Author Topic: Investment Culture  (Read 492 times)

Offline segnosaur

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Re: Investments
« Reply #60 on: May 08, 2017, 03:58:27 pm »
You sound like a guy who does not know what you are invested in.

Mutual funds could be anything from 100% stocks to 100% bonds.
Yes they could be.

But as I said, most of my mutual funds are indexed funds. I.e. it is held as a mutual fund, but it basically tracks the performance of the TSX or the NYSE. (So, its based on a broad collection of stocks; no bonds involved. It has very low management fees, and index funds often do better than actively managed portfolios when management fees are considered.)

I also have a few other funds... some balanced funds (mix of stocks and bonds) and a few lower risk funds to provide some diversity. When I get closer to retirement I will move more of my stock-based index funds to my bond funds.
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Consider checking out some charts of what happened in 2008/2009:  Emerging Markets down 55%, US markets down 50%, Canada down 53%, even Vanguard Total Index (essentially the world) was down 42% (from 2008 - it was not around at peak values of 2007ish).
I'm a long term investor. I don't intend to retire for at least a decade. Yes, 2008 was a catastrophe for the stock markets. There has also been times when stocks have experienced strong growth. On average the stock market has performed well. (I think my average growth over the past 10 years has been something like 8-9%, even with the market crash of 2008/2009.)
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But that is for stocks.
Bonds/Preferred shares held their value much better. Some did not even lose money.
That may be true for 2008/2009. But when you are talking about long-term market trends you can't get too fixated on one short time period. 

If Bonds do better in one year, but stocks do better in the next 4 years, at the end you're going to be better off being in the sock market than bonds.

The trick is:
- Diversify (i.e. get a broad base of stocks rather than trying to 'pick' winners and losers). That's the benefit of mutual funds.
- Prepare for the long term (i.e. expect that markets will have occasion wild swings. Don't try to time the market or panic if the market drops suddenly.)
- Invest regularly, rather than making one big lump sum investment and sitting on it