Is Now a Good Time to Invest Or Should I Wait for a Crash?

[@rob_berger]

One thing I failed to mention is this--what about an investor who wants to sit on the sidelines--no dollar cost averaging or lump sum investing--until some time when the markets are more hospitable? The question you have to answer is what will trigger you to start investing? A 5% drop? 10%? 15%? 20%? If 20%, that's where the SP500 was at the start of the year. And what happens if the market goes up 10% first, and then back down to today's level. Will you invest then? And whatever decision you make today, how confident are you that you'll stick to it? If your plan is a 20% drop, what will you do if it drops 19.5% and then starts to rise again? Timing the market is tricky business.

[@CalmerThanYouAre1]

Well said. Another great argument for dividend growth investing. Much more psychologically palatable to “buy income at a discount” when the market crashes. Most investors who follow this strategy are typically very long term holders, which basically gives you a psychological suit of armor during turbulent times. ESPECIALLY if your dividends continue to increase during recessions.

[@ljrockstar69]

Thank you for pointing it out this out. I've learned that you have to start somewhere the sooner the better and just ride it out. Waiting for that sweet spot might not come for a long time or never at all and you've lost a lot of time.

[@ld4974]

I agree that timing the market is impossible, but the fact is that we are in a Fed-fueled bull market that has gone on for 12 years and stock valuations have only been this high in 2 other historical periods 1) right before the Great Depression and 2) right before the 2008 crash. Capital is at risk. You have to be committed to buy and hold while the market drops as much as 50% in this market. Great if you are still building wealth and dollar cost averaging. Very painful if you have your life savings in the market. Tread carefully.

[@BillsSpamMail]

I didn't see you consider a lump sum investment in stock (I wouldn't put into bonds at negative rates after the capital losses and BEFORE CPlie is subtracted) then setting (trailing) stop loss orders using something like SmartStops for the level (stop) or trail trailing stop. BTW, I am against selling to rebalance. Why move money from winners to losers? Instead ride the winners and just set trailing stops to sell what you would have sold to rebalance. But if you must $ cost average in, I would stop buying if there news that you think could cause the market to drop significantly (for example China starts building emergency hospitals overnight -- though it did take about a month 4 the market to tank) then start buying on the 3rd up day (which is when I did -- also did $99K Roth conversion from my 401K). I actually sold some before it started down because I watched the news in January.

[@luckyjordan8139]

When a retail business has a sale they may have 5% off signs or 25% off signs. All are better times to buy than at full price, but like shopping for clothes, don’t buy something you would never want to wear just because it’s advertised at a discount. Make sure you buy good investments regardless of what you have to pay for them.

[@paulavaden5139]

Very helpful Rob. We recently sold our commercial property-Jan. 2022, and are 65 and 66. Big lump sum that I've been scratching my head about and doing crash learning as I want to do this one on my own without paying the 1% to my advisor. Between you and Paul Merriman and a few others I've learned so much and despite being somewhat uncomfortable and nervous I think I can do it on my own and move forward. Thank you for all the info which has been one right after the other what I've needed to know, learn and hear!

[@dmsoundcollective6746]

Rob you totally blew my mind with this episode.. my jaw drop to the ground when I realized the bad turns in the stock market can actually be an opportunity to create more wealth when the stock market comes back up.. all of this is so new to me my 54 year-old brain, trying to catch up on all of these Concepts

[@MrSmith-on1qz]

This is good stuff. I like how down to earth about it. No one knows where the top is or where the bottom will be. Subscribed.

[@TraceElements-ti5ke]

What a balanced confirmation about some of my "Undefined Gut Fears" that I have held for months about the markets. Great presentation of sane options for us early retirees.

[@bobneedham6224]

Very timely for me. I just received a lump sum and had this very question. I think I’ll spread out my purchases over a 12 month period. Thanks.

[@M1911jln]

This a very timely video for me. We have a lump sum to invest and I was leaning towards dollar-cost averaging over 12 months.

[@SirRupe]

Well thought out advice that has aged well. I wish I had seen this when you posted it.

[@kcsnew]

Yet another great video, perfect timing for me to choose between lumpsum and dollar cost investing, probably I am more inclined to distribute into a 12 month period or more rather than lumpsum based on the facts and observations made in this episode, big thank you Rob again. Cheers

[@dorkultra]

either way is fine, just depends on how long youre planning to keep it invested. the worst thing you can do is to panic sell when things drop, thats the best time to accumulate

[@quantomic1106]

If you're a long-term investor (10 years minimum) it's always a good time to invest.

[@miri9600]

That part of not skipping years 2000-2002 while still using DCA is eye-opening.

[@joekuhnlovesretirement]

Outstanding analysis. Unique from other advisors. Agree 100%

[@adamokoriscant8500]

Great video, you earned my subscription today!

[@chuckmurray1825]

I agree. I'm dollar cost averaging. I could not take it emotionally if I put a lump sum in and the market crashed the next week. 😊 Every asset class is overpriced right now so it's not a question of if but when. I'm too close to full retirement to lose a huge chunk of my portfolio so I'm playing it very conservative right now with a 55/45.

[@TheTrueHardcorefr3k]

Risk vs reward from what it seems. Dollar cost averaging is the safer play but with less rewards while hitting it big on timing could prove fortuitous.

[@mediadumb1]

Being 60 and how to manage the sequence of returns in those early periods is what seems quite scary in the current market. The market is never a loser in a twenty year cycle, but the 2000s decade scenario scares me and could really disrupt my retirement. When you’re no longer accumulating but withdrawing its hard to be anything but cautious.

[@redchevy3307]

Couldn't have said it better

[@coocoocachooglin]

I'm almost 59.5, still working but probably not for long, what's your plan?

[@redchevy3307]

@@coocoocachooglin I'm retired, invested in the Vanguard Wellesley fund. It's a moderately conservative investment with decent returns and low volatility when compared against a S&P 500 fund or a 60/40 stock/bond fund. Like you said, I don't want any large drawdowns that could wreck my retirement.

[@johnbirman5840]

@@redchevy3307 Agree. SOR is a great risk. As I believe Mark Twain said (paraphrased) “Don’t promise me a return ON my money, but a return OF my money” The Golden Butterfly Portfolio is an intriguing portfolio due to it’s recovery period after a big crash regarding this SOR risk. Cash, Gold, short/long bonds, small cap/ large cap.

[@redchevy3307]

@@johnbirman5840I like the Mark Twain quote!

[@happytravels2480]

Sounds like being cautious now, and then dollar cost averaging with the lump sum all the way down the next crash is the way to go. I’m putting most of my future contributions into a stable value fund for the time being. I don’t feel good about investing in the broader market at the moment.

[@Gabriel.Jarelys]

What is an stable value fund? Could you provide an example?. Thanks in advance.

[@happytravels2480]

@@Gabriel.Jarelys My 401k and my wife’s 401k offer a “Stable Value Fund” option. I don’t think there is a direct option or correlation in the open market. According to the description on the funds website, it invests in short term government bonds and insurance contracts. It yields very little, but should not lose value. Basically, it’s just a tad better than holding cash.

[@nicholasmartinez6043]

I like lump sum due to the human behavior reasons. Many people who intent to DCA with an inherited sum never actually follow through. Why? Often, if they haven’t been investing before, they “let life get in the way.” A car, vacation and home renovation later, no or little money gets invested. A lump sum is good to get the ball rolling and never look back. Years later, you’ll be happy you did.

[@justinyoun22]

Rob - this channel and you are legit. Thank you

[@4tomop]

Such a reasonable way to tackle the issue Rob 👍

[@snapintoaslimjimohyeah]

Great info. These are unprecedented times, and the next few years are bound to be interesting for better or worse. I'm sitting tight and playing things very close to my chest. I'll see how 2022 plays out before making any major moves.

[@SamuelBSR]

Thank you for your opinion. It’s very reasonable to take into consideration the current market conditions. Even with DCA I prefer not to invest all money into stock market but part of it invest into cash equivalents.

[@bg5215]

Well.... this video aged amazingly well! I would like to hear your opinion on what if you had a lump sum to invest today?

[@seananderson5334]

I made a lump sum last month. The writing is on the wall that the current economy will crash given current policy makers and leadership. I'll make periodic contributions but am ultimately going to wait to buy on sale

[@emue229]

So in current scenario, is it prudent at all to invest in total bond fund at all for a lump sum investor according to your 3 fund investing rule? Please guide. Thank you. Your videos are really educational and honest. You explain things in simple manner, easy to understand. I'm sure you will keep up the good work

[@jsalgadoluz]

Hi! My name is João, I’m from Brazil, love your videos

[@jeffnielsen3445]

Great Video ! Although all I can think of is the endless investment opportunities to invest and create wealth. 20 years ago no one would have guessed that there would Electronic Vehicles. Today, there's is an entire market for EVs, same with all the other tech that have sprung up over the years.

[@morganpearse9294]

My strategy is to invest in dividend and growth stock dollar cost averaging at the same time,build on cash position for the year to take advantage of the dip.

[@ryger1213]

If a lump sum should be invested over 12 to 24 months, why should a portfolio, already invested, not be hedged 23/24th's today?

[@sarar941]

so much useful information in a short vid. Extremely useful - thanks Rob

[@supreetnarula5795]

Very clear and logical explanations by you! Makes it easy to understand and develop the right mindset for investing Thanks

[@yzhxz]

Thanks Rob for this! I’m a very new to investment and having a lump sum to invest. I was thinking to invest in three fond portfolio in lump sum. But the situation now confuses me… will you still invest over time VS lamp sum today april 2022…? Also is it safer to do six fund portfolio or invest in mortgage real estate at a time like now..? As you said it is hard to pull the trigger for lump sum, especially when it is most of the live saving… thank you for your advice!

[@DragonkingR]

A great great program, Rob. Exactly my issue today. So many people have been waiting for a correction incl. Myself, which didn't really come. Thank you!

[@karimelzein9115]

Ugh how did i miss this video? I just invested a lump sum 2 months ago :/

[@danhanson9101]

Sound advice! Thanks

[@danielyang4707]

Excellent analysis 👍

[@rodrain2]

Just a note. The S&P PE ratio is for the market cap weighted S&P. If you use the equal weighted S&P like ticker RSP, the PE ratio is much lower. It might be another way to reduce your risk some.

[@Surf62]

Dr. Berger - Your reply last month gets close to the question that I have. But more to the point, I am looking at the amounts that I have in my 401k and my wife's, as well as cash accounts as "lump sums". If I leave it in now it is effectively like investing those amounts as lump sums every morning when the market opens. I wrestle every day with the decision to park that money until something "significant" happens. Considering I'm 58 and retiring in two years (+/-), if I do park the money, where would you suggest? Also, I think I would watch for some indication that the d$/dt (rate of change of market value) is slowing to some target and then move back in over a period of time. Any thoughts on how to analyze the market trends in this case?

[@rob_berger]

Interesting perspective that staying in the market is like lump sum investing every month. I've never thought of it that way. If I were going to park a large amount of money, it would be in a money market fund or short-term treasury fund. The big question is when do you get back in. I've never had confidence that I could make that decision with any degree of competence.

[@shijotg]

That makes sense.

[@XxMalabooo]

Great video Rob

[@electrohousemusic166]

Can you briefly explain why the Final Balance is so much lower if you do the lump sum in 2002 vs. 2003? Thanx

[@uwepemberton3768]

I find myself in a similar situation, retired a year ago at 62, have over 1Mil in a fixed accountb earning 3%, have pension and SSI that covers more than my expenses and over 100k in cash, I know I should be thinking about getting into the market , but have idea when to start , I have a feeling we have at least another 6 months of pain coming.

[@rob_berger]

Make a note of your prediction in writing, and then revisit it 6 months from now. Do that every time you have a feeling about the market. You'll be amazed at how often you are right and wrong. Unfortunately, even if the rights outweigh the wrongs, market timing ends up costing you.

[@pickyourswitchoriginal]

Very helpful.

[@laurak5196]

Thanks. I was looking for exactly this video. Really appreciate your time and the details behind the answer you arrived at. However, my question is where would you invest it? S&P 500 index, or somewhere safer? (I realize there are many factors going into this question, but I’m curious what you personally would do. Or did do, with your lump sum.). Thanks again!

[@alessandrodubaldo7254]

Thanks Rob, that's awesome. And if you were to spread over 24 months, where would you keep the lump sum balance as it very slowly drops to zero?

[@Chippy_The_Chipmunk]

A money market savings account but won't earn much in interest.

[@DanDavis100]

Dang… another great video! So clear and informative!

[@juliepowell3566]

You're a really good communicator, I'm not an Econ person and i understood everything you said Good stuff ! Thank you

[@mfreddy22]

Dude this is the best insight I've heard after agonizing for several months. I'm a business owner and have 500-700k of cash I want to invest. Every person and community comments to lump sum invest. Finally someone that thinks how I'm thinking. Yea the numbers show lump sum is historically better, but like you said, this is a different time. Last 4 months and moving forward been doing 5k a week on m1 Finance pie... VTI 67%, vxus 23%, bnd 10% and Plan to add 50k each time there's a 5% a dive. I'm still nervous everyday watching the market. After I get this over with I'll just invest normal but this influx of cash is stressful in the market. Great video though. Definitely my favorite so far.

[@redchevy3307]

What about option #3? A lump sum say with a 40/60 stock/bond split. A more conservative investment that will handle a drawdown better. If you're dollar cost averaging on a lump sum, you have a lot of money on the sidelines for a long time. Any thoughts? You're right about the studies. All of them are over a long period of time, not before a crash. Good point.

[@ramireddy331]

good analysis ....

[@nuevocomienzotampa6052]

I recently came across you channel. You have a wealth of information and I thank you for taking the time to share it in a way that is not above the common folk understanding and neither is so elementary that becomes boring. Thank you sir, I commend you for your initiative.

[@jeffcallahan4118]

Great video. I've been catching up on all your videos, you present some very useful financial information on your channel. Well done 👏

[@CalKidWilly]

Thank Rob. Helpful analysis. I agree with your behavioral point. Watching your net worth drop when one is retired and living off of the portfolio changes the emotional equation for me anyway, vs. when one is in the accumulation phase. The academic numerically correct course of action may be different from what one can actually stomach when those red lines are occurring.

[@remcat3572]

This is exactly what I wanted to know. My mom passed away a little over a year ago leaving us a nest egg. I'm six years from retirement and about half my nest egg is stocks. Now I know how to go about investing the rest in bonds in strange and uncharted times. Thank you!

[@jeremymeyer5552]

Now it's a better time to invest but we still might drop a little more.

[@anthonyalves5967]

Thanks for another great video, Rob!

[@SG-zh5xd]

yep the talk of a 20% pull back give or take seems to have legs ,housing is overvalued too .

[@jlina]

I don't know I'm waiting for a crash.... In the housing market! I'd rather buy real estate but not at the prices they're asking. Where to "park" the money that is the question? And I'm 63

[@basamnath2883]

Awesome!!

[@rhena229]

What if I continue to contribute to 401k each month, but invest only half in index fund and keep the other half sitting in money market fund at the moment? If we expect a likely downturn in the near future, I would have cash to buy low when that happens?

[@rob_berger]

The question is always timing. Can you stick with that plan if stocks go up for a couple more years? And at what point would you start investing the cash?

[@rhena229]

@@rob_berger true…market is hard to time.

[@DavidEVogel]

Make money from a market crash. Buy a bear market fund like PBRCX.

[@optionplug6995]

great video!

[@stevenobrien595]

8.9K views thus far! Great topic Rob.👍

[@Devillionaire]

I DCA by lump-sum investing once a year. Seriously.

[@wingman2k]

@6:30 Wouldn't the worst time to invest be something like 1998, before the start of the crash?

[@rob_berger]

Not necessarily. That may be a bad time to lump sum invest a lot of money. But right before a crash would be an excellent time to start dollar-cost averaging, say in a 401k or IRA.

[@NorthPoleInvesting]

Great video, well explained!

[@bolivariana7271]

Excellent sharing 👏

[@davidroberts7996]

Where is the lump money as one spreads it over 12-24 months?

[@brandonbaker5884]

I'm doing both. Still auto investing but have built a cash reserve for these violatile times. I'm expecting a pull back some time this year .

[@mfreddy22]

The people that say time in the market is better than timing the market remind me of the school teachers that say the safest sex is abstinence. Yea we fucking get it but good hear a real person breaking down what we are all worried about investing right now.

[@EvgeniusXplorer]

Thanks Rob. It was really useful. It's always a good time to invest. And one more thing. Dollar Value Averaging method will be much better then Dollar Cost Average method. Isn’t it?

[@TexasGirl1633]

Great information! I am retired and am sitting on a large lump sum, but also have a large amount in the market. Will wait for a downturn and then will dollar cost average over a period of time. Thanks again!

[@r0bberger.473]

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[@larryhawes8295]

Curious Rob, has your channel been hacked with fake responses? Shows your name but not your pic and random numbers? I'm probably just naive but again curious.

[@Harry_16710]

Yeah, it's a bot. Not sure why it frequently happens for YT finance-related videos.

[@rob_berger]

It hasn't been hacked. This is a problem across all of KZbin. People create fake accounts using names of other KZbinrs. I block them as I see them.

[@stockae74]

I have an outstanding loan on my 401k for about $34,000. I just won $100,000 (after taxes) in the lottery. I've been fretting about what to do. I'm terrified to payoff the loan in a lump sum because I'm worried the market will sink soon thereafter. I had not even really considered paying off the loan over a 12 to 18 month period. But I think that is the right way to do it. Thanks!

[@craigscott7315]

I think you should pay off the loan before the market goes down instead of after the market goes down.

[@kenm8754]

Pay the loan! Get rid of that debt!

[@noveltyrobot]

Always be investing, no other way I'd rather see it done.

[@larryhawes8295]

Rob, It seems that your analysis using 2003 - 2021 versus 2000-2021 uses 3 fewer years to show the lesser amount $237,000 versus $306,000 @ 9:55 . Doesn't seem like apples to apples - 22 years worth of earnings versus 19. Am I missing something? Not arguing your assumption re: investing but am curious.

[@rob_berger]

Larry, really good catch. I should have been more precise. The point is the same, however. For example, we could assume we hold 3 years of investments in cash waiting for the better market, and then start in 2003 with $9,000 to invest. We still would have been better off investing through the bear market AND that assumes the 2003 investor timed the market perfectly.

[@larryhawes8295]

@@rob_berger Thanks so much for the reply, clarification, and the great analysis. When I initially invested with my financial advisor he theorized that more people lost more money by staying out the market then those who entered at the 'wrong' time and your analysis seems to back that up.

[@davidmorrison5974]

Fantastic, balanced analysis. Thanks

[@almenasmith8590]

Exactly the information I wanted to know about. Thanks

[@BornAgainBride]

How would we send you our portfolio mix info? I heard you mention this on a couple of videos.

[@paulciccarello661]

Hi Rob, could the same principle of dollar cost averaging be used when withdrawing from an investment, say if the investment has made gains but not sure witch way the Investment will go? Love your videos Thank you

[@rob_berger]

I've never thought of it that way, but I suppose it could. To me the question is why you are taking money out. Is it to spend or because you no longer believe in the investment?

[@DS-go8mn]

Great info, very timely

[@jamesharris883]

Hey Rob, I’m loving your channel. Great job. I do have a question and would like your perspective. I started investing in vanguard funds following the 3 fund approach. I do have money invested with Edward jones (American funds target date) paying .75 expense ratio. I was thinking I should keep the American funds money with Edward Jones (that I have already contributed) and not transfer the money to vanguard because I have already paid the 121-B fee. If you don’t mind I would love your input?

[@rob_berger]

Truth be told, American Funds have done well historically. At least some of them. As actively managed funds go, they aren't bad. I still prefer index funds (of course). To answer your question, I'd look at the 5.75% fee as sunk costs. They've already been paid, whether you stay with American Funds or not. So if I were in your situation, I wouldn't base my decision on fees I've already paid.

[@SG-zh5xd]

play sectors with A ETF

[@kienngo6252]

great video - thankyou

[@chrismoore9807]

is there a way to roll over a 401k over time?

[@cronostradale]

Great video. Been dealing w a lump sum since January and spreading over a 12 months period, just as you suggested. But… I haven’t been buying any bonds because of dropping yield. Do you think I should dollar average bond purchase as well? Disregarding the 10 year yield? Thank you

[@rob_berger]

I don't see bonds the same way, at least not U.S. government bonds of short to intermediate term durations. The reason is they are no nearly as volatile as stocks.

[@Jesusismykin]

👍😊

[@stevekowalski7936]

Ah, I used to try to time the market. Now I time individual companies, so much easier.