Is it insane to invest in the stock market now?

CreditCardChris

PuzzledDave wrote: »

I get the nerves - but this you eyes seem set on the near future and not the long term.

Say you do buy today and tomorrow is the crash to end all crashes. The important thing to note is.... it may not matter at all. You are right the stockmarket has historically always recovered - so it only matters when you sell out.

Have you chosen when this will be ? This is the vital question I don't think you have a good grip on. I am assuming you are not intending to take the shares to your grave... so when do you plan to sell ?

In intend on selling (assuming there's no sudden need) in around 20 - 25 years, so I'll be 50 - 55 years old.

CreditCardChris

Deleted_User wrote: »

You have to accept a certain level of risk when investing in the stock market as you may not get back what you invested. You should seek advice as to the level of risk which you are able to live with and invest accordingly. If you cannot tolerate any level of risk that your capital value may fall, even if only in the short-term, then stock investing is not for you.

Instead of thinking of timing the market (impossible even for "experts"), think time in the market. You have the advantage of youth, so you should be able to start relatively small with a long time horizon, building up as you go on.

The feeling of insecurity that you are investing at the top of the market is very common, if not universal. Nobody would ever invest at all if this feeling is allowed to dominate.

I'm not really trying to time the market, but at the same time I'd prefer not to buy at the absolute tippy top if possible

Thrugelmir

CreditCardChris wrote: »

I'm not scared of losing my money because I know the stock market will always recover

Indices will recover. The companies you in invest in may not. The index will simply replace the companies concerned. This won't replace your lost capital.

First rule of investing is don't lose capital.
Second rule is don't forget rule no 1.

savings accounts barely breaking inflation

HTB ISA's and LISA's provide a no risk route to build a deposit etc for a property purchase.

capital0ne

Alistair31 wrote: »

.... when things go south I’ll be holding tight....

Noooo! When things head south that's when to buy! You're getting a discount! :T

CreditCardChris

Thrugelmir wrote: »

Indices will recover. The companies you in invest in may not. The index will simply replace the companies concerned. This won't replace your lost capital.

First rule of investing is don't lose capital.
Second rule is don't forget rule no 1.




HTB ISA's and LISA's provide a no risk route to build a deposit etc for a property purchase.

But if I invest in an index tracker doesn't that mean my portfolio will keep in line with the actual index, not the individual companies in it?

Alistair31

capital0ne wrote: »

Noooo! When things head south that's when to buy! You're getting a discount! :T

Yes indeed. Poorly worded on my part. I’ll be doing no different when markets tumble.

[Deleted User]

kinger101 wrote: »

Why do you keep parroting this advice.

(a) the vast majority of people do not have a sharesave scheme for which they are eligible.
(b) the merits of the scheme would depend on the details of the individual scheme.

(a) But the OP has a job and he's looking at a 20/25 year timeline, so there is a good chance he will be eligible along the way, if not yet. Of course, a civil servant or something would miss out.

(b) Not really. In all cases, you should be able to withdraw the amount you have saved; and in all cases, you should have the option at the end of term to take shares instead, if they are worth more than your savings.. So, it's one of the few bets you can make where you cannot lose. Would suit the OP, from what he has shared on this post.

steampowered

Stocks are a complete no brainer if you are investing for the long term. Make sure you think about the most tax efficient way to do it. Also consider the government bonuses associated with things like the lifetime ISA.

CreditCardChris wrote: »

I'm not scared of losing my money because I know the stock market will always recover, I'm scared of not being able to make a profit. That would be the nail in the coffin wouldn't it? I put off investing during the biggest bull run since the dotcom bubble and then when I finally do decide to invest, I end up with absolutely pathetic returns like 20% after 20 years.

It sounds like you are only looking at the indices while ignoring dividends.

The average dividend yield on the FTSE 100 is 4.2% (its better to invest in a more diversified way than that, I just use the FTSE as an example).

So even if you were unlucky enough to invest right at the top of a bubble and it took 10 years for the share to recover, you'll have been pocketing 4.2% a year in dividends as you go.

Have a read of https://www.nutmeg.com/nutmegonomics/increasing-your-chances-of-positive-portfolio-returns-the-facts-about-long-term-investing/ which has a useful graph showing you the statistical probability of losing money plotted against time in the market.

Obviously I'm not trying to buy the bottom, I don't expect to be that lucky, but buying now at literally the all time highs just seems like a terrible decision :eek:

The stock market is at "all time highs" all the time, because they go up over time, given economic growth and inflation. You only have to look at an index graph to see that.

EdGasketTheSecond

Alistair31 wrote: »

https://awealthofcommonsense.com/2014/02/worlds-worst-market-timer/

Or, perhaps you just don’t have the mentality for investing, many people don’t. And that’s ok.

Good job 'Bob' didn't invest in Woodford patient capital trust then!

gm0

When you are saving into stock market funds - work pension or personal as OP suggests - and you are busy with other life priorities - it can be hard to see past a 50% loss of value in an annual fund statement + projection to the lovely cheap units now being bought during the volatile period provided you keep going.

I remember this scenario well from my own journey 20 and 10 years ago through volatile periods. I remember (naively) being a bit worried, sad, scared even and then resigned to it (already happened) - but actually it was doing me a power of good for later (i.e. now). I sort of knew that but it wasn't comfortable.

Even if it is understood intellectually when pointed out - it needs to be internalised to a point of emotional comfort where you won't panic and act against your interests in the face of short term volatility. Easy to say. Harder to do.