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38 votes

Why should I hold stocks for the long term when the risk of more companies going bankrupt increases over time?

Whenever I see advice for "long term investing" it usually includes the caveat of making those investments into diversified index funds such as VOO or VTI. As opposed to investments into ...
Nosjack's user avatar
  • 8,747
35 votes

Is investing all your savings into a small number of individual stocks risky?

Investing in only four to six separate stocks is immensely risky. Depending on how you pick those stocks, there's a very real chance you'll lose the majority of your investment. Of course, if you pick ...
ChrisInEdmonton's user avatar
34 votes

Does dollar-cost averaging just means taking risk later?

The paper you are referring to is likely the Vanguard report Dollar-cost averaging just means taking risk later. The thrust of the paper is that lump sum investing outperforms dollar cost averaging ...
Magua's user avatar
  • 5,097
28 votes

Is investing all your savings into a small number of individual stocks risky?

How risky is this and is it a bad idea. It is very risky; whether it's a bad idea is more subjective. I feel like the stock market goes up over time This is true, but it's true for the stock ...
Magua's user avatar
  • 5,097
27 votes

In terms of safety, what's the next best thing after government bonds?

Did you go to college? Call up Donor Relations and ask them how they manage their Endowments. An endowment is a large gift of money, in which the money is invested, and then the college takes out ...
Harper - Reinstate Monica's user avatar
26 votes
Accepted

Why does the Nikkei 225 appear to be such a bad long-term investment?

The Japanese economy has had a unique history, with a huge bubble in the 1980s and a long unwinding afterward. I don't see why that would result in a market that appears to have brief periods of ...
nanoman's user avatar
  • 30.1k
21 votes

In terms of safety, what's the next best thing after government bonds?

High quality corporate bonds would generally be next in line. AAA corporate bonds are yielding a bit over 1.5% at the moment. Of course, if you are holding a bond (corporate or government) and ...
Justin Cave's user avatar
  • 27.3k
21 votes

Why should I hold stocks for the long term when the risk of more companies going bankrupt increases over time?

While some companies go bankrupt, some continue to exist, paying dividends until they ultimately liquidate or get bought out by another company. 'Nearly all companies go bankrupt' is an incredibly ...
Grade 'Eh' Bacon's user avatar
17 votes

Are ETF trackers fundamentally better than individual stocks?

I am mostly interested in long-term dividend-paying investments. Why only dividend stocks? The value of a stock goes down when they pay a dividend, so dividend stocks are (in my opinion) more ...
D Stanley's user avatar
  • 137k
16 votes
Accepted

Are bonds worth the investment since they don't compound?

Well, first of all, you're adjusting the bond for inflation, but you're not adjusting the rate that banks give for inflation. Second, it doesn't make sense to adjust money for 30 years of inflation ...
Acccumulation's user avatar
14 votes

Should I transition to index funds now, or wait?

To me, there are two great reasons to invest passively. The first is that it is impossible to time to market. Bargains may come along and you may choose to do some individual stock investment then, ...
Pete B.'s user avatar
  • 76.7k
12 votes
Accepted

Does dollar-cost averaging just means taking risk later?

The answer you link, and the Vanguard paper it references, implicitly define dollar-cost averaging (DCA) as an execution strategy where you acquire a large amount of cash all at once, and then decide ...
Phil Frost's user avatar
  • 3,131
12 votes
Accepted

Shouid I throw away my inkjet printer when its ink runs out & buy another?

Yes, you are missing something. Missing is the fact that 'starter' cartridges have a fraction of the ink of the full, new cartridge. Say the new printer on sale is $100. And the set of replacement ...
JTP - Apologise to Monica's user avatar
11 votes

Are ETF trackers fundamentally better than individual stocks?

The quick and dirty answer to your question is no. An ETF is not company equity. Is pizza fundamentally better than pepperoni? When you dig deeper in to the "you can't beat the market" it's ...
quid's user avatar
  • 49k
11 votes
Accepted

Why should I hold stocks for the long term when the risk of more companies going bankrupt increases over time?

Your reasoning might make sense if you buy a specific set of N stocks and then leave them completely untouched. Eventually, one of them will go bankrupt and then you are invested in (N - 1) stocks. ...
nanoman's user avatar
  • 30.1k
10 votes

Why should I hold stocks for the long term when the risk of more companies going bankrupt increases over time?

According to Goldman Sachs, 10-year stock market returns have averaged 9.2% over the past 140 years. From 2010 and 2020, the S&P 500 has returned of 13.6% in the past 10 years. Companies have been ...
Bob Baerker's user avatar
  • 76.7k
9 votes

Does dollar-cost averaging just means taking risk later?

I agree with the other answers but I think the confusion comes from the phrase "lump sum" and can be explained much more simply: In a market that is on average increasing, you want to get your ...
TTT's user avatar
  • 47.2k
9 votes

How risky is it to take a low-interest (small) personal loans to invest?

You are contemplating leverage In finance, leverage is borrowing money for investment, with the expectation (goal) of gaining higher gains than the cost of borrowing so that you end up with a net ...
BrianH's user avatar
  • 11.7k
7 votes
Accepted

Where is the boundary between short and long term investment?

You're right, there's not a strong line between "short-term" and "long-term" other than for taxes, where 1-year distinguishes between short-term and long-term capital gains. What you really want to ...
D Stanley's user avatar
  • 137k
7 votes
Accepted

Should I transition to index funds now, or wait?

The only certain things about investing are taxes and fees. So, calculate how much you lose to taxes when making the transition. Calculate how much you would save on fees every year after making the ...
juhist's user avatar
  • 6,743
6 votes

In terms of safety, what's the next best thing after government bonds?

A savings account can get around a 1% return if you go the right bank. It's not a huge return but it is pretty safe. A money market account could potentially earn a better return and offers advantages ...
Savage47's user avatar
  • 199
6 votes

How should I invest if I have much disposable income and cash on hand?

You are off to a good start. Highly recommended reading https://www.amazon.com/Intelligent-Investor-Definitive-Investing-Essentials/dp/0060555661: The guy was Warren Buffet's teacher has been dead for ...
Hilmar's user avatar
  • 7,915
5 votes

Is investing all your savings into a small number of individual stocks risky?

As others have noted, investing all your money in a small number of stock is risky. If you don't have enough money to invest in a broad range of stocks -- and I'm sure experts would argue over how ...
Jay's user avatar
  • 22.8k
5 votes

Does ROE project future returns?

The "equity" in return on equity (ROE) is based on book value -- an accounting construct that does not represent the economic or market value of the company. You do not have the opportunity to invest ...
nanoman's user avatar
  • 30.1k
5 votes

Does ROE project future returns?

1.3^20 = 190. Apple's current market cap is $1T today. $190T is a bit more than Total US wealth, just passing $100T. Even adjusting for inflation won't work. edit, to respond to OP’s comment. ...
JTP - Apologise to Monica's user avatar
5 votes

Are ETF trackers fundamentally better than individual stocks?

Because a few dozen companies randomly chosen from widespread market show the same gain in the long term as all the indices (Dow, SP500, etc), I don't think that fundamentally you'll win or lose ...
Michel_T.'s user avatar
  • 151
5 votes

How risky is it to take a low-interest (small) personal loans to invest?

Pay off all debts right now and have my net worth reduced to my emergency fund (~5k€) Paying off debt does not reduce your net worth - your net worth is all of your assets less what you owe, so it is ...
D Stanley's user avatar
  • 137k
5 votes

Should I transition to index funds now, or wait?

Assuming you are sure you want to make the move (and I agree, I did the same): The best time is when they are (both) rather low. That way, you 'harvest' losses for taxes. You get less when selling, ...
Aganju's user avatar
  • 37.7k
5 votes

Timing the market with a twist

Whenever there is an economic downturn (as evidenced simply by a majority of economists saying: "hey, we're in a downturn") you invest your money into a diversified portfolio that closely ...
Bob Baerker's user avatar
  • 76.7k
5 votes
Accepted

What is a good starting point for a new investor?

My advice, get proper financial advice, but if not, I've put some good UK specific resources in this post For anyone who is starting off, with the intention of potentially investing a significant ...
illustro's user avatar
  • 831

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