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Entering the market
Old 01-02-2014, 11:35 AM   #1
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Entering the market

For those beginning to invest ( my niece age 40 ) do you advise starting investing ( ie., equities) at a market "top" that we're currently probably experiencing. What are some are reasonable alternatives ?
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Old 01-02-2014, 11:45 AM   #2
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For those beginning to invest ( my niece age 40 ) do you advise starting investing ( ie., equities) at a market "top" that we're currently probably experiencing. What are some are reasonable alternatives ?

Dollar cost averaging consistently done works for me. I am halfway through a 2 year program with a lump amount I received. I'm not going to shoot the lights out, but hopefully won't shoot myself in the foot, either.
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Old 01-02-2014, 12:10 PM   #3
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For those beginning to invest ( my niece age 40 ) do you advise starting investing ( ie., equities) at a market "top" that we're currently probably experiencing. What are some are reasonable alternatives ?
The thing is, we don't know it's a top. I was thinking 2012 would probably be a down year.

If it's a small amount (a year or two of savings) and she'll be adding more regularly I'd invest everything immediately. If its a large amount (like 10 years of savings) I'd dollar cost average or value cost average into the market over a year or two. If we hit a dip of -20% or more I'd add quite a bit more. That's what you're waiting for, after all.
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Old 01-02-2014, 01:42 PM   #4
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I agree with the invest everything now camp. Good quality fixed income assets are very expensive and near a top. Stocks are fairly valued.

The P/E of our FI port = 71. The P/E of our equity port = 15.
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Old 01-02-2014, 02:15 PM   #5
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At every top (that was last week), the market has to go higher or none of us should be investing. And the market should spend most of its time at or near a top, so the degree of topiness should not impinge on how one invests.

That written, if I was DCA'ing a lump sum, I would put 50% in now and the rest as 5% monthly increments so that all would invested within 10 months. I would also have a written plan to accelerate DCAing if the market dropped in those 10 months.

Is that a reasonable alternative?
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Old 01-02-2014, 02:34 PM   #6
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Buy, buy, buy.

The more newcomers buy, the more people like me who are already in win.
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Old 01-02-2014, 02:40 PM   #7
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Market timing is hard.

If she is just starting, I would DCA into Wellington or Total Stock at that age.
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