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

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

Investing right now is scary. Stocks are near all-time highs. Bond prices are high, sending yields to historic lows. The Fed keeps buying bonds to keep yields low. And our country's debt is nearing $30 trillion.

Whether and how to invest today depends in part on whether you are dollar cost averaging or have a lump sum to invest. The effect of a bear markets is vastly different between these two approaches. In this video, we'll use the tech bubble crash to back-test whether you should start investing now or wait. And for those with a lump sum to invest, we'll compare investing it all at once versus spreading it out over 12 to 24 months.

One thing I didn't discuss in the video is whether one should not invest at all--lump sum or dollar cost averaging--until the market changes. The problem with this approach is knowing when to get back into the market. Most people miss a lot of returns because they bought in too soon or waiting too long. Timing the market rarely works, and it never consistently works over a lifetime of investing.

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#RobBerger #investing #stockmarket

ABOUT ME

While still working as a trial attorney in the securities field, I started writing about personal finance and investing In 2007. In 2013 I started the Doughroller Money Podcast, which has been downloaded millions of times. Today I'm the Deputy Editor of Forbes Advisor, managing a growing team of editors and writers that produce content to help readers make the most of their money.

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DISCLAIMER: I am not a financial adviser. These videos are for educational purposes only. Investing of any kind involves risk. Your investment and other financial decisions are solely your responsibility. It is imperative that you conduct your own research and seek professional advice as necessary. I am merely sharing my opinions.

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[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.

[paulavaden]

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!

[dmsoundcollective]

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-onqz]

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-tike]

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.

[bobneedham]

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.

[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

[quantomic]

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

[mediadumb]

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.

[chuckmurray]

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.

[happytravels]

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.

[TheTrueHardcorefrk]

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.

[Mjln]

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.

[bg]

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

[rupertg]

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

[adamokoriscant]

Great video, you earned my subscription today!

[nicholasmartinez]

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.

[ryger]

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?

[miri]

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

[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