Long Term Investment - Investing your existing assets

[gaijin]

Historically, time in the market has beaten timing the market on average. How do you know when the bear market starts? What if it does not start in the next five years? If you are investing for the long term (10-15+ years), it does not matter much, just invest the money now and everything will average out. If you are investing for the short term, it may be a different matter.

Interesting, but also kind of scary. If I understand you correctly, once I have decided on my long term investment asset allocation, then I should put all my long-term assets immediately into this strategy and add additional earning for long time investment (e.g. from salary) into this strategy as soon as possible.
Looking at how my existing investment of VT and CHSPI went up and up in the past years, and reading articles like this one I'm a little scared to move everything into VT and CHSPI.

 

[Baptiste Wicht]

I am not sure I understand your concern.

The important point is that over 15+ years, stocks have returned positive returns. And that on periods shorter than that, they have seen some negative returns. So, you should indeed keep your money in your portfolio for as long as possible and keep investing into it.

If you have a long-term goal, you should entirely ignore financial news. Nobody knows where the market is heading, and it's a losing game to try to guess it.

I have more examples on this recent article:

What Is Long-term Investing? - The Poor Swiss

Long-term investing allows us to invest more aggressively than shorter terms. But why is that? We study many asset classes over multiple periods.

thepoorswiss.com

 

[FIRE]

Same here. I have CHF 40'000 sitting in Cash on a Säule 3a account. And I'm scared to deploy it at the moment. I read that when the Schiller P/E Ratio (CAPE) is above 30 (at the moment at 34) DCA might be the better option than lump sum investments. How would you approach this?

Especially the way I would invest it (trying to rebuild VT here) - what do you think of this allocation?

 

[Baptiste Wicht]

@FIRE How far is your goal? The longer term you have, the less you should care about the current valuations. I don't look at the current price of VT before buying.

In your example, if you are going to do a custom portfolio, just drop the 3% Switzerland, it's too small to matter.

 

[FIRE]

@Baptiste Wicht I have a 20 years investment horizon. Do you think the strategy is too aggressive?

mhmm, fair point!

 

[Baptiste Wicht]

@Baptiste Wicht I have a 20 years investment horizon. Do you think the strategy is too aggressive?

Impossible to know without knowing your risk capacity as well.

If you have a good risk capacity, 100% stocks for 20 years is pretty reasonable.