I figured out best way to invest

[Zoot Allures]

Picking individual stocks is a losing end game

Professionals claim they can pick the winners and avoid the losers but they cannot, I will not bother with a diatribe as to why, but if you have a specific question I will attempt to answer you.

Best play is not mutual funds but index funds

It is easy to do

Warren Buffet is golden when it comes to index fund advice and he has met a small handful of investors in 60 years who can beat an index

Jack Bogle of Vanguard funds created index funds to save investors’ money

These are history’s greatest stock investors

Ben Felix has solid info on investing and index funds

Google their names followed by " index funds"

ETFs are index funds that are traded like stocks so they are the same thing

Mutual funds charge over 2 percent and do not match an index because they have to beat market by over 2% for you to break even while index funds charge .2 percent or less and guarantee to match index

Open a trading account with your bank and transfer mutual funds over and immediately start saving the 1 percent the broker gets

The mutual funds that beat market are scams because fund companies have so many funds some will beat market by mere chance, but past performance is not indicative of future returns. I will not fully explain their smoke and mirrors show but feel free to ask me a question

Index funds match the index they are attached to by definition IE tsx , dow jones etc

Bonds are safer as they drop less in a bear market but rise less in a bull

motley fool Canada has advice on which index funds to buy www.fool.ca/2022/02/24/3-top-index-funds-for-safe-passive-income


Warren Buffet uses the “factor” of buying large companies that are undervalued knowing most of his picks will lose but the ones that win make up for the losers, that is called value investing but he has really created his own index fund

Buffet loses on 90% of his picks but the other 10% makes the money. Consider that before buying individual stocks

The question is how to invest in index funds, not if.

IMHO, you should put away some safe money that you will need over a five year period, or more, so when , not if, the market retreats you can leave your risk money alone and live off safe money.

The market should bounce back within 5 years

One way is to invest safe money in GICs. The interest from GICs will cover inflation. As you cannot get the money until GICs expire ladder them. For example, have one come due every week.

Put your risk capital into S&P as that will give you your best return over the long haul. The S&P will fluctuate more than other indexes as the rule of investing is the greater the expected return the greater the fluctuation.

This means the percentage of risk to safe money will fluctuate. To remedy this, have a robo advisor, which is a computer, adjust the monies to the correct percentage as the GICs come due.

You must ask yourself the risk you can accept. You do not want to pull monies out when the market falls then buy back in when they rise. That is called selling low and buying high.

BTW, stay away from Hedge Funds as they are extremely risky, and you can lose it all in a heartbeat

 

[Zoot Allures]

rajput if you think my investment ideas are bad please explain why

I think they are solid as the S&P historically will give you the greatest return over time but it also is more volitile so I suggest a way you can invest and not be concerned with the volitility because it will bounce back
and with my scheme you can wait for the bounce back

The caveat is you have to understand that there will be loses so can you stomach the loses without angst as you wait for the rebound

If you cannot do not invest in the S&P also you have to have some money in reserve if you do not have such monies then avoid the S&P

 

[rajput]

DCA into a S&P index fund is a good strategy.
I'd consider some bond etf or bond proxy as well.
Check out The Perfect Portfolio.

 

[Zoot Allures]

DCA into a S&P index fund is a good strategy.
I'd consider some bond etf or bond proxy as well.
Check out The Perfect Portfolio.

dollar cost averaging is a term created by the mutual fund industry
as a way to convince you to give them your money

IMHO it makes no statistical sense

A bond etf is safer but a far better return is S&P

Put your safe money into GIC, instead of bond, as that ties up less capital for the S&P

The Perfect Portfolio IE mix of everything geared towards your risk acceptance and time horizon is complex and will never beat the S&P
in the long term and the long term horizon IE length of S&P typical cycle is what I am concerned with

The big caveat is the possibility of a 10 year or longer cycle IE a depression in that case you lose so it is all about your risk acceptance

 

[rajput]

dollar cost averaging is a term created by the mutual fund industry
as a way to convince you to give them your money

It makes sense as investing part of your monthly paycheck regularly.

 

[Zoot Allures]

It makes sense as investing part of your monthly paycheck regularly.

I agree that forced savings on a monthly plan is a great idea. Most people save what they do not spend what they should be spending what they do not save

But, that is called investing that happens to be DCA by default

Let us pretend you have found $10,000

I would not suggest dollar cost averaging it into the market just put it all in.

SCA is market timing which cannot be done outside of luck, no one ever
has and no one ever will

For example, if you are waiting for the ' overheated market ' to drop 20 % before putting your $10000 in, the market will eventually drop 20% but in the meantime it will just as likely rise 30% before dropping 20% so you lost a 10% gain by market timing

 

[sprite09]

I agree that forced savings on a monthly plan is a great idea. Most people save what they do not spend what they should be spending what they do not save

But, that is called investing that happens to be DCA by default

Let us pretend you have found $10,000

I would not suggest dollar cost averaging it into the market just put it all in.

SCA is market timing which cannot be done outside of luck, no one ever
has and no one ever will

For example, if you are waiting for the ' overheated market ' to drop 20 % before putting your $10000 in, the market will eventually drop 20% but in the meantime it will just as likely rise 30% before dropping 20% so you lost a 10% gain by market timing

dollar-cost averaging is investing whatever amount you want regardless of the price--for people, it's usually biweekly.

some people like to argue semantics and say dollar-cost averaging is actually lump sum investing because technically people are going "all-in" with their paycheque's disposal income. I still say it's dollar-cost averaging, because what is the alternative? Saving up cash to time the market and going all-in with that saved cash when one thinks the market has bottomed (not a wise thing). Vanguard agrees with this terminology [1, shaded box at the top of the page of 4].

Now, if you get a windfall of , say, $100,000--which is better? Lump sum or dollar-cost averaging or systematic implementation plan (or whatever you want to call it)? the same Vanguard paper I referenced says, on average, lump sump is better vs spreading your $100,000 over, say, 10 months (e.g., $10k a month over 10 months), roughly 67 percent of the time [1,2].


[1]https://static.twentyoverten.com/59...ing-Just-Means-Taking-Risk-Later-Vanguard.pdf

[2]https://www.pwlcapital.com/wp-conte...llar-Cost-Averaging-vs-Lump-Sum-Investing.pdf

 

[rajput]

dollar cost averaging is a term created by the mutual fund industry
as a way to convince you to give them your money

IMHO it makes no statistical sense

A bond etf is safer but a far better return is S&P

Put your safe money into GIC, instead of bond, as that ties up less capital for the S&P

The Perfect Portfolio IE mix of everything geared towards your risk acceptance and time horizon is complex and will never beat the S&P
in the long term and the long term horizon IE length of S&P typical cycle is what I am concerned with

The big caveat is the possibility of a 10 year or longer cycle IE a depression in that case you lose so it is all about your risk acceptance

Check out TLT in the last few months. Lots of upside potential with rate cuts imminent.
I'm only suggesting a bond etf to add some stability and reduce portfolio beta.
Friday was the worst day since March 2020, yet TLT gained 3%.

 

[Ceiling Cat]

Picking individual stocks is a losing end game

Professionals claim they can pick the winners and avoid the losers but they cannot.

I would disagree with this. No one can pick stocks and achieve a profit every time. As long as you can make a profit more times than you lose then you are ahead. Not only do you have to know what stock to buy, when to buy it and when to sell it for maximum profit. Most people pick stocks without reason. Canadian Tire may be a good stock, but what reason do you have to pick this stock at this time? Here are some of my previous picks. I consistently make 10% plus per month on my picks. with compounding my money triples in 12 months.

https://terb.cc/xenforo/threads/bce.829344/page-8

Post#158, 161

https://terb.cc/xenforo/threads/looking-into-canadian-hedged-american-companies.856412/

 

[Jubee]

dollar cost averaging is a term created by the mutual fund industry
as a way to convince you to give them your money

lol, love reading and learning shit from others, that's wild and I wouldn't be surprised.

Kind of like the term "condo" for what was an "apartment" before, just so they can hit you with a property tax when you own a "condo".

 

[ValuedSupporter]

dollar-cost averaging is investing whatever amount you want regardless of the price--for people, it's usually biweekly.

some people like to argue semantics and say dollar-cost averaging is actually lump sum investing because technically people are going "all-in" with their paycheque's disposal income. I still say it's dollar-cost averaging, because what is the alternative? Saving up cash to time the market and going all-in with that saved cash when one thinks the market has bottomed (not a wise thing). Vanguard agrees with this terminology [1, shaded box at the top of the page of 4].

Now, if you get a windfall of , say, $100,000--which is better? Lump sum or dollar-cost averaging or systematic implementation plan (or whatever you want to call it)? the same Vanguard paper I referenced says, on average, lump sump is better vs spreading your $100,000 over, say, 10 months (e.g., $10k a month over 10 months), roughly 67 percent of the time [1,2].


[1]https://static.twentyoverten.com/59...ing-Just-Means-Taking-Risk-Later-Vanguard.pdf

[2]https://www.pwlcapital.com/wp-conte...llar-Cost-Averaging-vs-Lump-Sum-Investing.pdf

…love the actual references - unlike so very many others - to back up your argument.

 

[Candymancan]

ETFs have been around for decades.

 

[jeff2]

ETFs have been around for decades.

I put some of my mom's money in the first one. Toronto 35 Index Participation Fund. Felt bad when Nortel crashed as it had a big weighting in it. I think 30 or 35 percent if I remember correctly.

 

[Candymancan]

There are many that rebalance once a stock gets over 5%

 

[Zoot Allures]

Check out TLT in the last few months. Lots of upside potential with rate cuts imminent.
I'm only suggesting a bond etf to add some stability and reduce portfolio beta.
Friday was the worst day since March 2020, yet TLT gained 3%.
View attachment 347804

iShares 20+ Year Treasury Bond ETF (TLT)


Yes bonds can gain when stocks falter. But they usually lose in a bear, just less than stocks

Bond ETFs redeem then buy every day so interest changes have less impact then you think

lot of stocks gain as well in a bear, it can be a minority of stocks that woke the bear

 

[superstar_88]

dollar cost average is a form of diversification to reduce risk. Since you can't time the market.
Betting a one time million on red on the roulette wheel is risky.
Betting a dollar a million times on red reduces the risk.

 

[Candymancan]

dollar cost average is a form of diversification to reduce risk. Since you can't time the market.
Betting a one time million on red on the roulette wheel is risky.
Betting a dollar a million times on red reduces the risk.

Isn't it the same odds. You will eventually lose all of your money at a casino. You can't compare investing in blue chip stocks with gambling.

 

[superstar_88]

Isn't it the same odds. You will eventually lose all of your money at a casino. You can't compare investing in blue chip stocks with gambling.

It was a lesson for you on risk. It obviously went way over your head.
One time million on red yes you can lose all your money. Hence the tremendous risk.
One dollar a million times on red impossible to lose all your money. You'll lose the house margin.
You seriously think the roulette wheel can be non red one million straight times?
That is the only way to lose all your money.
Every heard of probability? Ever heard of expected value? Ever heard of law of averages?
Same expected value either way the only difference is the risk.

How is a one time million dollar bet "eventually lose all your money at a casino"?
It's a one time bet!!! Win a million or lose a million.
Which part of one time did you miss?

Anyone who thinks I'm advocating putting your money on a roulette wheel is a fool

 

[superstar_88]

Here's the full Stanford Business education for you in 28 min

 

[Candymancan]

It was a lesson for you on risk. It obviously went way over your head.
One time million on red yes you can lose all your money. Hence the tremendous risk.
One dollar a million times on red impossible to lose all your money. You'll lose the house margin.
You seriously think the roulette wheel can be non red one million straight times?
That is the only way to lose all your money.
Every heard of probability? Ever heard of expected value? Ever heard of law of averages?
Same expected value either way the only difference is the risk.

How is a one time million dollar bet "eventually lose all your money at a casino"?
It's a one time bet!!! Win a million or lose a million.
Which part of one time did you miss?

Anyone who thinks I'm advocating putting your money on a roulette wheel is a fool

Thank you. I am dazzled by your education and intellegence.