Afraid to take the leap

[Stef]

Hello

I'm just at the beginning of my investment career. I made some lifestyle changes to increase my savings-rate to around 2000-2500$/month. I didn't save much till now (~15k available cash for investing), but that will change from now on. My IBKR account is now ready and I would like to invest in the Vanguard Total World Stock ETF. My goal is to do that for the next 25 years and to able to retire early.

But I'm afraid to start at the wrong moment. The yield curve inversion and currently in the longest bull market in history.



I'm currently much more afraid of "losing" money in a crash than missing out on future gains. I feels like I should really wait out for 12-18 months and just keep saving cash. Any advice for me?

[DJN]

Hi,
I found reading these passages was helpful.

http://awealthofcommonsense.com/2014/02 ... ket-timer/
https://www.bogleheads.org/wiki/Behavioral_pitfalls

DJN

[digarei]

My goal is to [periodically invest] for the next 25 years […]

But I'm afraid to start at the wrong moment. The yield curve inversion and currently in the longest bull market in history.

I like the links provided by DJN, above.

There really is no "wrong moment" to invest when your time horizon is 25+ years. Or even 10 years. Invest now and keep doing so… damn the yield curve, the Schiller PE ratio (CAPE), bull and bear markets, etc.

[Cyclesafe]

Human hard wiring makes OP's fear totally understandable. Every investor has felt exactly the same way and can easily relate to the dilemma he/she faces. To say otherwise is either a lie or the result of having worked through - many times - this behavioral flaw in our common DNA.

First. It NEVER seems like a good time to put money in the market. Whether actually up or down or whether "predicted" to go up or down, the market beckons and repels equally.

Second. Fundamentally, we have common faith that over the long term the market will go up. Technology will create unexpected value and our overlords will eventually do the right things by us. But examples abound where this has not sufficiently happened in the past so the naysayers have a say too.

The US market is at a peak. That means that in the short term (dare I say it?) it WILL go down - by a little or a lot. In the long term, as long as one has this faith, the market will be higher than today. Expected (in the probabilistic sense) long term gains for properly timing the dip are actually lower than the expected long term gains of being in the market as soon and as often as possible. If one has a long term horizon, IMHO one has no financial vehicle choice but to be in the market - even starting today.

[JBeck]

I would invest it and not worry about it. The natural state of the stock market is bull-ish mode, how else would you get a 10% CAGR on average? I remember reading that the U.S. stock market flirts with all time highs something along the lines of 25% of the time historically.

[JoeRetire]

I'm currently much more afraid of "losing" money in a crash than missing out on future gains. I feels like I should really wait out for 12-18 months and just keep saving cash. Any advice for me?

If you are that afraid, you should stay in cash until the fear subsides.

[MotoTrojan]

Nobody that market times and is afraid of the market will retire early without incredible savings rate. Make a good tax-loss harvest plan and plow in. Good luck.

[BogleMelon]

If you can predict the crash, the market can do too. The prices of shares today already reflect that fact, so they are not overpriced.
Crashes happen when most people are overconfidence, I don't think this is the case now. I might be wrong.
Why do you have to be 100% in stocks? If you are scared from being 100% stocks, then you may try a more conservative asset allocation. Something like 60% stocks and 40% bonds should make you sleep well at night, and be in the market in the same time.

[pkcrafter]

stef, your AA at 100% stock is higher than your personal risk tolerance, so you have to reduce it so it’s in your comfort zone. Perhaps somewhere between 50 and 75% stock?

There really no time that is “safer.” No matter when you enter, risk is there.

Paul

[brent0485]

Has it been a continuous bull market if 2018 was negative? Each year has varying returns. I think it’s a mistake to time the market, could miss out on growth.

[Nate79]

If you think like this you will never invest. There is always some reason that the market is ready to crash.

[bligh]

I'm just at the beginning of my investment career.

That right there.

You should be hoping, praying and begging the market to give you a gigantic humongous crash. You should embrace it this early in your investing career. Picture how small these sums you are investing will look 20-25 years from now when you are about to pull the trigger on your retirement.

There are three possible outcomes.
1) You invest, market crashes.. you lose a lot of money (but only on paper).. but MUCH more importantly you get to continue to buy in at these new cheap highly discounted prices. You win!
2) Market goes sideways for a long time. In which case you would have been sitting on the sidelines missing out on the dividends and growing your portfolio through those. Eh.. Let's call it a draw.
3) Market continues to rise for a while. In which case you will be glad you invested the money right away. You win!

Go ahead jump in, the water is turbulent, it is and always will be. Ignore the noise.

[wolf359]

Hello

I'm just at the beginning of my investment career. I made some lifestyle changes to increase my savings-rate to around 2000-2500$/month. I didn't save much till now (~15k available cash for investing), but that will change from now on. My IBKR account is now ready and I would like to invest in the Vanguard Total World Stock ETF. My goal is to do that for the next 25 years and to able to retire early.

But I'm afraid to start at the wrong moment. The yield curve inversion and currently in the longest bull market in history.



I'm currently much more afraid of "losing" money in a crash than missing out on future gains. I feels like I should really wait out for 12-18 months and just keep saving cash. Any advice for me?

Congratulations! You've picked the ideal time to start your investment program! Just think of it:

1) You're going to invest $15,000 up front, and an additional $2,000-$2,500 each month. That means if the market does nothing, your portfolio balance will climb by 13% each month. The market will have to drop by MORE than 13% in a month before your balance drops. And next month, and the month after that, your contributions keep going in. Near the peak of the market is the best time to start a long-term investment program, especially if your initial investment is small relative to your on-going contributions.

2) You will be investing more than $600,000 over the next 25 years. Only $24,000 or so will be contributed each year. Bear markets last only 2-3 years on average. You'll only invest a relatively small amount of that $600,000 before that market crash occurs. At that point, you will want your continued investments to buy additional shares while the market is cheap.

3) If you're not sure, pick an asset allocation of 50/50 stocks/bonds. This allocation means that no matter what happens, you're going to wish you had put more in one of those asset classes. Personally, I'd use a more aggressive AA, because that high savings rate relative to your portfolio balance makes you very resilient to volatile markets.

[Ged]

In general the successful strategy is to maximize time in the market instead of trying to time the market.

However it's tough to overcome psychological aversion to taking risk with money. In your case I would try to find a way to overcome that aversion as best as you can. Put the money in gradually. Use a ratio of bonds to stocks you feel tolerable.

Understanding human psychology and how it affects financial decisions is one of the most important steps towards becoming financially successful. It is why the average investor under performs the market and by a lot.

https://www.investopedia.com/articles/05/032905.asp

Understanding this issue was the main hurdle most investors face.

[Stef]

Thank you very much for all the answers.

I don't want to buy bonds because this will decrease my expected returns. My main goal is financial independence and the only way I'll achieve that is buying stock overs a long period of time. I'm in my 20s and willing to take the risks, because I don't need the money I save. It will be invested for decades. So the only thing that makes sense for me is buying VT. I know that the 15k I have right now is nothing compared to what I will invest in the next 5 years, let alone in the next 20 years. So my fear isn't really rational.

I think a good way of overcoming this fear is to start investing my montly savings and DCA the 15k over the next 12 months? If the markets are going up, I will be glad that I started, if the markets go down, I will be glad that I DCA my initial savings. What do you think?

[bligh]

I think a good way of overcoming this fear is to start investing my montly savings and DCA the 15k over the next 12 months? If the markets are going up, I will be glad that I started, if the markets go down, I will be glad that I DCA my initial savings. What do you think?

That is still an emotional not a rational decision. It's fine if that is what you want to do, and if it helps get you going, then so be it.

Imagine that $15K was in VT instead of a Savings account right now. Would you sell or stay invested? It is still the exact amount, and if you are uncomfortable having that $15K in VT right now, then in that other scenario it stands to reason that you would be selling and going to cash.

Next question .. What are you going to do 7 years from now when you have a $300K invested and that chart shows up again in the news. Are you going to go all cash and DCA back in? Hopefully your answer in both cases is "you will stay invested" and not "try to time the market".

[KingRiggs]

I think it's like getting ready for a New York to LA drive, and worrying about whether you leave now or in 15 minutes...won't matter much in the end.

The SINGLE BIGGEST DETERMINANT of what balance you end up with is NOT your asset allocation, but your savings rate. Max that out, and all else will take care of itself. Do whatever lets you sleep at night!

Congrats on starting at your age!

[GaryA505]

Thank you very much for all the answers.

I don't want to buy bonds because this will decrease my expected returns. My main goal is financial independence and the only way I'll achieve that is buying stock overs a long period of time. I'm in my 20s and willing to take the risks, because I don't need the money I save. It will be invested for decades. So the only thing that makes sense for me is buying VT. I know that the 15k I have right now is nothing compared to what I will invest in the next 5 years, let alone in the next 20 years. So my fear isn't really rational.

I think a good way of overcoming this fear is to start investing my montly savings and DCA the 15k over the next 12 months? If the markets are going up, I will be glad that I started, if the markets go down, I will be glad that I DCA my initial savings. What do you think?

This is what I call "half right / half wrong" thinking, I have found which works for me. In other words, you will be half right and half wrong, which might be easier to accept than the possibility of being 100% wrong. The truth is that nobody knows what the future holds, so I think if using that kind of thinking gets/keeps you invested (which in the long run is what really matters) then it's a good strategy for you. Just my $02.

I wish I had had money to invest in my 20s. Back then I was eating beans and potatoes and just trying to get by.

[magicrat]

I don't want to buy bonds because this will decrease my expected returns.

Not investing at all will decrease your expected returns to zero. The expected return of stocks is always positive due to the equity risk premium. Make a plan, invest, stay the course.

[ruralavalon]

Hello

I'm just at the beginning of my investment career. I made some lifestyle changes to increase my savings-rate to around 2000-2500$/month. I didn't save much till now (~15k available cash for investing), but that will change from now on. My IBKR account is now ready and I would like to invest in the Vanguard Total World Stock ETF. My goal is to do that for the next 25 years and to able to retire early.

But I'm afraid to start at the wrong moment. The yield curve inversion and currently in the longest bull market in history.



I'm currently much more afraid of "losing" money in a crash than missing out on future gains. I feels like I should really wait out for 12-18 months and just keep saving cash. Any advice for me?

Determine an reasonable asset allocation (stock/bond mix) suitable for you. Then start investing now and continue contributions on a regular basis.

Market timing is a fool's errand. Besides guessing when the market top has occurred, you have to guess again when the bottom has occurred in order to enter the market. Otherwise you miss the bargain prices at the market bottom, and miss the benefit of the recovery.

Holding on to cash while you wait for a better time to invest is likely to give you a negative real return net of inflation and taxes. I think it is better to invest in something with the reasonable prospect of a positive real return. Market timing (waiting for a good time to buy) is a fool's errand. If you wait for a good day to buy, you will never know if the next day, or the next week, or the next month, or even the next year might be an even better time to buy.

It was always my policy to invest whenever I had money available to invest.

Please read this: "What if you only invested at market peaks?"


.

[DJN]

But I'm afraid to start at the wrong moment. The yield curve inversion and currently in the longest bull market in history.
I'm currently much more afraid of "losing" money in a crash than missing out on future gains. I feels like I should really wait out for 12-18 months and just keep saving cash. Any advice for me?

I don't want to buy bonds because this will decrease my expected returns

Hi,
its great to start early and save lots.
The two statements above seem to be a little contradictory.
The advice to get your allocation right is your first priority and there are smart people who advise to have at least 20% in bonds.
You are going to invest gradually and over the long term, so that's fine.
DJN

[ruralavalon]

Thank you very much for all the answers.

I don't want to buy bonds because this will decrease my expected returns. My main goal is financial independence and the only way I'll achieve that is buying stock overs a long period of time. I'm in my 20s and willing to take the risks, because I don't need the money I save. It will be invested for decades. So the only thing that makes sense for me is buying VT. I know that the 15k I have right now is nothing compared to what I will invest in the next 5 years, let alone in the next 20 years. So my fear isn't really rational.

I think a good way of overcoming this fear is to start investing my montly savings and DCA the 15k over the next 12 months? If the markets are going up, I will be glad that I started, if the markets go down, I will be glad that I DCA my initial savings. What do you think?

Either way is better than not investing, just get started.

Lump sum or in stages? There is much discussion here about the two approaches. I am in the invest it "all at once" camp. When investing a large chunk of new money, "all at once" works out better about 2/3 of the time. Please see the Vanguard paper, "Dollar-cost averaging just means taking risk later".

Wiki article, "Dollar-cost averaging". “Lump sum investing will always carries a higher expected return, because it immediately moves your funds from asset classes with lower expected returns to ones with higher expected returns. Note that higher expected returns do not guarantee that your actual returns will be higher. According to an investopedia article, studies indicate that lump sum investing has produced higher returns 66% of the time”.

The compromise solution is to invest part in a lump sum now, and the rest in stages. For example invest 50% in a lump sum now, and invest the other 50% in stages (like an additional 10% on a predetermined date each month for the next 5 months). Don't needlessly agonize over when the best time may be to invest.

[retired@50]

Thank you very much for all the answers.

I don't want to buy bonds because this will decrease my expected returns. My main goal is financial independence and the only way I'll achieve that is buying stock overs a long period of time. I'm in my 20s and willing to take the risks, because I don't need the money I save. It will be invested for decades. So the only thing that makes sense for me is buying VT. I know that the 15k I have right now is nothing compared to what I will invest in the next 5 years, let alone in the next 20 years. So my fear isn't really rational.

I think a good way of overcoming this fear is to start investing my montly savings and DCA the 15k over the next 12 months? If the markets are going up, I will be glad that I started, if the markets go down, I will be glad that I DCA my initial savings. What do you think?

I like the plan to DCA over the next 12 months, then to DCA for the remainder of your working years... Buy every two weeks until you stop working. If it gets you in the game, and you're able to deal with the emotions of investing by using DCA, then do it. You cannot be an investor if you sit on the sidelines. Best of luck,

[3funder]

I'm just at the beginning of my investment career.

That right there.

You should be hoping, praying and begging the market to give you a gigantic humongous crash. You should embrace it this early in your investing career. Picture how small these sums you are investing will look 20-25 years from now when you are about to pull the trigger on your retirement.

There are three possible outcomes.
1) You invest, market crashes.. you lose a lot of money (but only on paper).. but MUCH more importantly you get to continue to buy in at these new cheap highly discounted prices. You win!
2) Market goes sideways for a long time. In which case you would have been sitting on the sidelines missing out on the dividends and growing your portfolio through those. Eh.. Let's call it a draw.
3) Market continues to rise for a while. In which case you will be glad you invested the money right away. You win!

Go ahead jump in, the water is turbulent, it is and always will be. Ignore the noise.

+1, especially since Total World gives you significant exposure to [currently] cheaper international stocks.

[GoldenFinch]

Automate your investments. After they become automatic you will not think/worry about timing. If the market starts to head downward you will be buying low. When the market goes up you will see your money grow. This process is a recipe for financial success. Many of us have lived through earlier economic booms and extended downturns and have found out that saving and investing money through thick and thin works. A 25 year time horizon is a long time. Set a proper asset allocation and set up your investing schedule. Your future self will look back and thank you when you have a nice pile of money to retire with in a couple of decades.

Your new mantra is: set it and forget it...set it and forget it...set it and forget it....

[MarkRoulo]

Hello

I'm just at the beginning of my investment career. I made some lifestyle changes to increase my savings-rate to around 2000-2500$/month. I didn't save much till now (~15k available cash for investing), but that will change from now on. My IBKR account is now ready and I would like to invest in the Vanguard Total World Stock ETF. My goal is to do that for the next 25 years and to able to retire early.

But I'm afraid to start at the wrong moment. The yield curve inversion and currently in the longest bull market in history.



I'm currently much more afraid of "losing" money in a crash than missing out on future gains. I feels like I should really wait out for 12-18 months and just keep saving cash. Any advice for me?

I have some unusual advice: Start investing and hope for a market drop. But not for the usual "because you will be dollar cost averaging at a lower price" reason.

You are, as you say, "just at the beginning of my investment career." One of the most difficult things to understand is your actual risk tolerance. Filling out questionaires won't get you the answer. Neither will talking about it. You need to go through an actual big-ish market drop to see how you deal with it.

And you want to go through your FIRST big-ish market drop without a lot of money invested. (a) Because it is easier to NOT panic when you realize that you have decades of future (hopefully better!) returns ahead of you, and (b) because early on it really isn't "that much money" compared to later. Experiencing your first big-ish market drop when you are 50 can easily result in a combination of (1) big losses and (2) panic selling at the bottom.

So ... try to go all-in with whatever allocation mix you think is reasonable ... realizing that experiencing a market drop is essentially just paying your tuition and you'd be better off paying it earlier and cheaper.

[k3vb0t]

You’re being illogical, willing to admit it, but still unable to commit. You can DCA but what will you do when the market drops?

Also, your fancy chart shows a 34% chance of recession in a year. So tell me what happens between then and now, and another way to read that is a 66% of *not* a recession. So what then?

Then factor in that the market has likely priced in that data and knows more than you do.

Bottom line: you need to find an AA that works for you, and you need to invest now and set up automatic investments. At your age your human capital greatly outweighs your investment capital. Invest the investment capital and focus on what will drive your earnings over the next 20-30 years: your career.

[RickBoglehead]

As pointed out, DCA loses to lump sum investing.

Doing nothing loses to DCA.

My advice - stop posting and invest the money NOW.

[Stef]

Ok guys, you convinced me.

Didn't expect so many good responses to be honest. This thread was really very helpful!

I think I'm ready to go.

[Stinky]

Ok guys, you convinced me.

Didn't expect so many good responses to be honest. This thread was really very helpful!

I think I'm ready to go.

Glad that you're going to take the plunge.

At the savings rate you quote, you will be wealthy in 25 years, and you will be glad that you started when you were young.

[Steve Reading]

Ok guys, you convinced me.

Didn't expect so many good responses to be honest. This thread was really very helpful!

I think I'm ready to go.

The worst thing that could happen to you is if the market keeps going UP. You'll invest your future income at higher prices. So hedge your bets by investing as much now. That way if the market goes down, your future wages will get better prices, making up for it. Conversely, if the market keeps going up and your future savings buy at expensive prices, at least your investment today will offset that a little.

In fact, as a young investor, even that's too conservative and prices going up would be a much worse result. So I further hedged my bets by leveraging my stocks. Now if the market goes up or down, it is mathematically offset by my future wages buying at better prices.
viewtopic.php?f=10&t=274390

I'm 25, looking to retire in 20 years and currently on track. Hopefully knowing that leveraging stocks is actually the optimal thing for you will give you the courage to at least pour everything you do currently have (without leverage) TODAY!
Good luck!

[yb]

I agree with all of the above advice regarding market timing. However, given that OP is in their 20's and worried about losing the $15,000 that I sure took a lot of effort and discipline to accumulate, I think we should address basic personal finance questions before blanketly suggesting investing.

Do you have an emergency fund, credit debt, other debts, 401K match, ROTH, retirement plans?

Where do you plan to invest? Taxable or tax-deferred?

I would not tell a 20 something with $15,000 cash and $3,000 in credit card bills and no additional savings, to open a taxable account and start investing. I might tell them to get the 401k match, pay off credit bills, start contributing to Roth, then consider additional 401K contributions if you are able. If the company didn't have a 401K, then I'd suggest maxing Roth out this year now(6K), and next year (6K) and holding the remainder (3K) in emergency savings.

OP, it is great that you are getting an early start investing!

[Stef]

I agree with all of the above advice regarding market timing. However, given that OP is in their 20's and worried about losing the $15,000 that I sure took a lot of effort and discipline to accumulate, I think we should address basic personal finance questions before blanketly suggesting investing.

Do you have an emergency fund, credit debt, other debts, 401K match, ROTH, retirement plans?

Where do you plan to invest? Taxable or tax-deferred?

I would not tell a 20 something with $15,000 cash and $3,000 in credit card bills and no additional savings, to open a taxable account and start investing. I might tell them to get the 401k match, pay off credit bills, start contributing to Roth, then consider additional 401K contributions if you are able. If the company didn't have a 401K, then I'd suggest maxing Roth out this year now(6K), and next year (6K) and holding the remainder (3K) in emergency savings.

OP, it is great that you are getting an early start investing!

I'm not a US investor. I made the topic in this subforum because it's way more crowded and my location wasn't relevant to my question.

[22twain]

If you're not a US investor, then you shouldn't worry as much about a US recession as we US-folk do, right?

OK, Vanguard World Stock is about 55% US, but that's less US exposure than most US investors have.

[galving]

Just do it!
Timing the market is not really possible.

Check out the bogleheads wiki.
Select a stocks / bonds allocation that matches your risk tolerance and begin.
(Note: Holding your monthly savings allotment in cash, essentially says your risk tolerance is near 0%, and you accept the real return = bank interest rate - inflation rate, which could be negative.)

[FrugalInvestor]

If you wait to implement your investment plan you'll likely be unable to start once the market begins to tank (it certainly will eventually). That's because your emotions will tell you to do exactly the opposite of what you should do, they always do. You will likely be frozen and miss a golden opportunity.

But if your plan has already been implemented it will be much easier to continue, particularly if it is automated. The money goes in no matter what is happening and if the market is falling you buy at lower and lower prices until the bottom is reached. If you began by putting money in at the top (which may or may not end up being the case) once the years have passed the downturn will look like a negligible little blip on the graph with a long run-up afterwards and you will be able to point to it with pride as proof of your wise choice.

The time is never perfect but putting your plan into action is almost guaranteed to be a better choice than waiting. The more time you have the more likely this is to be the case.

The best of luck to you in your investing future!

[Rhino01]

Meet Bob.

[ruralavalon]

Ok guys, you convinced me.

Didn't expect so many good responses to be honest. This thread was really very helpful!

I think I'm ready to go.

It's good to see you will go ahead and start investing now.

[FrugalInvestor]

P.S. Look at my Avatar. Once you get started do what I am doing.......Ignore the Noise!

[Dottie57]

OP

Put your money in now or at least start by dollar cost averaging in. Investing for retirement is a long trek. Over 25+ years the value will go up and down.

Keep investing on a schedule - think of it a a steady Drumbeat.

Good luck.

[Momus]

When you market time, you need to wait until it dips, and buy. If it doesn't dip, you are buying on the highest level too. And then what????? What? Answer this question. All you can do after buying is riding on it for 30 yrs. The graph has always been going up, there is absolutely no reason to predict 1 transaction trying to save or lose 10%-20 when it's 600%+ gain in 30 yrs.

Buy now, forget market timing.

[dboeger1]

I am currently 28 years old, and have been saving pretty aggressively since I started my career at 22. However, I didn't invest any money beyond the amount required to get my 401k match for the first couple years of my career. One day, I received an email from my bank notifying me that I had earned interest for the year, and it was the first time I had more than $50k in my savings account, so out of sheer curiosity, I looked into how much interest I had earned that year. I think it was something like $2. That's when I knew in my gut I was doing something wrong.

If you're on this forum, I'm assuming that means you believe the market will go up in the long term. With a 25+ year timeline, you should be fairly confident that you will make gains on your investments. What you're trying to do is maximize those gains. Are you really any more confident in your market timing than you are in the fact that if you don't invest in the market, you will get a measly $2? And yes, that's hyperbole, because a high-yield savings account (which I moved to that very same day) would return much more, but you get my point. I can't tell you if your market timing will be good or not, but I absolutely can tell you with 100% certainty that if you aren't in the market when it goes up, you will have missed out on all those extra gains, because of your fear. No risk, no gain.

And it's not just waiting for the dip, but also being able to call the bottom. Remember, it's never all sunshine and rainbows and roses when the market's at rock bottom. There's no magical sign that will tell you it's time to get back in. In order to successfully time the market, you pretty much by definition have to be a huge contrarian and get in when everybody else is getting out. Good luck with that. That's the piece people tend to forget. The price is not just some weird sin curve. It's actually a reflection of market sentiment. In what amazing market conditions exactly are you planning on putting all your money in when nobody else is? When you think of it in these terms, I think the risks of trying to time the market become much more real and concrete.

Like you, I've been deathly afraid to invest more in the market in recent years. It's human nature. I'm young and don't want to lose everything I've been working hard to save up. At times, I've had more in my savings account than I wanted because I was uncomfortable putting more into my taxable investment account (maxing out retirement accounts still feels like a no-brainer to me). But in the end, I eventually convince myself to just do it. And thanks to that, my portfolio went up between $10k-$15k in the past week alone, in addition to my earned income. Now to be fair, it'll go down by that much very often as well; it's definitely a 2-way street. But you have to be in it to win it.

[Pomegranate]

Hello

I'm just at the beginning of my investment career. I made some lifestyle changes to increase my savings-rate to around 2000-2500$/month. I didn't save much till now (~15k available cash for investing), but that will change from now on. My IBKR account is now ready and I would like to invest in the Vanguard Total World Stock ETF. My goal is to do that for the next 25 years and to able to retire early.

But I'm afraid to start at the wrong moment. The yield curve inversion and currently in the longest bull market in history.



I'm currently much more afraid of "losing" money in a crash than missing out on future gains. I feels like I should really wait out for 12-18 months and just keep saving cash. Any advice for me?

DCA, mix in some bonds and MM into your portfolio

[Stef]

Update:

It took me a whole month to really get confident with investing. I was convinced, but still wanted to wait for a correction (yes I'm that stupid lol). Today I put 13.5k in the market, now invested with 14.5k in total and 2k sitting in cash (to be invested). I was just sick of the waiting, I wanted to start, forget everything I read about the future and just keep investing every month. Now I'm doing it.

I'm sure I will laugh at myself in 20+ years worrying about such a small amount.

[HomeStretch]

Congratulations on a good start!

Market declines are never fun. But at this point, your rate of contributions (rather than market growth) will have the biggest impact on your portfolio.

[mrspock]

Update:

It took me a whole month to really get confident with investing. I was convinced, but still wanted to wait for a correction (yes I'm that stupid lol). Today I put 13.5k in the market, now invested with 14.5k in total and 2k sitting in cash (to be invested). I was just sick of the waiting, I wanted to start, forget everything I read about the future and just keep investing every month. Now I'm doing it.

I'm sure I will laugh at myself in 20+ years worrying about such a small amount.

Great call. I’m a bit late to this thread, but my mentality has always been that “I win no matter what... it’s just a matter of by how much.”, market tanks 50%? Who cares...I’ll rebalance per my AA, and my retirement will likely be bullet proof for the ages (starting with such low valuations). If things keep going up, I’ll pad my nest egg even more — specifically with more bonds as rising equity markets generally require you to buy far more bonds with new money. It’s win-win .

Part of this is choosing an AA that lends itself to this mentality, something like 90/10 starting out, to 60/40 if approaching retirement.

Good luck!

[ruralavalon]

Update:

It took me a whole month to really get confident with investing. I was convinced, but still wanted to wait for a correction (yes I'm that stupid lol). Today I put 13.5k in the market, now invested with 14.5k in total and 2k sitting in cash (to be invested). I was just sick of the waiting, I wanted to start, forget everything I read about the future and just keep investing every month. Now I'm doing it.

I'm sure I will laugh at myself in 20+ years worrying about such a small amount.

When just starting out your establishing a high contribution rate is the most important investing decision you can make.

[Rosencrantz1]

Update:

It took me a whole month to really get confident with investing. I was convinced, but still wanted to wait for a correction (yes I'm that stupid lol). Today I put 13.5k in the market, now invested with 14.5k in total and 2k sitting in cash (to be invested). I was just sick of the waiting, I wanted to start, forget everything I read about the future and just keep investing every month. Now I'm doing it.

I'm sure I will laugh at myself in 20+ years worrying about such a small amount.

Good for you! And, you (fortunately) picked a day to jump in with a little "blip" in the market.... that's always nice. A little story about me... almost exactly a year ago, I had a little windfall of about $200K. I foolishly put that 200K into short term CDs because I REALLY believed the US economy was headed towards recession (this was before me becoming a bit more financially educated - mostly by this website). Fortunately for me, I kept about half my holdings in equities at that time. Well the rest is history - we can now look in the rear view mirror and see that having money in equities over the past year (in fact, the last decade) has been where it's at. The point is....no one can accurately predict where the market will be tomorrow or next week or next year for that matter. I'm hoping I've finally learned my lesson.

[DarkHelmetII]

1) You're going to invest $15,000 up front, and an additional $2,000-$2,500 each month. That means if the market does nothing, your portfolio balance will climb by 13% each month. The market will have to drop by MORE than 13% in a month before your balance drops. And next month, and the month after that, your contributions keep going in. Near the peak of the market is the best time to start a long-term investment program, especially if your initial investment is small relative to your on-going contributions.

+1. If hesitant, which is perfectly natural, then split this with part lump-sum and some dollar cost average over 3 to 6 or 12 months. No major damage in spreading it out a little bit, point is to not sit on $$ for a decade.

[Stef]

That right there.

You should be hoping, praying and begging the market to give you a gigantic humongous crash. You should embrace it this early in your investing career. Picture how small these sums you are investing will look 20-25 years from now when you are about to pull the trigger on your retirement.

There are three possible outcomes.
1) You invest, market crashes.. you lose a lot of money (but only on paper).. but MUCH more importantly you get to continue to buy in at these new cheap highly discounted prices. You win!
2) Market goes sideways for a long time. In which case you would have been sitting on the sidelines missing out on the dividends and growing your portfolio through those. Eh.. Let's call it a draw.
3) Market continues to rise for a while. In which case you will be glad you invested the money right away. You win!

Go ahead jump in, the water is turbulent, it is and always will be. Ignore the noise.

I wasn't hoping or praying for a crash, but still kind of got it. I invested my bonus last week on Friday (right at the top) and already lost >10% of my whole investments in just 4 days.

I think it's a good lesson for me, even if it hurts a lot. Better to experience my 1st big drop with 30k invested than with 600k invested.