Investment thread

my New Years resolution has been to be much smarter with my money and was lucky enough to get a sizable end of year bonus from work. 

Do we have any investors here? Obviously with the asterisk that none of this constitutes as legal financial advice and it’s definitely best seek out a professional. 

But interested to to hear what any BMers are investing in. 

So so far I’ve been reading books on Index Funds and have an eye on a few dividend paying stocks. Most of the stocks I’m looking at are in the aerospace industry. IE Boeing, Lockheed, etc 

also interested in ETFs but I’m pretty clueless on this. 

Definitely staying away away from any get rich quick ideas or Super risky investments. I tried FX trading a few years back and got took to the Cleaners...I’m still holding some crypto but I don’t think I’m putting any more money into it.

I’m also not really trying to simply make 5% returns either. Also if anyone is an actual certified financial advisor feel free to PM me to talk privately. 
LordBy
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Comments

  • FreddyFreddy Denton, Texas
    edited January 11
    I'm opening a trading account with my tax return. First stock will be Campbell's Soup (CPB) simply based on the fact that basically everyone I know has at least one Campbell's product in their house at all times, and since it's creation, I've never went a single year without eating at least one can of Chunky Chicken Noodle Soup. Outside of that, I have a friend who works for a medical marijuana dispensary in Oklahoma that is on the verge of going public. Depending on how that goes I might put buy some shares. Really though, MMJ is a crazy volatile industry and is still very much federally illegal.
    Hatorian
  • I switched over to Betterment last year instead of trying to manage my portfolio myself and to consolidate both my retirement and my investing accounts into one place.  I was looking more for a set it and forget it rather than something I would have to actively manage.  

    I've been pleased so far in their interface / features so far.  They have tax loss harvesting tools and asset location that are above my head but all the reviews I read on Betterment seemed to point out as great benefits.  Just got an email they are rolling out an auto withdrawal to a low risk savings account in an attempt to put that non-long term invested money to use when your linked checking account gets over 3-5 weeks of spending. Haven't enabled the feature yet but  
  • My wife and I are doing the ole Dave Ramsey debt snowball thing, currently on baby step 2 - paying off all that debt with reckless abandon before doing anything else.  Once that's done in about a year, we'll pad the savings account again and get back to investing.  Once we do, I'm sure we'll do mostly mutual funds, probably open a Roth IRA for me, get the kids college fund going, etc. 

    If anyone has any debt, I really recommend the Dave Ramsey plan.  He's a mixed bag when it comes to his podcast (lotsa evangelical type stuff sprinkled in), but he generally has good financial advice.  Unless you're in real deep shit, I wouldn't buy any of his stuff or do his "Financial Peace University" thing, you can get all the main principles and plan for free. 
  • I think picking individuald stocks is real risky, and not something I'd do myself.

    If you are going to do some playing with individual stocks everything I've read says to pick a small percetage of your portfolio and play only with that amount (e.g. 5%). Just my opinion, I'm certainly no expert! 
    Aww_PHuuCk
  • Giovanni said:
    I think picking individuald stocks is real risky, and not something I'd do myself.

    If you are going to do some playing with individual stocks everything I've read says to pick a small percetage of your portfolio and play only with that amount (e.g. 5%). Just my opinion, I'm certainly no expert! 
    I hear ya. I was watching some videos today that just really fucked with my head.

    Banks/professional investors/sharks rarely make money by helping you make money. They make waaaay more money taking your money. Reminds me of the Matthew Mccanehey scene in Wolf of Wall Street. 

    What really hit me the hardest was my FX trading losses. Like I said I got took to the cleaners. But after doing more research I found out they were not acting as the intermediary they promoted. FX is very similar to stocks. People buy and sell and there is an intermediary who processes it for a fee. But what I found out was these FX companies where doing nothing more than being a casino. They were the house and they were betting on you to lose. They didn’t do anything illegal. They just simply played the percentages and decided instead of being the middle man we’re going to play the opposite of this persons position. And they usually won. Reading that was heartbreaking. Not too mention during the time I lost money it was confirmed banks were manipulating prices. 2 Traders in the UK got arrested for FX manipulation. FX is a trillion dollar industry. Yet only 2 guys took the fall for one of the biggest scams in history. 

    Back to stocks. People seem to be be scared of stocks and picking “the right one” which yea it’s not easy. 

    But if you look look at the best performing investors and portfolios over the past 100 years. All of them were stock heavy. 

    The problem is picking the winners. You could be a billionaire from buying $100 worth of Coke in 1923. Or you could have went bust spending 50k on some .com bubble stock in 2002. 

    Just like the casinos the house holds the odds to win. Investing is nothing more than gambling. And the people you invest with most likely want you to lose money. 


  • Doctor_NickDoctor_Nick Terminus
    edited January 14
    I'm exclusively Vanguard index funds at this point.  I don't have the time or energy to try and compete in stock picking with people who do it for a living.  
    LordByAww_PHuuCkHatorianrustywright4
  • I have become really interested in this topic over the last few years. I am 35 and the thought of working at a corporate job like the one I have now until I'm 65 kind of makes me sick. I don't make a ton of money and I'm not due for a large inheritance so I realized the only way I am going to achieve financial security and eventually independence is to put my money to work. I actually took the first course toward becoming a Certified Financial Planner last year, but I definitely don't know enough to give investment advice yet. I am personally interested in trading cryptocurrencies and potentially other markets but I have had mixed results so far, I am still testing strategies. I think it's not looking good for the US stock market overall right now. I have a 401k which I continue to contribute to, which I am okay with because it's basically dollar cost averaging into the market as it goes down, but I don't know that I want any more exposure to stocks at the moment. Short term I am parking most of my funds in Worthy Peer Capital - they issue loans to small businesses and sell bonds in $10 increments to account holders that pay 5% (interest paid out weekly). It's not insured or risk free but the loans have collateral so it's less risky than some other investment vehicles and you can take your money out (sell your bonds) at any time. If anyone is interested let me know, I will give you my referral link and we will each get a free bond. They offer bonuses sometimes for an additional 1-2% in free bonds but usually they come with a requirement to hold your bonds for a period of time (like a year). I'm also looking into REITs (real estate investment trusts) and crowdfunded real estate platforms. So far I think Fundrise looks like the best option because you are investing in a portfolio of properties (so risk is spread out) and you can choose from a few profile types where you can either take out more income from your investment or re-invest the gains. They estimate a return of ~8.5-10% but you are supposed to have a time horizon of at least 5 years I think. Anyway I don't want to write a novel here, but I'm really interested in this stuff and I do a lot of reading on it. I would be happy to share ideas and I would love to hear about other investment ideas anyone else has.
    Hatorian
  • Best way to start equity investing is with a low cost index fund, either an S&P 500 or something even more-broad like Vanguard’s Total Stock Market Index Fund. If you have a good chunk of money, break it up into 12 equal slices and put it into the fund over a year to smooth out market volatility and benefit from dollar cost averaging.

    Park extra cash in an FDIC insured high yield savings account. You can find these on bankrate.com and you’ll find big institutions like American Express, Goldman Sachs, and Barclays paying 2.10 - 2.25% (versus my local credit union’s 0.05%).

    I’d avoid individual stocks until you are comfortable with them and the higher risk associated with them. ForEx, Crypto, and naked option trading are very high risk and more like gambling than index equity investment is. If the S&P 500 goes to $0, we all have more to worry about than what we have saved, while losing all of an investment in some of the riskier stuff is not uncommon. If you start stock picking, don’t have them all in the same industry.

    Don’t put money in that you may have to pull out over the next few years. The worst is being forced to sell during a recession or other downturn because you have to have the cash, thus locking-in your losses.

    Hatorian
  • HatorianHatorian Dagobah
    edited January 15
    All good advice. I’m really interested in the Vanguard indexes. Unfortunately the broker I use here in Singapore doesn’t have the Vanguard 2050. Which after doing some research seems like a perfect one for me. I’d be 66 in 2050. 

    Also I went against my own will and put 10k into some forex trades last night and made 1k overnight. Got sucked back in after seeing some naked signals. Woke up and closed it though. 10% return in less than 24 hours. However I’ve learned my lesson. Going to use that 1k profit and invest into something more stable. 
  • Anyone have any experience with CDFs?

    seems like buying stock but with higher risk/reward. Almost like FX. Buying and selling positions on stock with Margin. 

    Still seems less less risky than FX given Stock prices don’t fluctuate as much. Was interesting to read you still get paid dividends even though with CDFs you technically don’t own the shares. 
  • LordByLordBy Utah
    edited January 15
    Hatorian said:
    Anyone have any experience with CDFs?

    seems like buying stock but with higher risk/reward. Almost like FX. Buying and selling positions on stock with Margin. 

    Still seems less less risky than FX given Stock prices don’t fluctuate as much. Was interesting to read you still get paid dividends even though with CDFs you technically don’t own the shares. 
    I’m familiar with most forms of investment, but CDF is a stumper: what does it stand for?

    Margin certainly amplifies both the upside and the downside (with the bank always winning of course). I’m not a fan, I pick my own individual stocks and sell covered calls, but I’m not usually aggressive enough to mess with margin or naked options. I had a good-sized margin position in early 2008 and it really, really, didn’t end well, even though I saw some of the risk and had it covered with Puts; Puts expire and the market was worse than anyone expected. Being forced to sell into a market crash because of margin calls does not feel good at all so I’ll not put myself in that position again.
  • MrXMrX CO
    edited January 15
    Hatorian said:
    All good advice. I’m really interested in the Vanguard indexes. Unfortunately the broker I use here in Singapore doesn’t have the Vanguard 2050. Which after doing some research seems like a perfect one for me. I’d be 66 in 2050. 

    Also I went against my own will and put 10k into some forex trades last night and made 1k overnight. Got sucked back in after seeing some naked signals. Woke up and closed it though. 10% return in less than 24 hours. However I’ve learned my lesson. Going to use that 1k profit and invest into something more stable. 
    If your broker has Vanguard admiral shares available (they lowered the minimum investment on them to $3,000), you can roll your own target-date fund, and will save on fees  - it's just a mix of their total stock and bond market funds, both domestic and international. You would just want to reallocate the mix every 5 years or so to match what the target date fund is doing. 

    Bogleheads wiki has a pretty good guide to building a 3 or 4 fund portfolio, with Vanguard and others:
    https://www.bogleheads.org/wiki/Three-fund_portfolio
    https://www.bogleheads.org/wiki/Vanguard_four_fund_portfolio
    HatorianGiovanni
  • Sorry it’s CFD. It’s basically playing Long or short positions on stocks with leverage. Sort of like FX. You’re buying a position and since it’s leveraged you’re able to “own” more shares than if you simply bought the stock. But you don’t actually own the share. You’re simply making a bet on which way it will go. 

    Example of stock purchase vs CFD. With stock If I have $1k to invest and Stock A costs $100. I could only buy 10 shares. Then I own that share and pretty much my gains and losses simply follow the price by the dollar. 

    With CFDs I can purchase Stock A with leverage technically allowing me to purchase a much higher amount of shares. Which if I’m right and it goes up my earnings would be much higher. However if it goes down my losses are much greater and you are at risk of a margin call if you don’t have the equity to cover the losses. Let’s say stock A drops like 20% cuz they have some scandal or declare some major issue. If I don’t have the equity to cover that loss my position gets closed and I’m out however much the leveraged loss is. 

    Theres also no no broker fee with CFDs but they charge a nightly holding fee which is usually a small percent. So like 20 shares of Boeing costs me $1 per night to hold the position. If I had $100 it would be $5. 

    Also there limits and stops like forex where you can set an auto close if the stock hits a certain price. 


  • Hatorian said:
    Sorry it’s CFD. It’s basically playing Long or short positions on stocks with leverage. Sort of like FX. You’re buying a position and since it’s leveraged you’re able to “own” more shares than if you simply bought the stock. But you don’t actually own the share. You’re simply making a bet on which way it will go. 

    Example of stock purchase vs CFD. With stock If I have $1k to invest and Stock A costs $100. I could only buy 10 shares. Then I own that share and pretty much my gains and losses simply follow the price by the dollar. 

    With CFDs I can purchase Stock A with leverage technically allowing me to purchase a much higher amount of shares. Which if I’m right and it goes up my earnings would be much higher. However if it goes down my losses are much greater and you are at risk of a margin call if you don’t have the equity to cover the losses. Let’s say stock A drops like 20% cuz they have some scandal or declare some major issue. If I don’t have the equity to cover that loss my position gets closed and I’m out however much the leveraged loss is. 

    Theres also no no broker fee with CFDs but they charge a nightly holding fee which is usually a small percent. So like 20 shares of Boeing costs me $1 per night to hold the position. If I had $100 it would be $5. 

    Also there limits and stops like forex where you can set an auto close if the stock hits a certain price. 


    i knew a guy from college that got into algorithmic swing trading - writing code to predict which way the market is moving - seems maybe similar to what you're describing here. I was thinking one day if I had enough to play with I'd give it a go, but I'm not there. I think you need $25-$50K to be able to weather the ups and downs.
  • HatorianHatorian Dagobah
    edited January 15
    I put a decent chunk into a newer CDF that looks pretty promising. Holds most of the major US aerospace companies. It’s only 3 years old and it’s had a healthy rise since it was created. Now I’m just hoping these last few months drop are not a signal of a downward trend but just a minor correction and it will head back up. I didn’t put much in. My limit is +$2500 and my stop loss is $2100


  • The biggest issue with the CDF is the nightly fee. If the CDF stalls and just sort of ranges I’ll be eating like $5 a night in fees
  • Hatorian said:
    The biggest issue with the CDF is the nightly fee. If the CDF stalls and just sort of ranges I’ll be eating like $5 a night in fees
    I’m more of a buy-and-hold investor than a trader, and not as comfortable with leverage in equity investments, so this wouldn’t work for me.
  • Hatorian, what are your financial goals and how involved do you want to be day to day in managing your investments? In your first post you said you weren't looking for super risky investments but it seems like you're all over the map in terms of riskiness of what you're investing in. Leverage can be a great tool for traders if you have a profitable strategy/track record already but it proportionally increases risk/reward.
  • yea. i am all over the place. financial goals...Millionaire...haha

    in all reality right now im just testing out a few options and see what works for me. I think im just going to try a few different things and then settle on something that 1. I become proficient at and 2. fits how much money im trying to make. 
  • Haha yeah I am in the same boat, experimenting with different strategies to see if I can do any better than the average returns. I would just suggest keeping different "buckets" of funds allocated and try to start with small amounts for the more risky ventures. Once you have success you can always add capital or leverage later. But if you wipe out a significant portion of your capital when you are just getting started it can have a huge impact on your portfolio long term. I would love to know if you find something that works for you and I would be happy to share the same. Good luck!
  • Short sterling and then get ready to go long when Brexit actually happens. 
  • HatorianHatorian Dagobah
    edited January 16
    Short sterling and then get ready to go long when Brexit actually happens. 
    It’s not the same situation but when the Swiss Franc broke from the Euro it rose like 40 cents. Anyone who shorted the Euro with some serious leverage could have been an instant millionaire. 

    Holding a 10K leveraged short on that position would have netted something crazy. It wouldn’t be impossible to make a million bucks on the trade if you heavily leveraged multi-thousand dollars 

    Its not not the same situation with Brexit but if you play the right position man...cha Ching.

    the problem is if you play the wrong position and you get over leveraged and margin called you could potentially owe your broker serious dough. When the Eur/CFH happened it was instant. And even if you held a stop loss you most likely got closed well below your stop loss.

    Even if you only invest 10k you could find yourself closed at a -90k position and then you got Lawyers coming for your assets..
  • As you are looking for professional advise here are some articles https://tranio.com/articles/investment/ regarding investments into real estate market from all around the world with latest statistics. Might be worth a look in your case, maybe you will be interested in this field. 
    Hatorian
  • Steve321 said:
    As you are looking for professional advise here are some articles https://tranio.com/articles/investment/ regarding investments into real estate market from all around the world with latest statistics. Might be worth a look in your case, maybe you will be interested in this field. 
    Thanks. Property is definitely high on my list but here in Singapore you’re looking at 500k for a 1-2bedroom and over $1mil for a nice condo and $2mil for a house. bare minimum you need like 50k cash. But if you want something nice you’re talking 200k cash. 

    The good old thing about Singapore is we got our PR 4 years ago and as a PR/citizen you have a mandatory retirement fund called CPF that you have to contribute to each month with the government matching your contribution up to 1,200.

    been able to save a significant amount of money over these last four years but the only thing you can use it for outside of medical bills is housing. So I could technically use my retirement fund plus cash in hand to purchase property but I don’t have the money for anything more than 1.

    my Wife is Australian so we were thinking maybe buy a house there but anywhere 1 hour from downtown Sydney is same. 500k to $1+mil. But we could only use our cash. 

    Lastly i I could buy in the US but 1. We really don’t ever plan on living there until maybe 2028 when our first kid goes to college and 2. I’d have to pay for a property manager because I couldn’t manage it myself from here
  • Check out crowed funded real estate platforms like Fundrise and Groundfloor, or real estate investment trusts (REITs). It's a good way to get exposure to real estate without having to be actively involved in managing property. I have been a landlord before and while it can definitely be worth it, it's a huge pain (finding new renters, late rent, plumbing emergencies etc). Many of the crowd funded real estate platforms and REITs pay out dividends from the rental income they receive. 
    Hatorian
  • Hatorian said:
    Short sterling and then get ready to go long when Brexit actually happens. 
    It’s not the same situation but when the Swiss Franc broke from the Euro it rose like 40 cents. Anyone who shorted the Euro with some serious leverage could have been an instant millionaire. 

    Holding a 10K leveraged short on that position would have netted something crazy. It wouldn’t be impossible to make a million bucks on the trade if you heavily leveraged multi-thousand dollars 

    Its not not the same situation with Brexit but if you play the right position man...cha Ching.

    the problem is if you play the wrong position and you get over leveraged and margin called you could potentially owe your broker serious dough. When the Eur/CFH happened it was instant. And even if you held a stop loss you most likely got closed well below your stop loss.

    Even if you only invest 10k you could find yourself closed at a -90k position and then you got Lawyers coming for your assets..
    This kind of trading is a rich-man’s game. No stop loss can help if an equity or exchange rate gaps-up or gaps-down against you on significant news. For the sterling a hard Brexit would likely hurt, a last minute deal or delay of Brexit could work the other way.

    I’d develop a get-rich slow strategy and then only pursue high-risk options with excess money over and above implementing that strategy (without risking assets in that slower strategy).
    GiovanniHatorian
  • michielterlouwmichielterlouw Helsinki
    edited January 18
    My thoughts:

    1. Start by making sure you really know what your goal is. You write that you don't want high-risk speculative stuff, but also that you don't "just want to go for 5% returns". These are potentially conflicting statements. In today's market (with historically low interest rates), most experts say that about 5% is what investors should expect from a well balanced portfolio.

    2. The majority of your return is the result of your asset allocation (how much you put in bonds, stocks, and other categories). Picking individual stocks is exciting, but ultimately doesn't influence the result that much (unless you cherry-pick a few speculative companies to invest in)

    3. The golden rule is that: as an investor, you need to make sure you get rewarded for the risk you take on. If one investor (John) puts all his money in company ABC, and makes a 7% return, and his friend Anna puts all her money in companies ABC, DEF, GHI and JKL and also makes 7% return.... then I would say that Anna is the better/smarter investor. John took on more risk by putting all his eggs in one basket, but was not rewarded for the additional risk.

      If a third investor comes along (Bob), and he makes 7% by investing in an index fund that tracks the average weighted share price of 500 companies, then he's doing better than John and Anna, because he gets the same result with less risk.

      What this means is that, if you decide to be stubborn and not follow a broad index, you are intentionally taking on more risk than necessary. Professional investors do this, because they believe they have better information than the average investor, and they believe they are better at analyzing the available information. Some of them succeed.

      If you take on extra risk, you have to realize that you are betting on your own ability to analyze the market better than millions of other investors (better than "the crowd"). This can be an exciting bet to take, but there's also something inherently arrogant about it (I'm not judging)

    4. There is no rational reason for Dollar Cost Averaging. Historically, putting in all the money at once (lump sum) leads to higher returns. On the other hand, some people just sleep better if they spread their investments.
    HatorianDoctor_NickGiovanni
  • My thoughts:

    1. Start by making sure you really know what your goal is. You write that you don't want high-risk speculative stuff, but also that you don't "just want to go for 5% returns". These are potentially conflicting statements. In today's market (with historically low interest rates), most experts say that about 5% is what investors should expect from a well balanced portfolio.

    2. The majority of your return is the result of your asset allocation (how much you put in bonds, stocks, and other categories). Picking individual stocks is exciting, but ultimately doesn't influence the result that much (unless you cherry-pick a few speculative companies to invest in)

    3. The golden rule is that: as an investor, you need to make sure you get rewarded for the risk you take on. If one investor (John) puts all his money in company ABC, and makes a 7% return, and his friend Anna puts all her money in companies ABC, DEF, GHI and JKL and also makes 7% return.... then I would say that Anna is the better/smarter investor. John took on more risk by putting all his eggs in one basket, but was not rewarded for the additional risk.

      If a third investor comes along (Bob), and he makes 7% by investing in an index fund that tracks the average weighted share price of 500 companies, then he's doing better than John and Anna, because he gets the same result with less risk.

      What this means is that, if you decide to be stubborn and not follow a broad index, you are intentionally taking on more risk than necessary. Professional investors do this, because they believe they have better information than the average investor, and they believe they are better at analyzing the available information. Some of them succeed.

      If you take on extra risk, you have to realize that you are betting on your own ability to analyze the market better than millions of other investors (better than "the crowd"). This can be an exciting bet to take, but there's also something inherently arrogant about it (I'm not judging)

    4. There is no rational reason for Dollar Cost Averaging. Historically, putting in all the money at once (lump sum) leads to higher returns. On the other hand, some people just sleep better if they spread their investments.
    I don't understand your last point on dollar cost averaging. Can you elaborate? It makes sense to me that on average the lump sum investments would have more time for growth and therefore perform better in aggregate. But as an individual investor with a lump sum to invest at a single point in time, the average is less relevant - you would be trying to avoid buying in at the top of a market cycle and being an outlier on the low end, right?
    Giovanni
  • I can understand why you wouldn’t want to spread out your buys. 1 purchase vs 12 purchases can be s big difference in brokerage fees.

    the money you might save by spreading out your purchases can easily be eaten up by fees. 

    On the flip side though bitcoin is a great example where it would have killed to invest sll
    your money st a single price instead of spreading out the purchases as it dropped. 

    Once again ive has a 1k profit with a 10k investment in FX today. 

    Ive decided to split my investments into 2. 

    Say i habe 100k. I’m going to put 70k into non risky investments and hope for the 5% return.

    the other 30k I’m going to act like casino money and play risky investments that can net 10%+ returns. Basically the 30k is going to be money I’m willing to lose. 

    I actually built an FX “bible” took me months to do and I’ll share it via Google drive. It’s worked well for me when I don’t trade on emotion and let the signals/analysis help make my decisions. 
  • My thoughts:

    1. Start by making sure you really know what your goal is. You write that you don't want high-risk speculative stuff, but also that you don't "just want to go for 5% returns". These are potentially conflicting statements. In today's market (with historically low interest rates), most experts say that about 5% is what investors should expect from a well balanced portfolio.

    2. The majority of your return is the result of your asset allocation (how much you put in bonds, stocks, and other categories). Picking individual stocks is exciting, but ultimately doesn't influence the result that much (unless you cherry-pick a few speculative companies to invest in)

    3. The golden rule is that: as an investor, you need to make sure you get rewarded for the risk you take on. If one investor (John) puts all his money in company ABC, and makes a 7% return, and his friend Anna puts all her money in companies ABC, DEF, GHI and JKL and also makes 7% return.... then I would say that Anna is the better/smarter investor. John took on more risk by putting all his eggs in one basket, but was not rewarded for the additional risk.

      If a third investor comes along (Bob), and he makes 7% by investing in an index fund that tracks the average weighted share price of 500 companies, then he's doing better than John and Anna, because he gets the same result with less risk.

      What this means is that, if you decide to be stubborn and not follow a broad index, you are intentionally taking on more risk than necessary. Professional investors do this, because they believe they have better information than the average investor, and they believe they are better at analyzing the available information. Some of them succeed.

      If you take on extra risk, you have to realize that you are betting on your own ability to analyze the market better than millions of other investors (better than "the crowd"). This can be an exciting bet to take, but there's also something inherently arrogant about it (I'm not judging)

    4. There is no rational reason for Dollar Cost Averaging. Historically, putting in all the money at once (lump sum) leads to higher returns. On the other hand, some people just sleep better if they spread their investments.
    I don't understand your last point on dollar cost averaging. Can you elaborate? It makes sense to me that on average the lump sum investments would have more time for growth and therefore perform better in aggregate. But as an individual investor with a lump sum to invest at a single point in time, the average is less relevant - you would be trying to avoid buying in at the top of a market cycle and being an outlier on the low end, right?

    If the market goes up, you're better off investing the lump sum. If the market goes down, you're better off delaying some of your investments. But when you need to make the choice, you don't know whether the market will go up or down.

    On average though, markets are going up more often than down. Therefore, the rational choice is to invest the lump sum.

    Emotionally, averaging is attractive, because it just feels super bad to invest everything at once and then lose money when the market goes down. If you delay your investment and then the market goes up, you're also losing money (you're buying at a higher price than you would have done without the delay) but most people (irrationally) don't perceive it that way.


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