Future of retail investing w/ETFs & Index Funds

[skitta]

As someone who was investing prior to the March market downturn, and has made some sizable returns off of buying individual stocks or ETFs at incredibly low prices, I started to think about what has taken place.

With the insane amount of returns many of us have seen, and the historically high prices we are seeing now for securities, are people worried about future % return potential?

Like for someone getting into investing today who wanted to get into an ETF like VTI that has gone up considerable following COVID, would they be able to see sizable gains over the next 10 years?

I don’t want to be one of the people screaming “bubble”, but as someone who has always been happy with their passive gains through ETFs I am starting to worry that this may not be viable in the future.

Thoughts?

 

[diamondp]

@skitta Provided you do not plan on retiring in the near future, I would not be worried. Simply look at what has happened following bubbles in the past. Time is your friend. If you are looking to retire soon, that’s a whole different story.

Trying to time the market is a fool’s game. Many have been screaming bubble for several years and have not participated in huge gains.

 

[tebo]

@diamondp Can’t agree with this more. Before the election had plenty of people tell me “get out of the market why you can” “be careful” “you must be mad to be in the market during an election”

Please.

 

[anonymous9299]

@diamondp September was the bubble Pop, December was the top of the bubble. Now we're at the top of the bubble, March is going to be the top of the bubble too.

 

[mmsyther]

@diamondp Strongly agree. Especially given that OP is talking about ETF's and not specific/individual stocks. Solid and low risk ETF's are safe especially given their diversification

 

[resjudicata]

@diamondp Totally agree! Don't try to time the market on a bubble. This is a long term game.

If you are near retirement, you still need equities (ideally you will live 30 plus years in retirement!), but you need to have short term cash for immediate spending needs.

 

[mbm_kdm]

@skitta You should read Bogle “Little Book of Common Sense Investing”.

Goes over mutual funds in detail. A few will have solid gains for a few years but eventually most if not all regress to the mean, sometimes spectacularly.

We are 100% in a bubble. But it’s very hard to predict when it will burst. Everything is overvalued and the stock market has been pumped ol by the feds lowering interest rates so that no other investment vehicle (cash, bonds) is worth it. Therefore everyone pumps into stock market.

Eventually things will correct or crash. Just gotta keep on investing.

 

[mickaela]

@mbm_kdm In theory, if the market was rational, we wouldn't see a crash until the fed raises interest rates such that fixed income provides a higher yield than equities.

As it stands now, you buy the S&P500 and it yields more than 10 year treasuries, and that's assuming dividends never grow.

 

[diamondp]

@mbm_kdm TINA = There Is No Alternative

 

[lilliannac37]

@skitta It's mid-February and I have a mutual fund that is already up 57% this year after going up 150% last year (including a 260% increase from it's March lows). No, these gains are not sustainable.

 

[drumz]

@lilliannac37 Which one is this? Asking for a friend

 

[lilliannac37]

@drumz mssmx

 

[thepinkpreacher]

@lilliannac37 jeez, you know how to pick them

YTD everything is 2-7 and this is over 33%

but smaller companies have bigger growth

 

[lilliannac37]

@thepinkpreacher Don't mistake luck for skill.

 

[claudia4christ]

@lilliannac37 They lost money during the 2015-2019 bull market for 4 YEARS.

 

[lilliannac37]

@claudia4christ Not sure what you're looking at, but if I run a growth-of-$10,000 chart on Morningstar from 01/01/15-12/31/19, I'm showing that MSSMX grew 49.7% (total, not annually) during that period while the S&P500 grew 57%. So a little below the S&P, but certainly not losing money.

But they have definitely taken off since the COVID crash in March. I won't disagree with that.

Update before hitting save: It looks like you're just looking at the per unit fund price change and not taking dividends and capital gain distributions into account. They paid out over $10.00 per share in distributions during that period; which most mutual fund investors would have reinvested.

 

[claudia4christ]

@lilliannac37 Ok that's fair. Still they did 21% worse than the total market in that timeframe.

 

[lilliannac37]

@claudia4christ What have you done for me lately?

 

[vinnierocks]

@lilliannac37 OFC thats not on Wealthsimple nothing is on flipping Wealthsimple.

 

[shadowlife]

@vinnierocks Wealthsimple doesn't allow stocks from companies that have no female higher ups, or have a bad reputation environmentally.

You should look up VFV or HXT depending on if you wanna bet on the American or Canadian market.

Very nice basic ETFs