Is it a good time to invest in ETF index funds?

[bondog]

Perhaps the appropriate ending of the everything bubble is anything and everything, i really dont think its gona take much, have been some big losses in some crypto based assets lately, talking 60 to 90%.

Yes m crypto is down 30 % but I’m still up 20% overall

 

[bondog]

If you have trouble imagining a 20% loss in the stock market, you shouldn't be in stocks.

Ask yourself: Am I an investor, or am I a speculator? An investor is a person who owns business and holds it forever and enjoys the returns that U.S. businesses, and to some extent global businesses, have earned since the beginning of time. Speculation is betting on price. Speculation has no place in the portfolio or the kit of the typical investor.

Two Bogel quotes.

Now decide if the first issue worries you. If not then it shouldn't matter when you place the funds because the underlying theme is it's always a good time to invest in shares.

In regard to the second quote, decide who you are. The concept of the second quote is to keep investing no matter what and allow compounding to do its work for you.

I don't consider investing itself is difficult although some give the impression it is. The hard part for me has always been the temptation to do something. After I've resisted and done nothing, I give a sigh of relief I didn't do a stupid thing.

Agreed, I am a bit cautious to buy at the top of the market if I’m investing a large sum of money, that’s all

 

[bondog]

How much ; for how long ; what type? There are so many different ETFs.
Just be clear in your own mind on what you want to achieve, and especially how patient you're prepared to be.
ETFs for retail investors -have many fans amongst the professionals.

welcome to ASF ,

my fellow members , have probably said what i was thinking better

now let's assume you have your sight set on VAS and VGS

first off let's discuss DRP ( Dividend Reinvestment Plan ..DRiP in the US )

Dividend Reinvestment Plan (DRIP)​

Dividend Reinvestment Plans (DRIPs): Compound Your Earnings

A dividend reinvestment plan (DRIP) is an arrangement that allows shareholders to automatically reinvest a stock's cash dividends into additional or fractional shares of the underlying company.

www.investopedia.com

What is a Dividend Reinvestment Plan?​

Dividend.com

The easiest way to reinvest your dividend, explained.

www.dividend.com

and

THE MAGIC OF COMPOUNDING​

The Magic of Compounding

Simple Interest and Compound Interest. Remember these terms from your maths lessons? Well if your eyes want to glaze over at the mention of the word ‘Maths’ I urge you to stay focused. This lesson may change your life! The Magic Of Compounding Let’s refresh your knowledge of these...

thewealthygraduate.com

in your case accumulating extra ETF units

now both VAS and VGS both pay quarterly ( 3 monthly ) and both have an optional DRP

now IF you choose this strategy you might want to buy your ETFs at least two week BEFORE the next ex-div. date so the paper-work is in place ( VAS and VGS have recently gone ex-div so you have nearly 10 weeks to try for a 'nice price ' before the next dividend cycle )

now i am a 'lurker ' ( will wait up to 3 years for a target price ) but that strategy doesn't appear to suit your aims , collecting as many divs as you can , will probably make you happier

ALL investing carries risk ( even cash sitting in the bank term deposit )

also VAS will pay you franking credits ( reduce your tax a little bit , don't forget to claim them ) VGS doesn't appear to pay franking credits

good luck

Hey thanks for that, much appreciated

 

[divs4ever]

Agreed, I am a bit cautious to buy at the top of the market if I’m investing a large sum of money, that’s all

check out the rates your broker charges SOMETIMES it is better to buy some now ( oops ! i mean soon ) and buy some more later ( hopefully cheaper )

now logic will tell you we must be somewhere near the cycle top , but the market is clearly irrational currently , so the actual top might be weeks away , maybe months away , could be even years away

there is NO easy answer even when the market plunged like March 2020 ( then you are trying to guess how low it will go ... and IF it will recover anytime soon )

the OTHER option is to save some cash as you go , so you have a cash reserve for that correction , BIG dip or maybe even the crash we all kinda dread

and yes making the correct decision ( for you ) is HARD , just like those high-flying fund managers trying to NOT blow up billion dollar portfolios.

BTW caution is GOOD , but investing is all about controlling your GREED

 

[Austwide]

"Agreed, I am a bit cautious to buy at the top of the market if I’m investing a large sum of money, that’s all".


You don't have to be all in or out.

Consider investing 10% or whatever percentage you feel comfortable with.

As already said, no one knows what the market will do but how long do you wait.

 

[Belli]

Agreed, I am a bit cautious to buy at the top of the market if I’m investing a large sum of money, that’s all

Ok. First statistically it has been shown a lump sum is better than Dollar Cost Averaging. It's psychological and DCA moderates some of the fear factor associated with lump sum investing.

Here is one article. There are many others.

Dollar Cost Averaging vs. Lump Sum Investing (DCA vs. LSI)

Dollar cost averaging and "lump sum investing" are two different timing strategies for getting cash into the market. Let's compare them.

www.optimizedportfolio.com

As to timing the market, an interesting opinion on that from a few years ago.

Busting The Myth Of Market Timing

Investors can be their own worst enemy – selling at the times of greatest panic, and potentially then missing out on subsequent gains.

www.forbes.com

PS: I am not trying to convince you what to do or what not to do. You have to decide but it's good to thoroughly know yourself and your limits. The market runs on fear, greed, hope and frustration. You should determine how much each of those will influence your investing.

 

[Bill M]

You don't have to be all in or out.

^This, me too. I hold VHY ETF in my Super and at this point in time I am not selling or buying. Having cash on the sidelines for any potential crashes is a good idea. On the other hand, having some in a rising market (if it happens) and watching it go to real silly prices I will sell a bit more off too but never all of it.

 

[qldfrog]

Thanks you, I think I’ll just sit on the sidelines and watch it for a week or two with this omicron around who knows what’s going to happen’

I do not believe a week or 2 will give you much more clarity.
Omicron is noise . But there are real issues with the market, the valuation,massive docial engineering so where to from that.i do not have the answer.whatever the decision to invest or not, you need to weight risks on both

 

[Belli]

In general considering a long time line, indexes were cheaper 3 months ago, 12 months ago and 2 years ago, PE ratios are crazy high now, correction territory high. Is it a good time to invest in index funds? a better question is - will there be a better time to invest in index funds over the next 2 years?

​

He he. I've been placing funds into ETFs since late 2002 - and in LICs since 1995. Every time I put funds into the market, at lot of pundits probably thought the market was at its peak.

 

[Belli]

Totally wild thoughts for an all in one.

VDHG

or DUI - which also provides some gearing.

 

[Sharkman]

Agreed, I am a bit cautious to buy at the top of the market if I’m investing a large sum of money, that’s all

that's what i thought too back in 2014 when i was looking into S&P 500 index ETFs. it had already gone up significantly over 2012-2013. but then an inner voice spoke up... mate, just go for it, you've gotta go international, you are 100% exposed to Aust right now which is becoming more and more of a one trick pony, if mining softens, you'll be stuffed. so i started DCA'ing into IVV + VEU, and sure am glad i did.

i guess listen to what the 2 little blokes sitting on your shoulders have to say, the one clad in white with a halo and the one clad in red holding a pitchfork. if the one telling you to invest (maybe for you it's saying "you are 100% exposed to real estate, you've gotta diversify into other asset classes", i dunno, you're the only one who can hear what those 2 blokes are saying) is more convincing than the one saying "but you'll be buying at the top!", then just go for it.

if you still have a nagging fear of buying in at the top you can always use DCA (i did). as mentioned by Belli there are studies showing that most of the time diving in with a lump sum performs better than DCA (i've read other studies suggesting it's about 70-30 in favour of lump sum). in hindsight i would've been better off going in with a lump sum back in 2014 instead of DCA'ing in over 2014-2016. but this might be one of the 30% where it doesn't. for the record i do think it is looking a bit toppy now, then again i thought it was looking toppy back in 2014 as well...

 

[bondog]

Totally wild thoughts for an all in one.

VDHG

View attachment 135284

or DUI - which also provides some gearing.
View attachment 135286

View attachment 135287

Hi Belle,

sorry what do you mean by your comment?

 

[divs4ever]

Hi Belle,

sorry what do you mean by your comment?

suggestions ( or food for thought ) is how i see it

but back to you buying VAS and VGS , see how waiting even two days can alter you long term outcome ( a $3 saving for VAS means 3% more units magnified by your time of holding them )

now given the slide in the last two days ( which MIGHT continue tomorrow , or rebound )

you COULD throw in your order for VAS at say $92 or even $90 and see if you are lucky

just a suggestion , of course ( calculate what is best for YOU ) if the order misses you can reassess over the weekend

 

[bondog]

Ok. First statistically it has been shown a lump sum is better than Dollar Cost Averaging. It's psychological and DCA moderates some of the fear factor associated with lump sum investing.

Here is one article. There are many others.

Dollar Cost Averaging vs. Lump Sum Investing (DCA vs. LSI)

Dollar cost averaging and "lump sum investing" are two different timing strategies for getting cash into the market. Let's compare them.

www.optimizedportfolio.com

As to timing the market, an interesting opinion on that from a few years ago.

Busting The Myth Of Market Timing

Investors can be their own worst enemy – selling at the times of greatest panic, and potentially then missing out on subsequent gains.

www.forbes.com

PS: I am not trying to convince you what to do or what not to do. You have to decide but it's good to thoroughly know yourself and your limits. The market runs on fear, greed, hope and frustration. You should determine how much each of those will influence your investing.

Thanks for the info, much appreciated

 

[bondog]

that's what i thought too back in 2014 when i was looking into S&P 500 index ETFs. it had already gone up significantly over 2012-2013. but then an inner voice spoke up... mate, just go for it, you've gotta go international, you are 100% exposed to Aust right now which is becoming more and more of a one trick pony, if mining softens, you'll be stuffed. so i started DCA'ing into IVV + VEU, and sure am glad i did.

i guess listen to what the 2 little blokes sitting on your shoulders have to say, the one clad in white with a halo and the one clad in red holding a pitchfork. if the one telling you to invest (maybe for you it's saying "you are 100% exposed to real estate, you've gotta diversify into other asset classes", i dunno, you're the only one who can hear what those 2 blokes are saying) is more convincing than the one saying "but you'll be buying at the top!", then just go for it.

if you still have a nagging fear of buying in at the top you can always use DCA (i did). as mentioned by Belli there are studies showing that most of the time diving in with a lump sum performs better than DCA (i've read other studies suggesting it's about 70-30 in favour of lump sum). in hindsight i would've been better off going in with a lump sum back in 2014 instead of DCA'ing in over 2014-2016. but this might be one of the 30% where it doesn't. for the record i do think it is looking a bit toppy now, then again i thought it was looking toppy back in 2014 as well...

Love the analogy of the two guys on your shoulders! I work with my intuition/Gut mostly so I’ll sit and watch more a bit, build my confidence first which feels right ?

 

[So_Cynical]

He he. I've been placing funds into ETFs since late 2002 - and in LICs since 1995. Every time I put funds into the market, at lot of pundits probably thought the market was at its peak.

And today the ASX 200 is 2.7% cheaper to buy than yesterday - timing matters, with 20 years in the market you know that.

 

[Belli]

And today the ASX 200 is 2.7% cheaper to buy than yesterday - timing matters, with 20 years in the market you know that.

Wouldn't have a clue what the particular prices are at the moment. No spare funds to place in the market so it doesn't matter to me. When I do get the funds shortly, they will just go in on that day no matter what.

Should menion it doesn't matter to me how others approach investing or what they invest in. I'm only concerned about myself in that regard and what suits me.

 

[qldfrog]

And today the ASX 200 is 2.7% cheaper to buy than yesterday - timing matters, with 20 years in the market you know that.

Seen that way, investing tonight instead of Tuesday would save you more than 2y of bank TD returns....
obviously, if markets fall tomorrow..

 

[bondog]

And today the ASX 200 is 2.7% cheaper to buy than yesterday - timing matters, with 20 years in the market you know that.

Yep put in an order at $92 so will see!

 

[Logique2]

This has turned into a really good thread.

I was trying to place something I'd read about Buffettt and index funds, so tracked it down:

From: make it
...[Warren] Buffett warned against investing in individual stocks, as “I do not think the average person can pick stocks,” he said... Instead of stock picking, Buffett suggested investing in a low-cost index fund..
..he has instructed the trustee in charge of his estate...I just think that the best thing to do is buy 90% in S&P 500 index fund.”..