Is now a good time to buy NISA?

[jwray]

Looking at Rakuten eMAXIS Slim U.S. Stock (S&P500). I had meant to get into this a couple years ago, but I’ve just recently got my finances in order. It appears to be at an all-time high currently, and I’m wondering if I should wait. If I had bought it back in 2020, it would’ve tripled by now.
I’m a beginner, so any advice welcome.

 

[phillev]

@jwray Stocks generally go up over time. Not in a straight line, but generally up over time. That means, statistically, stocks will always be at an all time high.

No one can say whether stocks will go down 20% or more this year or next. However, if you look at a 30 year chart of the S&P then you’ll notice the trend is generally up and to the right.

Perhaps the better question is, why has that been true until now? Population growth, GDP growth, productivity improvement, etc. If you research about that and ask yourself whether you think that will continue into the future, you’ll find whether or not you should invest.

Most importantly, don’t choose whether to invest or not based on what people on the internet say. Think about whether you believe the global economy (or the U.S. economy, if you’re looking at the S&P) will continue to grow in the future. Then, take action based on your own conclusions.

 

[jwray]

@phillev It seems likely there will be a dip at some point, or the yen will strengthen. Wouldn’t that be a better time to invest than at an all time high?

 

[phillev]

@jwray Yes, it would. But the problem is, you don’t know when that’s going to happen, and neither do I. Also, when a dip does happen, you don’t know when it’s at the bottom, or whether it will dip more or rebound.

Therefore, unless you have special psychic powers, it’s better to average into the market over time, generally.

 

[jwray]

@phillev Is the other concern that inflation will negate any gains from a future dip?

 

[pl21000]

@jwray The best time to start is always "now", regardless of which year/decade you ask

 

[mellie]

@jwray The best time to start investing - always and forever - is NOW.

 

[resjudicata]

@jwray Open a Nisa account now, as the window for a legacy account is closing. Like seriously the paperwork takes time!

Then decide once the account is open.

 

[jwray]

@resjudicata I’ve already opened the account, just haven’t purchased the stock yet.

 

[njn]

@jwray If you don't know when to get in, Dollar Cost Average in.

 

[paradise_falls]

@jwray NISA is a type of tax-advantaged account, not an actual investment.

But if you're investing long term, any time is generally a good time to buy an S&P 500 index fund.

 

[lishacccc]

@jwray You can't time the market. It's just one of those absolute truths about the universe that everybody's mind rejects ("but look, obviously it's too high/too low!") but which remains true anyway.

The market is the synthesis of all available information. You can't consistently beat it, you can only join it.

Whenever you have investable money that you won't need to touch for a few years, invest all of it immediately.

 

[gooliga]

@jwray I don't think it's a good time to invest in funds investing in US stocks. My reading is that the JPY is so weak that if it gets stronger against USD, in a 1 yr horizon, then considering the historical max (around 110 yen) you could potentially lose 30% of your investment in US stocks. If the emaxis slim gives a 10% gain, then the loss effectively becomes 20%. This is just my opinion. Maybe none of what I mentioned comes to pass. JPY just keeps getting weaker and never returns to its past glory.

Investing in a mutual funds comprising Japanese stocks makes more sense because you don't lose out on JPY/USD conversion. However, I don't much of the Japanese market and I don't know to where it is heading.

Would love to hear recommendations for good candidates for domestically invested mutual funds.

 

[jwray]

@gooliga This is what I was thinking!

 

[bigoink]

@jwray The S&P 500 itself is about 10% below all time high (although much recovered from the slump of 2022). However in yen valuation it will be ATH because the yen is 145 to the dollar right now.

I would buy but accept that there may be an unusual amount of short to medium term volatility. You could easily see a 10% price drop and 20% currency drop by the end of the year. Over the long term (7+ years) you will still likely make money, if the US economy grows.