How to choose when to buy mutual fund index stocks?

[Scott 2]

Professional investors are also working with much, much more money. That adds complexity to their problem.

[TopHatFox]

Minimum buy-in for a Vanguard fund is $3K. For an Admiral-status fund the buy is $10K. You only have enough for one fund. I would suggest Total World Stock as it is a world stock fund (~50% USA). Once you have more than $10K, then you can diversify into more funds.

The portfolio is currently:

1k Personal Possesions
4k Checking Account
7k Money Market
18k VTSAX

I'll get another 7k in stipends in September, and another 7k in January, then start work hopefully in the 60k + range in likely June.

I might have to pay for orthognathic surgery + orthodontia this year, at least 5k-10k w/ insurance. Rent + Food comes out to ~4k/yr.

I think I might just move the money market to VTSAX via the original plan, and then decide what to do w/ the stipends once I hear back from the insurance company about the ortho surgery.

[SimpleLife]

A big problem with waiting for a downturn is that the market still goes up in the long run. By the time the next downturn occurs, the downturn price could be higher than it is today, so it only makes sense to wait if you think the downturn is coming soon.

Example: During the early '90s recession, the price for S&P 500 was close to $300. As the '90s went on the price went up and up, particularly during the late '90s, and in year 2000 it peaked around $1500. Then the early '00s recession happened and it bottomed out in the $800s. This was more than twice the price during the previous downturn. So if you had started saving in 1992 and planned to wait for the next downturn, you would have been waiting a very long time, and you would not have been able to buy as many shares as you would have if you started investing right away.

This. I had debated not investing in case of a DT. Had I done that 2 years ago I would have 200k less than now...

[black_son_of_gray]

This. I had debated not investing in case of a DT. Had I done that 2 years ago I would have 200k less than now...

If there was a 40-50% downturn in the next year, how much would you lose?

[BRUTE]

I might have to pay for orthognathic surgery + orthodontia this year, at least 5k-10k w/ insurance.

has Zalo considered medical tourism?

[BRUTE]

You don't lose anything in a market crash unless you start selling.

brute is not sure this is correct.

[The Old Man]

You don't lose anything in a market crash unless you start selling.

brute is not sure this is correct.

If you are using the 4% rule and also retired (thus using the 4% for living expenses), then by definition you are selling. USA stocks and bonds are generally returning about 2%, so you are selling 2%.

[FBeyer]

You're only selling during a crash if you don't have a cash buffer for those exact instances where your portfolio is not returning as needed.
Or in case you're not willing to pick up enough work to cover half of your already low expenses. Like, I don't know, a newspaper route or something.

Or?

[Tyler9000]

Since I am young at 22, and stocks have historically been the fastest way toward financial independence once the expenses/income portion is taken care of, I will be using 100% VTSAX until I am living off my portfolio at around 500k of $ in VTSAX in 5-10 yrs time, at which point I'd switch over 30% to VTBLX.

This is an example of a common investing mantra that doesn't hold up to scrutiny. The truth is way more interesting than that. Too many investors talk about "risk" as something that is somehow nonexistent if you're stubborn enough to ignore the markets, but they never really understand the implication of investing uncertainty on the timing of their important life goals. IMHO, there are far better options than putting all your chips on VTSAX and hoping for the best.

[BRUTE]

brute thought he saw a butterfly just now..

@FBeyer:

brute buys company X. crash happens. company X goes under. stock is worthless and ceases to exist or never recovers. brute never sold. brute lost.

FBeyer assumes that everything that comes down must go up. mean reversion is not guaranteed.

[FBeyer]

...
FBeyer assumes that everything that comes down must go up. mean reversion is not guaranteed.

You're right. I assume that VTSAX won't disappear in its entirety.
You're absolutely right about survivorship bias, granted, I was being blunt. But since Zalo is indexing in the entire US stock market, I'd wager that he won't see all his investments disappear in a crash, unless he panics and starts selling.

[brighteye]

How would your advice change if it was not $7000, but $300000?
Invest all at once (regardless of market valuations), DCA or wait for a "correction"/crash like in 2008?

[BRUTE]

brute would probably invest 50% now, and DCA the rest over a time span of 1-2 years. mostly a "being comfortable with it" thing though, no hard science behind it. then again brute wouldn't buy 100% domestic, but expand into a golden butterfly type portfolio or global market portfolio.

[Locke]

Hi All,

Larry Swedroe is a financial guy whom I trust. Consider an article that he wrote:

"Zakamulin concluded that the real-life performance of the market-timing strategies suggest that over a long run, one can expect that a market-timing strategy delivers only marginally better risk-adjusted returns than the buy-and-hold strategy, yet with a substantially lower long-term capital growth."

For more info: http://www.etf.com/sections/index-inves ... nopaging=1