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Problem with "long term investing" as I see it is that to realize the gains you must get out of the market at approximately the correct time. That is difficult

Problem with "long term investing" as I see it is that to realize the gains you must get out of the market at approximately the correct time. That is difficult psychologically because if you have been able to increase your worth by doing what you have been doing so far you are likely to keep on doing it. Then one day the next crash comes. All of a sudden having been a long term investor does not help so much any more. You need to be a long-term investor for a limited term. But hard to know when that term is over. So I think when markets go up you should seriously consider taking some money out and using it for leisure and travel and education investing in yourself. But taking money out and spending it is not usually considered prudent investing. Especially because taking money out means you must pay taxes on it. So you stay in the market and soon most of your long-term gains are wiped out, and you have to be a "long term investor" all over again.

throwaway898989 5y ago
if you have a large enough sum of money (i.e., $50m USD ) you can stay invested all the time and withdraw a small sum of money each year like $300k With $50m if your portfolio averages 4% a year you would be clearing $2m then pulling out $300k for 1.7 gain. You only pay tax on the income withdrawn
- matwood 5y ago
  The real baller move for someone worth 50M+ with rates as low as they have been, is take out loans against the 50M to live off of. Pay back the loans with rates less than the annualized market returns. Also limits/pushes out cap gain taxes.
  - galaxyLogic 5y ago
    Right, take out a mortgage. That is tax deductible
refurb 5y ago
You should clearly have a purpose for your investing goals and adjust your investing style based on risk. So if your goal is retirement and you're 30, you can tolerate higher risk because if the market crashes, you've got 30 years to wait for it to recover. If you're 60 and retiring in a few years, your risk tolerance is low. And you can slowly adjust your portfolio in between.
- srean 5y ago
  This a very popular idea but I don't fully accept it. Goals and desires are not static. They are path dependent and adaptive. I want a funding scheme that's able to fund that.
  - refurb 5y ago
    So you want high returns with little to no risk? Doesn’t exist. Sorry bud.
    - srean 5y ago
      You think you are entitled to returns just because you took a risk ? Sorry bud, sad to break it to you but it does not work that way. That's the idea that I am criticizing. Risk might be necessary, but never sufficient. BTW I don't think, you think that way, but neither should you. Gratuitous condescension poisons the well.
      - refurb 5y ago
        I never said I "think [I am] entitled to returns just because [I] took a risk". There is no entitled, it's simply a trade-off. It's a basic precept of investing. In a very simplified way - higher returns require higher risk of invested capital - why else would you invest in something higher risk unless the return justifies it? And likewise, people will accept lower returns if they know the risk is low. Nobody is doing payday loans at prime because the risk isn't justified by the return. When you start looking at portfolio allocation across multiple investments, it gets more complicated because you can actually achieve the same return at lower risk through diversification across classes of assets. But to answer your original question - the only way to guarantee short-term and long-term positive returns (as you put it "if my goals change, I don't want to lose money") is to invest in low risk investments. Low risk investments mean low returns.

throwaway898989 5y ago

if you have a large enough sum of money (i.e., $50m USD ) you can stay invested all the time and withdraw a small sum of money each year like $300k With $50m if your portfolio averages 4% a year you would be clearing $2m then pulling out $300k for 1.7 gain. You only pay tax on the income withdrawn

matwood 5y ago
The real baller move for someone worth 50M+ with rates as low as they have been, is take out loans against the 50M to live off of. Pay back the loans with rates less than the annualized market returns. Also limits/pushes out cap gain taxes.
- galaxyLogic 5y ago
  Right, take out a mortgage. That is tax deductible

refurb 5y ago

You should clearly have a purpose for your investing goals and adjust your investing style based on risk. So if your goal is retirement and you're 30, you can tolerate higher risk because if the market crashes, you've got 30 years to wait for it to recover. If you're 60 and retiring in a few years, your risk tolerance is low. And you can slowly adjust your portfolio in between.

srean 5y ago
This a very popular idea but I don't fully accept it. Goals and desires are not static. They are path dependent and adaptive. I want a funding scheme that's able to fund that.
- refurb 5y ago
  So you want high returns with little to no risk? Doesn’t exist. Sorry bud.
  - srean 5y ago
    You think you are entitled to returns just because you took a risk ? Sorry bud, sad to break it to you but it does not work that way. That's the idea that I am criticizing. Risk might be necessary, but never sufficient. BTW I don't think, you think that way, but neither should you. Gratuitous condescension poisons the well.
    - refurb 5y ago
      I never said I "think [I am] entitled to returns just because [I] took a risk". There is no entitled, it's simply a trade-off. It's a basic precept of investing. In a very simplified way - higher returns require higher risk of invested capital - why else would you invest in something higher risk unless the return justifies it? And likewise, people will accept lower returns if they know the risk is low. Nobody is doing payday loans at prime because the risk isn't justified by the return. When you start looking at portfolio allocation across multiple investments, it gets more complicated because you can actually achieve the same return at lower risk through diversification across classes of assets. But to answer your original question - the only way to guarantee short-term and long-term positive returns (as you put it "if my goals change, I don't want to lose money") is to invest in low risk investments. Low risk investments mean low returns.