Why don’t people just invest in the S&P ?

[underflip540]

@zc17bills VOO and chill

put 15% after tax in a roth style retirement account and dont touch till your 59.5

 

[dtucker17]

@zc17bills Time horizon Not every one is saving/investing for retirement or otherwise having 10-20yr ++ time. I may need the money in 5years

 

[tonyzy]

@zc17bills because there are better options like VT

 

[lauzerus]

@zc17bills

you pretty much are set to get 8% returns every year.

That's pretty much false. What people say is that the movement over a prolonged period of time (decades) averages out at 8%. But this requires years in order to be "guaranteed" to have this average.

Thought experiment - for those who "dumped their investments" into the SP500 in December 2021 - find out their return today:

• Calculate their return, based on OPs "pretty much are set to get 8% returns every year."
• Compare this to the actual position today, compare to Dec 2021

 

[zc17bills]

@lauzerus Okay if you’re using the index for retirement (let’s say in 40 years) who gives af the markets been down. All it does is saves you a few bucks now that doesn’t even matter anytime soon

 

[lauzerus]

@zc17bills Well yeah if you're looking at it from 40 years time. But that's not the same as saying "you pretty much are set to get 8% returns every year" - because it's basically saying you're set to get this... unless if you don't.

But anyways...

You mention "Why doesn't everyone annually dump their investments into the S&P"... and to be honest, I'm not sure what this means (e.g. does it mean to only stay in investments for 12 months before selling them and using the proceeds to purchase SP500 index funds)?

But isn't this already the most basic, vanilla of investments - outside of bonds and a savings account? Many retirement plans are already set out this way for people with zero interest in the mechanics of investing and just want a passive auto-pilot way to have some kind of investment pot.

But for people actively engaged in the investing space, to nevertheless still rely on a vanilla 8% return on average, to only begin to see the benefit after 40 years...

What's even the purpose here - for a fresh 18-25 year old to only focus on their old age retirement?

Considering their youth, and flexibility to take risk, isn't this incurring huge opportunity costs and wasted opportunities to elevate themselves ahead?

 

[adorkable]

@lauzerus You are so wrong it’s not even funny. It averages that Annualy , not after 20 years lol.