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Investing / S&P 500 is over valued?
Oct 25, 2021
S&P 500 is over valued?
I have some money I'd like to invest. I'm really trying to learn and figure investing out. Watching the S&P 500 climb and at a PE of nearly 40 makes me nervous. Choose large cap stocks or funds doesn't seem like a good idea either because more than 90% of large cap funds didn't beat the S&P in the last 15 years!! I have around 30 more years until I retire. Wwyd? I have a stable job, great at adding to my retirement savings account (it's on auto pilot as an auto deduct from my paycheck) and wouldn't need this money for the next 5 years at least. Wwyd? Words of wisdom appreciated 🙌 !!
Replies (4)
Oct 25, 2021
@Ann412, well there's never a best moment to invest in the market. Timing doesn't work and I think a broad market, low cost index based fund is a great idea, PE ratios aside. Try dollar cost averaging if you don't want to put a lump amount into the market. If it were me, I'd invest regardless. Also with inflation and everything else going on, a stock fund like SPY or VOO may be a great inflation hedge too. There was a thread here on that earlier.
Oct 25, 2021
@Ann412, It's human nature to want to jump into investing at the "right" moment and there is never such a moment in reality. Think about where the market was at 5 years ago and you would probably say the same thing back then. Your stat here is a compelling reason to go with the SP500. Ratios are all over the place right now and they are hard to ignore because you want to make good decisions based on some data, but they are all getting skewed like the CAPE ratio too - and that's all out of whack. GL!
Oct 26, 2021
@Ann412, There's never a good time to plop some money into the market. It's about investing regularly and staying in it. You can plop all of it or add some set amt each month. But you've gotta do what feels right to you. Don't analyze to the point you're paralyzed though - that will do no good. What would I do? I'd invest all of it at once because you don't need it now or in the short run. But if you're on the risk averse spectrum, do DCA.
Oct 27, 2021
@Ann412, read somewhere today that 3rd quarter earnings and profit margins of S&P500 companies are looking stellar. As long as company fundamentals look strong even in times like this that should give you some confidence to invest!