I've maxed out my IRA, have a three-month emergency fund, and have paid off all my debts. I have some remaining money to invest and don't have any short-term goals to spend it on. While my priorities might change, right now my goal is "save more money for retirement", so I'm looking at a time horizon of several decades. From my (pretty narrow) understanding of how funds work, it's almost impossible to consistently outperform the market. Can I just throw everything in the Vanguard 500 and not think about it for a few years, or is that a really, really dumb idea? I know it's generally a good idea to have a diverse portfolio and rebalance every so often, but I don't need money in the short term so I don't know if I should only focus on the long game.

My main concern is that something could come up, like five years from now I might decide to purchase a house. But I'm living off just under half my take-home pay, so I'm not hugely worried about coming up with additional money short-term.

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    In the link I show how to get long term leverage on the SPY while preserving 95% of your cash. Can't be any riskier than going all in. For instance had you bought at $213, you'd be almost 5% in the hole already with zero downside protection. At least with options your losses are limited and your cash can stay dry as powder. money.stackexchange.com/a/49694/13043 Commented Jul 9, 2015 at 0:45
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    What is the money in your IRA invested in?
    – BrenBarn
    Commented Jul 9, 2015 at 1:06
  • The S&P500 is a great diversification tool, but it's not complete. It's overexposed to the US and to large-cap stocks. It's why I like services like betterment, or wealthfront, or futureadvisor - they provide better diversification and with low-cost (and other features, like automatic rebalancing, partial shares, and tax-loss harvesting)
    – David Rice
    Commented Jul 9, 2015 at 17:12

2 Answers 2


At a very high-level, the answer is yes, that's a good idea. For money that you want to invest on the scale of decades, putting money into a broad, market-based fund has historically given the best returns. Something like the Vanguard S&P 500 automatically gives you a diverse portfolio, with super low expenses. As it sounds like you understand, the near-term returns are volatile, and if you really think you might want this money in the next few years, then the stock market might not be the best choice.

As a final note, as one of the comments mentioned, it makes sense to hold a broad, market-based fund for your IRA as well, if possible.


What you choose to invest in depends largely on your own goals and time horizon.

You state that your time horizon is a few decades. Most studies have shown that the equity market as a whole has outperformed most other asset types (except perhaps property in some cases) over the long term.

The reason that time horizon is important is that equities are quite volatile. Who knows whether your value will halve in the next year? But we hope that over the longer term, things come out in the wash, and tomorrow's market crash will recover, etc.

However, you must realize that if your goals change, and you suddenly need your money after 2 years, it might be worth less in two years than you expect.

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