I.e. the entry point matters a lot.
If you win a lump sum, studies show that the best time to put it in the market is all of it right now, not trying to time the market or DCAing it into the market. Of course, you could get unlucky, so that you're initially in the 2000->2013 style window, but you can't know that at the time.
Of course, most of us do / should invest smaller amounts over time, just because that is what our earning profile is like.
2000+ was only an issue for US-only, equity-only investors: if you were globally diversified you were fine. Even if you were US-only, but had at least 20% bonds, you were also fine:
* https://www.forbes.com/sites/investor/2010/12/17/the-lost-de...
* https://ofdollarsanddata.com/the-cost-of-waiting/
Author has a repo where he often shares the data/code used in generating analysis:
https://m.youtube.com/watch?v=X1qzuPRvsM0
TLDW: just invest it all, right now, in value small caps.
Which is the whole point of DCA. It makes it less likely to get unlucky. (It also makes it less likely to get lucky. DCA makes it more likely that you will simply regress to the mean.)
If I plug this into a random calculator on the web without knowing what I'm doing, $10K to $170K over 20 years looks like... around 15.25%? That does seem quite high, can that be right?
https://www.investopedia.com/ask/answers/042415/what-average...
"The average annualized return since adopting 500 stocks into the index in 1957 through Dec. 31, 2022, is 10.15%."
"Over the past 20 years (2002 to 2022), the average annualized return on the S&P 500 is 8.19%."
So a conclusion might be: if you've been getting less than 8% (after fees) over ~10 years in any managed fund... you might want to reconsider your investments, seems like. But if you've been getting 8-10% or more, you're pretty good. Does that make sense?
But then, if you know this... have you switched any actively managed to funds to an S&P index fund? Why would this not be the obvious thing to do?
https://www.thebalancemoney.com/what-is-the-average-mutual-f...
It does note that that includes "the average for all mutual funds, including index funds." But if the answer is "oh yeah, the index funds bring up the average a lot"... why would anyone use anything but an index fund?
Is it going to be a lot lower than that over 20, even though that already includes 2008?
I admit this is all pretty confusing to me.
What returns would you consider acceptable over 10-20 years? Or do you not even look at past returns when deciding whether to keep your money in a given fund, or invest in a given fund?
“They will envy you for your success, your wealth, for your intelligence, for your looks, for your status - but rarely for your wisdom.” ― Nassim Nicholas Taleb, The Bed of Procrustes: Philosophical and Practical Aphorisms
If not on past returns, how do you decide where to invest your money? Have you ever decided to remove your money from a fund, on what basis would you make that decision?
There is _no_ returns that would cause you to re-evaluate your current investments? If you were invested in a fund that had given you say an average of 0.5% a year over the past 10 years, that would not cause you to re-evaluate your investment?
What about dividing funds for investment in three parts?
1-> Give to an active investor you respect
2-> One third to an Index Fund
3-> Last manage it yourself.
Compare performance after 5 years :-)
"...If you had invested $10,000 in the S&P 500 index in 1992 and held on with dividends reinvested, you'd now have more than $170,000. The market volatility in 2022 could cause this return to decline somewhat. However, the index has proven to be a winner over the long term..."