Monte carlo simulations don't model reality very well here. Years are not independent of each other.
For buy and hold to fail for something like the S&P500, companies would need to fail to make money or pay dividends for 50 years. If that's going on retirement is the least of your concerns.
Did you even read the link? The year you enter the market is the random variate.
It is a simple, uncontroversial fact that the stock market is not guaranteed to return your money over a randomly chosen N-year period. LTBH merely minimizes the chance that you'll lose money; it doesn't eliminate the chance.
It's a fact, folks. Downvoting doesn't change it, and you don't get to have opinions about it.
If you believe the stock market guarantees you safe returns, you are wrong. No matter what strategy you use, no matter what outlook you choose, you can lose money in the stock market. Don't invest what you can't afford to lose.
You say "don't invest what you can't afford to lose". If you want to eventually retire, what's the alternative?
Editing as clarification for downvoters: This was a sincere question. Since no one can afford to lose their retirement savings, but few people will generate enough income to retire without making long-term investments in the stock market, I was curious what strategy timr was actually advocating. My own approach is to invest in index funds that automatically adjust their investments to be more conservative as my retirement date nears.
If you can't afford to lose it, you should put it in a savings account, a CD or another guaranteed asset until you've accumulated sufficient wealth that you can afford to take risks.
This is investing 101. Any financial planner will tell you the same thing. Most will tell you that you shouldn't have money in the stock market if you're going to need it within the next five years. Ten years is a better number.
If your 20 you have up to 100 years worth of investing horizons to consider. Money put to retirement really is something you can lose while young. Investing in low enough to be zero yield instruments like CD's or savings accounts is terrible advice. As is treating investment savings as actual savings you can spend.
Sure, keeping ~3 years income outside of the market if your actually retired is a good idea idea. But, just because the market tanked does not mean you lost money. You have the same share of the same companies if the market goes up or down.
"If your 20 you have up to 100 years worth of investing horizons to consider. Money put to retirement really is something you can lose while young. Investing in low enough to be zero yield instruments like CD's or savings accounts is terrible advice. As is treating investment savings as actual savings you can spend."
If you need the money in five years, you should not be putting it in the stock market. If the money is truly "put to retirement" then you don't need it in five years, and you're just agreeing with me, pedantically.
The problem is that most of these HODL folks have never lived through a downturn, and will be crapping their pants when they realize that they really were secretly counting on the money being there. I've seen it happen twice now. The forums are filled with people "buying the dips" on 1% drops, but suddenly seeing a 30% short-term correction in their portfolio causes mass hysteria. The smart players have cash
on hand, and are ready to buy -- precisely because they didn't "buy the dips".
Cost dollar averaging already does a fairly good job of timing the market via retirement savings. Trying to beat that is a terrible idea, as being out of the market for a few days can easily cost you a year of growth.
He is also running an insurance company that needs cash on hand. On top of that they don't issue dividends only occasional stock buybacks which means they are going to accumulate cash by default.
> Downvoting doesn't change it, and you don't get to have opinions about it.
You wrote:
> Did you even read the link? [..]
Which is against HN netiquette:
"Please don't insinuate that someone hasn't read an article. "Did you even read the article? It mentions that" can be shortened to "The article mentions that."" [1]
I've been watching every comment on this thread wildly fluctuate for the entire day, and most have no style violations of any sort. People simply don't want to believe facts, and they're expressing their displeasure with the down arrow.
For buy and hold to fail for something like the S&P500, companies would need to fail to make money or pay dividends for 50 years. If that's going on retirement is the least of your concerns.