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27 October 2020, 05:52 AM | #1 |
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S&P 500 Investing
Hi guys,
New to the forum and am happy to see there is a stock investing thread! I am also new to the stock market. I met with a friend/mentor this weekend and he recommended I jump into the S&P 500 via an index fund. This way, because I am new to this, I don't have to sit there and hope I pick the right stock/s. He said over the years the S&P 500 has shown an average growth, so my money will be better there than in the bank as time goes by. I'm not looking for a get rich quick scheme, just trying to put some money to work. What do you all think? Thanks, Owl |
27 October 2020, 07:52 AM | #2 |
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seems reasonable. but it isnt like putting your money in the bank.
if you want a study in this just look a the nikkei historical chart for the last 40 years.
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27 October 2020, 08:11 AM | #3 |
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Index funds are a good way to get started. Keep in mind there is no guarantee the markets won't drop significantly, and stay depressed for 10 years or so. Look at the S&P between 2000-2013...or as Etschell says, the Nikkei.
Personally, I would suggest meeting with a financial advisor. |
27 October 2020, 09:10 AM | #4 |
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27 October 2020, 11:05 AM | #6 |
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Meeting with an advisor is a great start and I’d highly recommend an hourly fee structure. But many initial consultations are short, generic and complementary; although vague they can be very valuable.
I’m a big index fan and Boglehead at heart. Do what you feel comfortable with but there is nothing wrong with index investing. It may not be sexy but I’d rather be comfortable than sexy :) |
27 October 2020, 11:23 AM | #7 |
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There are lots of studies showing that few beat the market, so you are generally better off just "buying the market" through either an S&P 500 index fund or a total market index fund (they are virtually indistinguishable in their returns). But be ready for the ups and downs that entails. This isn't the right forum to go into those kinds of issues, but two resources that might help you are:
1. bogleheads.org (as Pw92676 mentioned above). Grand Central for information on index investing and asset allocation. 2. Portfoliovisualizer.com. An easy to use, free tool for checking out past results of various portfolios. The past doesn't predict the future, but it can be helpful to see the kinds of swings that can occur in times like the dot.com bubble, the 2008 recession, the March-April 2020 Covid panic. And that, nonetheless, overall the market tends to trend upwards. (But past results etc. etc.) Good luck! You are on the right track. |
27 October 2020, 11:44 AM | #8 |
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Thanks for the advice guys.
I'll check out the websites provided as well. I know that this forum doesn't allow talk of political views and such, that is not my intention. There is an election coming up in America on November 3rd. I hear the few days after the election should be a good time to invest. Is that true? If so, why is that? |
27 October 2020, 11:46 AM | #9 |
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One of the reasons why I've always feared the stock market is that it seems like a lot of things affect it.
Something might happen around the world or so and the market is affected. Which is interesting and scary at the same time. My mentor simply told me to watch what happens at the election and be ready to invest afterward. That is why I am asking. Please no discussion of the actual political parties so that this thread doesn't get locked by moderators. Thanks! |
27 October 2020, 12:29 PM | #10 |
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Your mentor has missed many points that are key to investing by simply saying buy SP500 and time it to the election.
You’d be so overweight in tech by value that your risk is beyond hedging in other areas. Facebook, Amazon, Apple, Netflix, Google (“Alphabet”), and Microsoft now account for 25% of the index by value. Don’t know what you should do without more detail (which I’m not asking for)... But putting it all in SPX or SPY at this moment is a real risk. Sent from my iPhone using Tapatalk Pro
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27 October 2020, 01:04 PM | #11 | |
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Quote:
The idea was for me to try "dollar cost averaging." Do you have a link or book you suggest for me to read to be in a better position for investing in an index fund? Right now I want to stick to an index fund or maybe total market. I don't think I am ready to start picking individual stocks. Thanks. |
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27 October 2020, 01:18 PM | #12 |
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Index funds are a great core holding. As Paul mentioned above they are overweight in Tech.
Key to a good portfolio is being diversified. Don’t buy on FOMO. Stick to your fundamentals. |
27 October 2020, 04:24 PM | #13 |
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Don’t invest more than you can manage without - if the market dips you want to be able to ride it out.
So think 5+ years without that money as a minimum. Better 10+ years for less risk. Consider tax beneficial methods in what you do.
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27 October 2020, 09:19 PM | #14 |
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