@pauledwardmorgan You’re completely right! But the reason I’m motivated to rebalance is that I basically missed out on the face ripping returns that some people made by just being in market funds recently
@neari Go here, click on "quarterly" and ask yourself if you would have sold in 2022 with those losses and missed out on 2023 (this is Vanguard S&P 500 ETF):
In hindsight, it is easy to say you would have held. But if your 100K portfolio was down to 80K as we go through bank failures, wars, all the news around inflation, etc. would you have held on? If so, S&P 500 might be OK.
@pauledwardmorgan i don't understand why people get scared and sell when the market goes down. that should be the time you're throwing everything you can at it. the market always recovers. just tell yourself you're not ever selling, only buying. the chance of you timing the market is low and the chance you screw yourself over (i.e. selling down 30% during the 2020 crash and missing out on every dollar you put in at the bottom doubling since then).
@familylawyerspenrith Timeframe / sequence of risk? From 2000 to 2013 the S&P500 was flat. That is 13 years with steep ups and downs in between. That can test your fortitude and convictions. Would you have held on for that 13 year span? See the numbers:
@pauledwardmorgan I did hold and continued to buy. You keep reinvesting dividends and contributing and you come out ahead much sooner. If you invested 1% of your account monthly, which may or may not be reasonable depending on how much you had saved, starting at the peak of the dot com bubble, you broke even in under 10yrs.
Any recurring monthly investments you made starting at the dot com peak were net profitable by September of 2008, just over 8yrs.
Just tell yourself that you won’t sell. You’re not going to lose all your money unless the world economy implodes and in that case you’ll be bartering because currency won’t exist anymore anyway haha. What are you going to do with the money anyway by selling? What is the plan? Sit on your losses and hope the market crashes even further so you won’t miss out on making it back?
@neari this is what you should be thinking right now. invest aggressively. aggressive doesn't mean risky. the S&P500 is not risky over the 30-40 years that you likely have until retirement. in the last 40 years there were several major recessions and they were blips on the chart. Heck there have been 3 major recessions since 2000 and even if you bought at the very peak of the dot com bubble and never invested another cent you would have made 7.5% annual gains.
the target date funds make no sense in my opinion. i see what options there are as far as categories of stocks. keep it simple and buy the S&P or if you want to play around a bit, weight some small or mid caps if you have a feeling something is going to perform better. you can always rebalance. in the long term it's not going to matter a ton.
@neari The best fund is one you will stay in when the market drops (so you won't sell and capitulate). It's easy to overestimate your tolerance for risk. I'd go with the idea of just switching new additions to S&P 500 unless you really can tolerate extra risk.
But also consider Vanguard has people that spend their days investigating and thinking about the best way to get you to 2060 retirement. Factor that against /r/investing advice which is often not that good. So take it all with a grain of salt. Including mine. Do what you are comfortable with.
