Time in the market beats timing the market
- Thread starter skovc
- Start date
wrennelson143
New member
@skovc If you think the market can be timed reliably, try this https://engaging-data.com/market-timing-game/
steve77777
New member
@skovc I started investing in shares and ETFs 5 years ago after 1-2 years of paralised indecision (as yours, now). In the last 5 years I have seen several big crushes (Covid - recovered in less than 1 year), Ukrainian war (recovered in 2 months), then recession (recovered almost all). How much raise I have in 5 years? almost double the price of my first ETF bought, some shares are 4 times bigger, some are 5% more, some 10-20% ( REIT) - but when I do the total I am on a good raise.
Guess what? I continued to buy monthly at the end of the month on the salary day. Some buys were up, some down. And I will continue.
P.S. comparing to the EmergencyFund that stays in y banking account, who lost around 15% of value thanks to inflation.
Guess what? I continued to buy monthly at the end of the month on the salary day. Some buys were up, some down. And I will continue.
P.S. comparing to the EmergencyFund that stays in y banking account, who lost around 15% of value thanks to inflation.
freegracer
New member
@steve77777 Emergency funds is something I have been looking to put somewhere, where I have fast access but can earn something on top of it.
Saving accounts are not a reliable options in Spain. Opening outside is not as well. Any thoughts?
Saving accounts are not a reliable options in Spain. Opening outside is not as well. Any thoughts?
scottcuster
New member
@freegracer Why is a savings account not reliable in Spain? And why not elsewhere either?
freegracer
New member
@scottcuster Maybe reliable was a wrong choice of word. What I wanted to say - the savings accounts doesn’t offer much interest (especially the ones where I can open an account). Then others have restrictions for open accounts as I am not an EU-citizens.
@freegracer
Why no?
I'm also in Spain. I have my savings accounts spread into TR, IBKR, Renault bank...
I get the money into my account in 1-3 days, and yields on the first 2 about 4%
Why no?
I'm also in Spain. I have my savings accounts spread into TR, IBKR, Renault bank...
I get the money into my account in 1-3 days, and yields on the first 2 about 4%
freegracer
New member
@freegracer
Not on the first 10k... and on USD not, EUR.
https://www.interactivebrokers.ie/en/accounts/fees/pricing-interest-rates.php
Not on the first 10k... and on USD not, EUR.
https://www.interactivebrokers.ie/en/accounts/fees/pricing-interest-rates.php
freegracer
New member
@freegracer I believe Wise and Revolut have high yield accounts! You can open a Spanish bank account with them.
@nishan I have talken a short look at the Chart for the VAGF and that one looks bad over the last 3 years. Is it because of the interested rate change? How should that look in the future if interested Rates get lowered again? What is the idea behind the combination? And which percentages make sense?
@birdyof14
Yes
Well it would go up. However, it isn't only interest rate changes that would make it go up. Now the bonds have some yield again, they will have a natural upward pressure of about 3.5-4% per year
The returns of bonds are uncorrelated with stocks in the long run. This means the risk-adjusted return of the portfolio as a whole is improved (expected returns per unit of risk)
It's a personal decision. See more discussion here:
https://www.bogleheads.org/wiki/Asset_allocation
Yes
Well it would go up. However, it isn't only interest rate changes that would make it go up. Now the bonds have some yield again, they will have a natural upward pressure of about 3.5-4% per year
The returns of bonds are uncorrelated with stocks in the long run. This means the risk-adjusted return of the portfolio as a whole is improved (expected returns per unit of risk)
It's a personal decision. See more discussion here:
https://www.bogleheads.org/wiki/Asset_allocation
@nishan Thank you for your explanation and the helpful link. The exact allocation depends of course on your risk tolerance, which I still need to think through.
What do you mean with upward pressure? That it will reach 3.5-4% based on the current interest rates and the changes done to it? I assume, as probably most people do, that they will not stay as high as they are forever. Still, they will not go back to 0 like before.
What do you mean with upward pressure? That it will reach 3.5-4% based on the current interest rates and the changes done to it? I assume, as probably most people do, that they will not stay as high as they are forever. Still, they will not go back to 0 like before.
@birdyof14 The bonds have a yield of around 3.5-4% now, i.e. if rates (not only base rates but long term rates) froze, and stayed exactly where they are now, then you could expect a return of around 3.5-4% for a period of something like 8 years.
If rates were to come down (again not only base rates, but long term rates), then the price of those bonds would increase and effectively bring the returns forward.
If rates were to rise, then that would push down on the price of bonds, and returns would be pushed into the future.
Note that a few years ago, yields on bonds were near zero, so they had little natural tendency to rise, and the only way they could go up is if rates continued to go down. And then they got hit by very sharp rate rises. Getting hit by sharp rate rises after a zero interest environment are the worst possible conditions for bonds, hence recent performance has been terrible, but going forward the expected returns are better, although ultimately unpredictable because it depends how rates evolve.
If rates were to come down (again not only base rates, but long term rates), then the price of those bonds would increase and effectively bring the returns forward.
If rates were to rise, then that would push down on the price of bonds, and returns would be pushed into the future.
Note that a few years ago, yields on bonds were near zero, so they had little natural tendency to rise, and the only way they could go up is if rates continued to go down. And then they got hit by very sharp rate rises. Getting hit by sharp rate rises after a zero interest environment are the worst possible conditions for bonds, hence recent performance has been terrible, but going forward the expected returns are better, although ultimately unpredictable because it depends how rates evolve.
brotherjackgrace
New member
@skovc What I try to do is keeping a emergency fund (to big some would say) where I am comfortable with (how big is depending on your lifestyle)
I have kids so I want peace of mind and so mine (for now) is even bigger than my investments (does make 4% interest),,than I have a fund reserved for the stock market where I try to keep at least 10 k (2.5% interest) in for when my favorite stocks, etfs or the market in general crashes.. and the rest I just invest..
I think there is no right or wrong answer and historically I am wrong but I think the next 20 year are gonna be real different from the last 20(I know I know)..
Again ofcourse if you look back I am wrong but I like to do it this way because It makes me feel secure. No matter what happens in the market I can sleep at night and have some cash to throw in immediately if needed.. and I have to say that it felt great to trow in some extra money the last couple of crashes. but I would suggest to keep investing at least a bit in all market conditions.. especially because in eu terms with 1700/month you save enough to build an emergency fund and invest some at the same time
Good luck!
I have kids so I want peace of mind and so mine (for now) is even bigger than my investments (does make 4% interest),,than I have a fund reserved for the stock market where I try to keep at least 10 k (2.5% interest) in for when my favorite stocks, etfs or the market in general crashes.. and the rest I just invest..
I think there is no right or wrong answer and historically I am wrong but I think the next 20 year are gonna be real different from the last 20(I know I know)..
Again ofcourse if you look back I am wrong but I like to do it this way because It makes me feel secure. No matter what happens in the market I can sleep at night and have some cash to throw in immediately if needed.. and I have to say that it felt great to trow in some extra money the last couple of crashes. but I would suggest to keep investing at least a bit in all market conditions.. especially because in eu terms with 1700/month you save enough to build an emergency fund and invest some at the same time
Good luck!
knitreadrepeat
New member
resjudicata
New member
myworld2point0
New member
@skovc It's said “time in the market beats timing the market” for a reason 
You can't really know what will happen and when, even buying at a peak can most of the time just be a local peak, same goes for buying at the lowest, perhaps is not really lower than what the average quotation was a couple of years before.
From this “time in the market beats timing the market” , most of the time or most probably if long term enough.
Just buy regularly every month or every two also for what you have saved to average if it bothers you, that is a very reasonable and sound approach.
You can't really know what will happen and when, even buying at a peak can most of the time just be a local peak, same goes for buying at the lowest, perhaps is not really lower than what the average quotation was a couple of years before.
From this “time in the market beats timing the market” , most of the time or most probably if long term enough.
Just buy regularly every month or every two also for what you have saved to average if it bothers you, that is a very reasonable and sound approach.