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23 comments
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I'm more concerned about valuation multiples. With the market downturn, we can buy quality growth stocks at reasonable prices.
I am glad you bring up GFC, because that is exactly the example where it shows that investing for retirement could have gone wrong big time. So all the good intentions beforehand, DCA nicely every month until you are 3 years away from retirement and then this major market meltdown happens. In short, you are fucked. This is not enough talked about because it is bad publicity. People have been hit then hard. If we will have a GFC 2.0 I bet you that shit will hit the fan like we haven't seen before because so much more pension money is in the stock market now compared to then.
Your advise of keep investing during downturns is wise and imo self explanatory, but the problem is not the 'starters' in the stock market, it is the 'enders' for who timing does matter. If you growth portfolio hit 1 mil one year before you want to convert it to income generating products and the market crashes 30%… you lost 30% as you can not wait for 3-6 years for it to recover.
For people who still think they can time the market: you can, but only on micro scale: slow down your DCA when bull market, increase when bear market (it is reacting not predicting) and always buy before end-of-year rally around end of September/October. General rule of thumb, no guarantee.
So dollar cost averaging now in say S&P woukd likely outperform wahcking a 20k inheritance in ?
Andy Farrell a.k.a Andrew Duncan is probably creaming his MENSA pants over this. Jimmy Savile was also a member of MENSA, nuff said, as it happens. I'm sure there is no correlation.
This strategy sounds great, but I still can't shake the feeling of panic when the market drops! 😱
Great insightful video. Thank you. However, for setting the right course of expectations, I wish you had mentioned about the caveat regarding the “dollar-cost-averaging-over-long-term strategy not working for individual stocks per se” way earlier in the video rather than towards the end. Nonetheless, I thank you for giving sage advice about the dollar cost average strategy for gains in index fund investments 🙏🏼
Hi Toby, love your videos, so genuine and easy to understand. Thank you so much. This one grabbed my attention as I am at the point in investing a lump of my savings into SIPP or ISA. I am not sure if what you are saying here applies to a lump sum or just drip feed. Is it the same stats for people who invest their life savings all at once vs drip feed?
I can believe the point about the power of averaging in during a down phase. I’ve averaged in this year in an up phase. With a newly opened (about February 2024) account. I was so happy with how things looked but then surprised as after a market pull back in the summer I was actually losing money!! I see this as the opposite situation as that you described at the start of the video. It’s not a big worry and the surprise is arithmetically I couldn’t see how it could have happened 😬😀
Toby says keep investing what is the difference if person A has £1000 to make a one off investment or making 10 monthly investments at £100 pm what is the benefit?
Really like that screen on the wall behind you, displaying stock prices? anyone know what it is as I quite fancy getting one?
But different if you’re retired or approaching retirement
Great video, as always Toby
I dont have any money 5o invest right now since i unvest paycheck to paycheck, but if a crash does come, i will just pull from whatever savings accounts i have.
Distracted by terry tibbs haha talk to me
Who wants to experience their portfolio drop by 50% after years and years of hard work, NO ONE! Stop sugar coating all this guff, it's horrible and there is no guarantee the market will recover within any timeframe, past performance should not be a guide for future performance. What if you are ten years from retirement and it takes 20 years to recover to break even? You're screwed. A mix of T bills and broad equity exposure for me, reduces volatility and helps one sleep at night, sure peak gains will be reduced, however I will fair much better in any crash and could possibly add to my equity position within the crash. This current 15 year bull run has been built on ultra low interest rates and an accommodating Fed, things might be very different in the future and one should be, in my opinion, be alot more diversified that an index tracker.
Nice! Thanks for pointing that out , 👍
People worried about a crash yet ignore the fact that inflation is destroying their wealth if they leave their money in a bank account
I don’t think we will see a crash like 2007/8 again
Sure and Steadfast investing. Great example going through those years. Thank you
Revert to the mean:
When index is high its bound to go lower
When index is low its bound to go higher
This makes up the average/mean thus 2 above points are always true
It’s rather important to note that it’s not necessarily just about being strong willed and bravely keeping going – it’s also about having the resources to do so. If I had started out investing 200 a month, but due to the crash I got laid off, not much I can do – I don’t have the money to continue investing 200 a month. A crash like 2008 also changes the timescales on which people might expect to be getting returns. If you were investing hoping to get a house in 5-10 years, and you’d been going for a bit before the crash, you might have to push that hope out years in order to get the returns when the stock market recovers – at which point, the house price inflation would be screwing you over
Toby, I've been investing for 40 yrs and in all honesty alot of your so logic is flawed . Majority of people no matter how much you tell them to buy the crashes ….they don't and all these youtube wanna bee's experts play a game and don't understand logic of the markets and people's memtality. Example most invester (new ones) like your audience don't buy dips or continue with their plan. If an investor as 100k and things crash 30% which is common they'll stop buying or selling and watch, it's what people do. Now to all these financial experts which you aren't, no offence but most will wait, some sell but most will wait but when and if it rebounds 30% investers are laughing but they're still losing because they lost 30% on 100k and then made 30% on 70k which doesn't give them the money back. You have to double up or at least buy 10% at 70k to draw even when or if it regains 30% . The system is made to take money from you and to try and make you keep investing, youtubers don't fully understand, they see profit and forget about % loss on money. They're a few tricks professionals use in a down turn but people in the game especially short term youtubers have no idea and only gather momentum in rising markets, very dangerous. Don't take this as an attack far from it it's trying to make you look at the wider charts instead of short term charts.