The Wednesday Wellness threads are meant to encourage users to ask for and provide advice and motivation to improve their lives. It isn't intended as a 'containment thread' and any content which could go here could instead be posted in its own thread. You could post:
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Since our stipend got raised to $52k this year, I actually have significant money to invest every month. Any tips other than just dumping into index funds? I've been doing about a third into index funds, a third into specific stocks and keeping a third liquid in money market. In my IRA it's about 70% index funds and 30% individual stocks.
Getting good returns comes from timing the market as well as picking the right stocks/assets. You need to have the patience to wait for some panic like we got on August 5th 2024 and April 7th 2025. Then you must have the balls to pull the trigger and go in hard, when it feels frightening and wrong to do so.
If you want guaranteed mediocrity in return for no thinking, just do dollar cost averaging into the index.
People will parrot "time in the market beats timing the market" and "nearly everyone who picks individual stocks underperform the market", and that may be true, but that's because most people included in the stats don't have a clue what they're doing, and/or can't override their instincts for the unnatural behavior of investing.
Interesting analysis of dollar cost averaging vs buy the dip at https://ofdollarsanddata.com/even-god-couldnt-beat-dollar-cost-averaging/amp/
That appears to be a hypothetical strat of buying the market as a whole/index when it dips. I don't think index fund investing should be combined with market timing. That's a waste.
Why? No matter how successful a company has been in the past, any dip can be a long-term re-evaluation or even the start of the way to bankruptcy. Especially if you consider the average person asking for investing advice, thinking they can reliably tell apart an irrational panic that will soon be corrected, or a genuine problem that will have long-term impact seems foolish to me.
On the other hand, index funds can't really go bankcrupt. At most, it just stays lower than expected for an extended period of time before going up again. The risk/reward for buying into the dip seems much better here for the average low-knowledge investor.
A decent plan is to buy solid, growing companies during macro noise/sell-off events, such as the dates I mentioned.
It's very unlikely that the market uncovered terrible upcoming fundamental news about the specific company at the exact same date as the market wide fear and liquidity need.
The whole point of an index fund is that it's basically always better than guessing which companies are "solid and growing" and this advantage is only more obvious, not less, as time goes on (in part because index funds inherently re-weight on a mechanical basis as companies enter and exist whatever toplist they track, though minor differences especially within index ETFs exist in implementation). Turns out that judgement is way more subjective than often appreciated, according to the data.
There exist some speculative, theoretical reasons why index funds especially in their modern iterations might backfire in the future, but these remain wholly speculative, would mostly affect all investors roughly in aggregate together, and are not worth the time of day for most investors.
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