7 years plus, I’d keep buying and ignore those who say they are going to “cash”.
What if your time frame was 2-3 years out and not greater than 7 years? Is there a change to whether or not one chooses to invest in a down market when they are near retirement? Maybe wait to see how "down" down actually goes for a bit?
Are you allocating money to an investment where you expect to full withdraw more than 5% of the amount invested at the end of 2-3 years and not greater than 7 years? If the answer is yes, then monies you can not afford to lose does not belong in risky investments where principal value on nominal and/or real terms can be at risk of loss. If you were planning on retiring but were going to use those monies over a period of 15+ years, then holding at least 30% equity may permit your portfolio to keep up with inflation, but one should not expect to reap outsized returns as if owning 100% equity. One must be willing and able to distinguish and accept that lower equity exposure generally will result in muted returns but with high likelihood of near term stability in principal.

I guess the same question applies to investing in a Bond market during rising interest rates when you have 2-3 years to go prior to retirement. Does it make sense to wait and keep your money in cash until things even out and then lump sum into the bond fund?
The same question applies, are you planning to withdraw more than 4-5% of total principal value over the fixed income portfolio's duration? Is the portfolio widely diversified amongst asset classes, are holdings low-cost? What is risk tolerance of individual? Does your crystal ball indicate when things will even out? You can hold some level of cash if it provides comfort in your ability to stay the course and be able to sleep at night. Nothing wrong with holding cash if it achieves that goal for you. Since all finance is personal, you have to decide what amount you would hold - X times of annual expenses? One just needs to be able to accept that cash will most likely be the lowest yielding component of portfolio returns over the long haul.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions

Pdub
Posts: 65
Joined: Sat Oct 21, 2017 6:10 am

Re: Do you Continue to invest even in down market??

Post by Pdub » Fri Mar 23, 2018 7:21 am

Grt2bOutdoors wrote:
Thu Mar 22, 2018 10:02 pm
Pdub wrote:
Thu Mar 22, 2018 8:01 pm
Grt2bOutdoors wrote:
Tue Mar 20, 2018 6:24 am
randomizer wrote:
Tue Mar 20, 2018 1:46 am
I keep investing until I get laid off.
+1. Best time to buy is when there is a sale. If investments were a good buy at $68 per share, then a markdown to $64 will be a bargain. I’ll admit no one likes to see the value of their investment decline, but if you have an investment time horizon of 7 years plus, I’d keep buying and ignore those who say they are going to “cash”.
What if your time frame was 2-3 years out and not greater than 7 years? Is there a change to whether or not one chooses to invest in a down market when they are near retirement? Maybe wait to see how "down" down actually goes for a bit?
Are you allocating money to an investment where you expect to full withdraw more than 5% of the amount invested at the end of 2-3 years and not greater than 7 years? If the answer is yes, then monies you can not afford to lose does not belong in risky investments where principal value on nominal and/or real terms can be at risk of loss. If you were planning on retiring but were going to use those monies over a period of 15+ years, then holding at least 30% equity may permit your portfolio to keep up with inflation, but one should not expect to reap outsized returns as if owning 100% equity. One must be willing and able to distinguish and accept that lower equity exposure generally will result in muted returns but with high likelihood of near term stability in principal.

I guess the same question applies to investing in a Bond market during rising interest rates when you have 2-3 years to go prior to retirement. Does it make sense to wait and keep your money in cash until things even out and then lump sum into the bond fund?
The same question applies, are you planning to withdraw more than 4-5% of total principal value over the fixed income portfolio's duration? Is the portfolio widely diversified amongst asset classes, are holdings low-cost? What is risk tolerance of individual? Does your crystal ball indicate when things will even out? You can hold some level of cash if it provides comfort in your ability to stay the course and be able to sleep at night. Nothing wrong with holding cash if it achieves that goal for you. Since all finance is personal, you have to decide what amount you would hold - X times of annual expenses? One just needs to be able to accept that cash will most likely be the lowest yielding component of portfolio returns over the long haul.
I see, that all makes sense thank you. We are projecting a 3-3.5% total withdrawal rate so it should be ok from that perspective. The other concern is of course the sequence of returns risk..but I guess that just comes down to your AA and luck. We are at 45/55 and are hoping for the best.

Our situation has us with a big chunk of our finances left to invest (currently sitting in cash or tied to business/house which will be sold) so it "feels" like there can always be a better time to invest than what is currently happening.

Thank you again

student
Posts: 2071
Joined: Fri Apr 03, 2015 6:58 am

Re: Do you Continue to invest even in down market??

Post by student » Fri Mar 23, 2018 7:54 am

During the Great Recession, I was in my early 40's and I figured that I had enough time, so I took the hand in the sand approach and did not look at the market. I must admit that now that I am over 50's, it is harder. My current asset allocation is 65/35 and I currently continue to invest according to my plan.

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