Is it insane to invest in the stock market now?

thickasabrick

You will find a multitude of opinions on this but at the end of the day "nobody can predict the future".
I bookmarked a couple of articles which I found helped me understand my attitude to losing my hard earned cash.
JL Collins "Stocks — Part 1: There’s a major market crash coming!!!! and Dr. Lo can’t save you."
The Escape Artist "There’s a major market crash coming…"

To quote JL Collins "The market is the single best performing investment class over time."

From my perspective, which is 23 years ahead of you, first make sure you take advantage of your workplace pension matching, then put the additional spare cash into a Stocks & Shares ISA and choose your investments to match your risk profile.

Another article from The Escape Artist "Honestly, could this investing lark be any easier?!?" got me going with a S&S ISA and global tracker investing.

Just be warned that when you see the investment running at a loss for the first time, for whatever reason, it is quite a hit to your confidence.
The other thing that you need is patience, investing like this stretches your time frame to many years, something we are not used to.

CreditCardChris wrote: »

I'm 30 years old and have never invested in the stock market, mostly because I was young and not looking ahead to the future. However now it's finally hit me that if I don't start preparing for the future I'm going to be royally f'ed.

With the price of housing becoming almost unobtainable for the majority of people, savings accounts barely breaking inflation and wages lagging, I really need to start trying to make my money work for me.

However I take one look at the stock market (S&P) for example and I instantly think "not a chance I'm buying into that parabolic bull run". Then of course it just continues going up, month after month.

So that brings me to today, I just got a new job that allows me to invest about £500 a month which I'm going to setup to come out automatically, but I don't want to be one of the laggards, buying at the absolute top (and all the way down) that requires 10+ years just to break even again.

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.

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:

cfw1994

webjaved wrote: »

I'd be quick for those that have not opened an account, there is a deadline approaching.

https://www.express.co.uk/life-style/life/1199772/Martin-Lewis-money-isa-help-to-buy

Still not so sure why the obsession with HTB, when LISA allows more in (= bigger bonus!).

Full Martin Lewis article here

Yes, if a property purchase was imminent....but if not....hmmm

We looked into those for our kids (likely years from purchase): the options for LISA were much broader.

Given ours are not immediately buying (who knows, it could turn into a much longer semi-pension benefit!), they have picked “adventurous indexing” with a reasonably low cost AJBell fund....we figure the government bonus would outweigh any dips in the market anyway, felt a bit of a no brainer.

DairyQueen wrote: »

You are overthinking this. You are so concerned about the potential downside of S&S investments that you are over-complicating. Experts can't predict the markets. Nobody has a crystal ball that can tell you when to invest and what to invest in. Using historic data about individual sectors and regions as a guide to future investment is futile.

<many wise words>

First things first...
Keep it simple. Don't try to outperform or time markets. Choose a fund. Check the documents. Understand the difference between different share classes. Use that fund to learn the basics. When you don't worry at every market downturn you will have cracked the confidence issue. Your investments will be up-and-down like a yo-yo. That goes with the territory.

Oh, and never, ever put all your eggs in just a dozen company baskets - let alone one basket. Single share investments are definitely an area best left to the very experienced.

Broadly sound words, as always....but that bit about a dozen companies....I can think of a few I’d have loved to have owned for the past 10 years....those FAANG returns have been spectacular :rotfl:

Also....as mentioned before, IF you have an employee stock purchase scheme, examine the detail. Ours (US tech firm) essentially returns 9% every 6 months after high rate tax: another no-brainer to “max out”....always amazed when I find colleagues not using it!

DairyQueen

cfw1994 wrote: »

Also....as mentioned before, IF you have an employee stock purchase scheme, examine the detail. Ours (US tech firm) essentially returns 9% every 6 months after high rate tax: another no-brainer to “max out”....always amazed when I find colleagues not using it!

Often true but depends on the company. (Ahem...Royal Mail).

DairyQueen

bowlhead99 wrote: »

Diversification can be useful but an individual small holding can be pretty meaningless. If you are not careful you'll end up with each new holding being such a small single digit percentage of your total portfolio that it's not worth spreading the money. I heard an expert say this on MSE forums, he had a largish portfolio though

Dangit! Last year I missed that linked thread. I wish I could think of a similar analogy but it's early morning and it would be a waste of time to engage more of my brain cells than the two currently activated.

DairyQueen

jeepjunkie wrote: »

I’ve personally made way more money in shares than funds but had a few close shaves at times.

Ah yes. I recall those halcyon days of single share investing. Gone are the days when I see a 100% gain on a lucky winner wiped out courtesy of an unlucky loser.

Only a very few poker players have sufficient nous to take-on the casinos. The rest of us are best-served investing in the casinos.

jaymerchi

My advice would be straightforward

1. Determine how much you can save every month (this is money you are happy to not see for at least 5 years)
2. Open an account on Vanguard investor and put it into lifestrategy 80-20 (80 pc eq 20 pc bonds, IMO appropriate for your age but upto you) on direct debit the day you get your salary
3. Do nothing

The stock market will almost always hit new highs as long as nominal GDP growth is positive. Stocks are priced in nominal terms and should go up with inflation assuming companies are able to pass price increases onto their customers even if there is 0 real GDP growth.

Apodemus

DairyQueen wrote: »

Ah yes. I recall those halcyon days of single share investing. Gone are the days when I see a 100% gain on a lucky winner wiped out courtesy of an unlucky loser.

Only a very few poker players have sufficient nous to take-on the casinos. The rest of us are best-served investing in the casinos.

What you say is certainly the current wisdom and is almost universally supported, particularly on this board. But there is something deep in my soul that worries when unchallengeable orthodoxies are created and the cult of VLS triggers that within me.

It is still possible for an old-fashioned “widows and orphans” portfolio of blue chip stocks to meet long-term investment needs without accepting the casino-type risks to which you refer.