Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[Rain Man]

Originally Posted by Dunit35

First off. I’m not a big investor. I have a separate police retirement growing but started a Roth IRA in December. I don’t put much in it, $100/every two weeks. I noticed it’s been dropping all week. Should I continue putting money in it or save my money since it’s tanking? I’m not negative yet but should be next week when this continues.

I only buy two mutual funds through Charles Schwab. SWTSX and SWISX. Mainly because I have no idea what I’m doing and just saw these on other forums.

If you're still in your working career, the accepted rule is that you keep putting money into it when it's going down. Eventually it'll go back up and you picked up some cheap shares. The concept is called dollar cost averaging.

We're all taking big hits this month. I have to adjust my mindset to know that it's just going to happen, and as long as I've got a system that lets me avoid selling during a pullback, I can soldier through it and it'll eventually go back up.

[lewdog]

Now is one of the better times to be buying. The market has been extended far too long and a healthy pullback and reset was due for equities.

[Buehler445]

Originally Posted by Dunit35

First off. I’m not a big investor. I have a separate police retirement growing but started a Roth IRA in December. I don’t put much in it, $100/every two weeks. I noticed it’s been dropping all week. Should I continue putting money in it or save my money since it’s tanking? I’m not negative yet but should be next week when this continues.

I only buy two mutual funds through Charles Schwab. SWTSX and SWISX. Mainly because I have no idea what I’m doing and just saw these on other forums.

Few things. You're doing the right thing.

I don't know what all you know, so if you already know it, accept my apologies.

What you have is a ROTH IRA. Understanding how it works impacts how you view it.

A ROTH IRA is a retirement account, meaning there are penalties if you pull it out before 59.5 years old That gives you a long term approach. The other component of ROTH that is important to know is that contributions go in after tax. Meaning you have paid tax on all contributions...BUT everything that comes out is tax free. So presuming there are capital gains, that is tax free. So the perspective to adopt here you are accumulating as many shares as possible because you have a long time for those shares to appreciate and capture the tax free gain.

Look up Dollar Cost Averaging. That prevents trying to time the market (and potentially being catestrophically wrong). Since you have time, I'd just buy it every 2 weeks and not even look at the balance. Just let it go.

Here is a 90 year graph of the S&P 500. At any point in history, if you have a 30 year time window, it will appreciate. Plus, if you're dollar cost averaging, you're buying more shares as the price goes down, so if it takes off, you're growing a bigger position. One way to think about it is when the market goes down, you're buying on sale. Same asset, cheaper price.



NOTE: I'm not licensed. I can't advise you, this is just what I'd do.

As far as the funds, I'm not a big International fund guy. There hasn't been a big time when International has outperformed American ones. But almost every fiduciary or CFP will tell you international is important to a diversified portfolio. They're probably correct. I just disagree.

I'm also a big S&P500 guy. But I ran a quick backtest of Schwabs S&P500 Index fund (SWPPX) to your SWTSX, and there isn't much of a difference so I think you're good there.

Backtest Link

If it's me (and it's not - it's very much you. We may have different risk tolerances), I'd switch it up a bit. What you have is about as diversified as you can be. Which is fine if that's what you're after. Since you have your pension, you have the base covered as essentially a risk free return, so I think you can be a little less conservative with your IRA. If it's me, I switch the funds up a little bit, and shoot for a little higher return and pull off some diversification. If it's my account I put 50% in SWPPX (S&P 500 Index Fund) and SCHG (Schwab Growth fund).

I ran a backtest on it, and the more aggressive approach yielded 4% better. Those haven't been around too long, so the test only goes back to 2010, so it doesn't look that much different, but it will over time as compounding happens.

Backtest link.

I feel pretty confident about the DCA comments, but probably less so about picking funds. I can be pretty wrong on that, but given what you described, this is what I'd do.

[scho63]

My SHOP options were a FLOP. Market took back some of my profits.

[ReynardMuldrake]

I just noticed my IRA has been quietly killing it this year. Up nearly 50% since Nov 1.

[Rain Man]

Originally Posted by ReynardMuldrake

I just noticed my IRA has been quietly killing it this year. Up nearly 50% since Nov 1.

Wow. What are you in?

[ReynardMuldrake]

Originally Posted by Rain Man

Wow. What are you in?

These are my six largest positions.

[Rain Man]

Originally Posted by ReynardMuldrake

These are my six largest positions.

Impressive. I'm into the top three, but I've never heard of SNPS or ASML.

[lewdog]

Originally Posted by ReynardMuldrake

These are my six largest positions.

Rolling deep! Nice job!

[Buehler445]

GameStop is issuing 45M new shares on the meme rally. Those mother****ers are genius.

[Rain Man]

Originally Posted by Buehler445

GameStop is issuing 45M new shares on the meme rally. Those mother****ers are genius.

Yeah, that's pretty funny how the meme stocks keep doing that. Life is good for them.

[ReynardMuldrake]

Originally Posted by Rain Man

Impressive. I'm into the top three, but I've never heard of SNPS or ASML.

Basically all are part of the semiconductor food chain, from design to fabrication. It's a way to diversify a little but stay in the same sector.

[Buehler445]

I thought this was an interesting tidbit. Dude makes a case for a .com-esque AI bubble.



The interesting thing to me was that the Alphabet, Amazon and Microsoft reported an increase of 20B in revenue from AI that accounted for 2.5T in additional market valuation. That is a 120X multiple.

This dude lived through and was wrecked by (according to him) the .com bubble. It's an interesting perspective to listen to.

That would affect me as a proponent of S&P 500 investing.

[scho63]

The NVDA earnings report in 20 minutes is the most anticipated earnings report I have seen in a long time.

[rydogg58]

Originally Posted by scho63

The NVDA earnings report in 20 minutes is the most anticipated earnings report I have seen in a long time.

You playing anything on this earnings report? I'm surprised it hasn't moved much all day.