Is it a good time to invest in ETF index funds?

[bondog]

just be ready ( if time permits ) to cancel the order OR move the price lower ( there could be any sort of crazy news overnight ) and a better time ( or deal ) might be possible

good luck

Yes I only put it in for the day, so all good ?

 

[bondog]

i agree timing matters ( to me ) , but bondog is also trying to park his money as sensibly as he can , after all is was initially taken out of the super ,

so bondog ( and others in a similar position ) needs that cash working even if just to resist real inflation , because goodness knows if there will be a pension in twenty years time ( i suspect the Government will expect you to survive on your super returns )

so it is a balancing act , luckily the two ETFs selected have a reasonably predictable ( div. ) distribution cycle , so they can be bought in ( roughly ) the next ten weeks , join up in the DRP ( if desired ) and have the train rolling ... or decide to wait longer ( or do something else completely )

Yes look I that is what I’m trying to do as it seems like a good long term plan.
I’ll also have a sum to play around with also as I learn the ropes.

 

[frugal.rock]

And if you buy $100 of potatoes (or index) each week, some weeks it’s expensive and you get less some weeks it’s cheap and you get more, but the key point is you will accumulate a lot of potatoes over time, eventually enough to feed you in retirement.

Say the price of potatoes does change when bought once a week, one still has to pay a delivery fee, generally speaking.

Ideally and regardless of purchase method, one would partially sell their potatoes in the next Great Irish Potato Famine, which, by all accounts, could start any day now. (Due to start after the Global Bog Roll Crisis Part VII ends.)
One would have to keep their "eyes" open for a good sell price. Pun intended.

 

[So_Cynical]

I wouldn't think that's the case. By choosing not to sell , he remains a participant.

A market participant with no interest in the market isn't much of a participant, i occasionally buy potatoes but dont consider myself a vegetable market participant.

​

 

[Value Collector]

Say the price of potatoes does change when bought once a week, one still has to pay a delivery fee, generally speaking.

Ideally and regardless of purchase method, one would partially sell their potatoes in the next Great Irish Potato Famine, which, by all accounts, could start any day now. (Due to start after the Global Bog Roll Crisis Part VII ends.)
One would have to keep their "eyes" open for a good sell price. Pun intended.

View attachment 135328

It’s possible to beat the market average by trading, but it’s all possible to under perform the market by attempting to trade, those delivery fees and taxes can add up if you try trading in and out.

if you have a long enough holding period, simply dollar cost averaging through the cycle will be much less work, while also beating the return of the average trader.

 

[Value Collector]

And that sounds like Dollar Cost Averaging

Yep, it is.

 

[divs4ever]

those share tipping games can help you learn quicker ( without losing money ) the ASX runs a comp. as well infrequently ( i have never played in that one but know someone who does )

i find the tipping games a great way to discover plans that DON'T work ( better there than blowing cash )

 

[Belli]

And if you buy $100 of potatoes (or index) each week, some weeks it’s expensive and you get less some weeks it’s cheap and you get more, but the key point is you will accumulate a lot of potatoes over time, eventually enough to feed you in retirement.

Hope this works.

Got bored so did some very basic numbers to see what would happen based on the concept VC has posted. Used STW as it covers the period from 2008 which includes the GFC.

I used this site to obtain a price for each month. Used opening but change that aspect as you like.

SPDR S&P/ASX 200 Fund (STW.AX) Stock Historical Prices & Data - Yahoo Finance

Discover historical prices for STW.AX stock on Yahoo Finance. View daily, weekly or monthly format back to when SPDR S&P/ASX 200 Fund stock was issued.

finance.yahoo.com

Then used this site for distributions.

SPDR S&P/ASX 200 Fund (ASX:STW)

SPDR S&P/ASX 200 Fund (ASX:STW) share price, ETF research, charts, announcements, dividends, Exchanged Trade Funds at InvestSMART.com.au

www.investsmart.com.au

Change the number of units purchased each month as you like.

Also have VAS in this spreadsheet but someone else can mess around with the calcs. I'm over it. I assume others will nuance it "However, if you did this or that, etc." but that seems to me to miss the point.

 

[sptrawler]

Hi @Belli I can't open the file, did your calcs confirm VC's theory?

 

[Belli]

Hi @Belli I can't open the file, did your calcs confirm VC's theory?

Ah [expletive deleted]

Yes, in my opinion. Each month buying 100 units of STW on first business day of the month starting 01/01/2008. I'll attempt a summary of annual results.

FY ending:

2008: 600 units (total), $33,264 invested (cost-base), Distribution for FY $1,548 (no franking included or any other stuff)
2009: 1,800, $79,890, $2,624
2010: 3,000, $131,506, $3,660
2011: 4,200, $184,327, $6,913
2012: 5,400, $232,607, $8,598
2013: 6,600, $285,238, $12,002
2014: 7,800, $344,806, $16,638
2015: 9,000, $407,614, $16,974
2016: 10,200, $466,601, $20,170
2017: 11,400, $529,409, $23,927 (Changed to quarterly distributions)
2018: 12,600, $595,581, $27,282
2019: 13,800, $664,082, $39,229
2020: 15,000, $734,993, $28,825
2021: 16,200, $803,689, $29,556
2022 half year: 16,800, $847,659, $25,315

No account was taken of brokerage or tax.

If I was able to find the prices for STW going back to when it was listed in 2001, I would have extended it but I wasn't prepared to that amount of digging. The spreadsheet took me about 40 minutes after dinner last night.

It was my poor attempt at "proof of concept." I consider there would have been similar results if was a set $$ amount rather than a set number of units and would apply what ever broad based ETF, such as A200. Have no interest in find out if it applies to the thematic stuff.

I did it because while there is a lot of chat about it, a worked example (basic though it is) is rarely seen - at least to my knowledge

 

[Belli]

By the by @sptrawler, assuming I've added up proper like, over the period of 14 years the investor would have received a total of $263k in distributions (includes 2022 distributions to date.)

While I've known for many years about the glorious impact of not caring very much (as it applies to me) it wasn't an exercise I've done previously. Invest on a set date either in dollar amount or number of shares then shut down until the time to place additional funds.

It seems to fit with the principle Jack Bogle espoused which somehow has now been distorted in various ways with ETFs providers and investors.

 

[bondog]

By the by @sptrawler, assuming I've added up proper like, over the period of 14 years the investor would have received a total of $263k in distributions (includes 2022 distributions to date.)

While I've known for many years about the glorious impact of not caring very much (as it applies to me) it wasn't an exercise I've done previously. Invest on a set date either in dollar amount or number of shares then shut down until the time to place additional funds.

It seems to fit with the principle Jack Bogle espoused which somehow has now been distorted in various ways with ETFs providers and investors.

So what would have been better, lump sum investing or investing a bit each time through out the period?

 

[qldfrog]

Could not open the attachment on the phone.harder to do but ideally you want to compare lump sum vs monthly with the non invested part earning TD interest..remember it used to be 7 to 8% not so long ago.

 

[Belli]

So what would have been better, lump sum investing or investing a bit each time through out the period?

As has been said previously a lump sum is supposed by many to be statistically better.

Could not open the attachment on the phone.harder to do but ideally you want to compare lump sum vs monthly with the non invested part earning TD interest..remember it used to be 7 to 8% not so long ago.

Yeah, a bit more difficult as ideally these aspects would also need to be considered:

PS: My apologies if you were not able to open the spreadsheet. It is the first time I've ever attempted to upload one and obviously I stuffed it up. Sorry for any inconvenience or frustration.

 

[divs4ever]

So what would have been better, lump sum investing or investing a bit each time through out the period?

investing the lump sum NEAR a market bottom ( and very nice work IF you can do that ) should win UNLESS you , say waited until 2011 to buy in ( missing 3 years of gains , and divs )

and THAT is the quandary we all face ( although the chartists try very hard , to minimize their buying price , via prediction )

so IF you bought today ( actually before mid-February ) you are still trying for the maximum returns possible for you ( i bought into VAS in 2011 and bought 5 parcels as it slid lower , and during 2011 from $59.70 down to $52.70 , in 9 months )

so buying almost anytime in 2011 was better than yesterday , but buying yesterday MIGHT still be much better than next year ( because of the extra divs . ) than buying 5% cheaper in 2023

and that is the balancing act ... now IF your term deposit was paying you 5% a year ( which i doubt it is currently ) that would make it all harder to choose from

with a 3 monthly payer ( especially if you DRP ) that is the dilemma you are faced with time IN the market ( divs collected ) versus $$$ paid to buy in

instead of buying ( say ) monthly , i try to buy each time it goes below the previous low price , i bought at , BUT i hold hundreds of shares , so when VAS is too dear , maybe BHP , FMG or WES is a good price , your current plan with just two holdings only gives you limited options , but that might be perfect for you

 

[Sharkman]

So what would have been better, lump sum investing or investing a bit each time through out the period?

managed to find one of the studies i was referring to in my previous post that actually quantified it.

https://static.twentyoverten.com/5980d16bbfb1c93238ad9c24/rJpQmY8o7/Dollar-Cost-Averaging-Just-Means-Taking-Risk-Later-Vanguard.pdf

they found lump sum outperforms DCA roughly 2/3rds of the time. i was aware of this before embarking on my international index ETF diversifying journey, but chose to go for DCA anyway as given the strong run up in the prior 2 years, i thought there was a good chance 2014/2015 might've ended up in the 1/3rd bucket.

no regrets over that decision. the difference between lump sum and DCA is peanuts compared to the difference between DCA and not investing at all had i kept constantly putting it off due to "waiting for a better price to get in".

 

[divs4ever]

As has been said previously a lump sum is supposed by many to be statistically better.



Yeah, a bit more difficult as ideally these aspects would also need to be considered:

View attachment 135351

PS: My apologies if you were not able to open the spreadsheet. It is the first time I've ever attempted to upload one and obviously I stuffed it up. Sorry for any inconvenience or frustration.

it opened for me , and the spreadsheet downloaded fine , but i use a non-popular browser , so it MIGHT be a browser/software thing

i note a 'potential virus warning ' on the opened spreadsheet , so obviously part of my anti-malware system isn't pulling it's weight

( the joys of modern computing )

now one little tweak i did discover the hard way , was buying fixed numbers of shares , compared to fixed dollar amount ( more shares when cheaper , looks so obvious NOW )

cheers

 

[qldfrog]

As has been said previously a lump sum is supposed by many to be statistically better.



Yeah, a bit more difficult as ideally these aspects would also need to be considered:

View attachment 135351

PS: My apologies if you were not able to open the spreadsheet. It is the first time I've ever attempted to upload one and obviously I stuffed it up. Sorry for any inconvenience or frustration.

the unable to open was just on the mobile phone, all good with laptop, and mobile was not using the excel compatible app properly, you did good, not an issue on your side!!

 

[Belli]

Post #75 is an excellent example of:

I assume others will nuance it "However, if you did this or that, etc." but that seems to me to miss the point.

To implement the concepts in Post #75 would require a mandatory tarot reading followed by a deep study of chicken entrails,then a reading of the latest horoscopes in the local newspaper and knowledge of what will occur at indeterminate future point.

 

[Ann]

Even if the price is further discounted next week, at least you haven’t paid full price.

The way I look at it, even if I pay the going rate on the day as it rides at the top of a rising support line not too far from the 200dsma, I will not be paying full price as it will continue to rise. To wait for a discount may mean one has to chase a price higher if there is no fall or at worst the stock continues to discount until your capital is profoundly discounted along with it.

Yes largely. Holding only LICs and ETFs I don't feel any real connection with individual companies nor an affinity with the share market in general.

"I don't feel any real connection......nor an affinity with the share market in general'' If there is a collapse in the markets you will see there is a very powerful connection with the markets and LICs/ ETFs!