6 ms·

This is exactly the right answer. Broad based index funds, invested over time. You could also consider a 70/20/10 portfolio of S&P 500, international equities,

by fnbr 7y ago

This is exactly the right answer. Broad based index funds, invested over time. You could also consider a 70/20/10 portfolio of S&P 500, international equities, and bonds.

sytelus 7y ago
I mostly believe this (which is also largly the Buffet philosophy) but have learned few caveats: 1. Not all broad indexes are great buy because lot of companies will do great in this crises but others will suffer long term. Instead of investing only into S&P 500, you might want to also diversify in Europe, Asia Pacific, China markets as well as have ETFs in energy, utilities, finance etc. 2. S&P500 doesn't actually have all that great returns, contrary to usual belief for same risk taking. For example, QQQ has returned ~30% avg/yr while SPY has only ~12%/yr over past 10 years even at lowest points. This is more than double the difference for reasonably similar level of volatility and liquidity! 3. The buy and forget strategy misses out on entirely on "unreasonably low" prices event. For example, massive ETFs like XLE are at all time lowest price and very unreasonably low priced. Investing them in now can boost your returns massively.
- raincom 7y ago
  well, this strategy requires investors to master some basics. Yes, it is worth the effort.
- davidivadavid 7y ago
  How can QQQ which tracks mostly tech stocks have comparable volatility to SPY?
- fnbr 7y ago
  I largely agree with what you're saying. The only point I disagree with is 3. That's the exact same logic I used to make a large investment on March 6th. If I had time-averaged the investing, I would have saved a ton of money. The point is that it's near impossible to predict market bottoms, so time-averaging helps with that. If your point is that you should increase investing now, I totally agree, but you should invest the money over a period of weeks/months, not in one lump sum (which I don't think is what you're advocating).

by fnbr 7y ago

This is exactly the right answer. Broad based index funds, invested over time. You could also consider a 70/20/10 portfolio of S&P 500, international equities, and bonds.

sytelus 7y ago

I mostly believe this (which is also largly the Buffet philosophy) but have learned few caveats: 1. Not all broad indexes are great buy because lot of companies will do great in this crises but others will suffer long term. Instead of investing only into S&P 500, you might want to also diversify in Europe, Asia Pacific, China markets as well as have ETFs in energy, utilities, finance etc. 2. S&P500 doesn't actually have all that great returns, contrary to usual belief for same risk taking. For example, QQQ has returned ~30% avg/yr while SPY has only ~12%/yr over past 10 years even at lowest points. This is more than double the difference for reasonably similar level of volatility and liquidity! 3. The buy and forget strategy misses out on entirely on "unreasonably low" prices event. For example, massive ETFs like XLE are at all time lowest price and very unreasonably low priced. Investing them in now can boost your returns massively.

raincom 7y ago
well, this strategy requires investors to master some basics. Yes, it is worth the effort.
davidivadavid 7y ago
How can QQQ which tracks mostly tech stocks have comparable volatility to SPY?
fnbr 7y ago
I largely agree with what you're saying. The only point I disagree with is 3. That's the exact same logic I used to make a large investment on March 6th. If I had time-averaged the investing, I would have saved a ton of money. The point is that it's near impossible to predict market bottoms, so time-averaging helps with that. If your point is that you should increase investing now, I totally agree, but you should invest the money over a period of weeks/months, not in one lump sum (which I don't think is what you're advocating).