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This is picking a bad time horizon and acting like that's the only way to invest. If you'd been investing let's say starting 2000 in a 401k, you put in money a
by iolothebard 12y ago
This is picking a bad time horizon and acting like that's the only way to invest.
If you'd been investing let's say starting 2000 in a 401k, you put in money at regular intervals. So you were buying the whole way down and up.
You wouldn't simply have "held" a NASDAQ ETF.
- rsync 12y agoIt is indeed the worst time horizon. However, when evaluating a course of action, I think looking at the upper and lower bounds of possible outcomes is a very wise thing to do, so in that sense it's relevant...
- Retric 12y agoIt's not the worst time horizion as you can oviously do worse than break even ex: 1999:2002. There are many stratagies where you would have gotten significant returns over that time period. EX: If you held say 50% nasdaq and 50% cash and then rebalanced your portfolio you would have been well ahead of the curve.
- ChuckMcM 12y agoThe funny thing for me was that when I first heard about 401k programs the talks discounted the period of time during the depression as that was 'anomalous'. Having run the experiment you've proposed (although I started putting money into a 401k in '86) I think when we did the calculation my rate of return from that period to today for the 401k it was like 3.2%. (and there are things that drag it down like fund loading etc and my initial exuberance as a young investor for 'risk' as I figured I had plenty of time to make it back later if it went down. ) Not the sales pitch they investors want you to hear :-)