First of all, we are not talking about your regular scheduled contributions to your 401(k), 402(b), 457(b) or IRAs. For those contributions either by every paycheck period or on your own schedule, you allocate the money to buy funds. You should continue to contribute to your retirement accounts without fail. You should never time the market with your retirement savings!
This is not what we are talking about here! We are talking about the extra cash from selling a property, receiving a cash gift from your parents, and for whatever the reasons, etc. When and how do you put the cash into the market?
You need to wait for an entry point to get into the market. The entry point would be either a recession or a correction. A recession is by definition two consecutive quarters of negative GDP and a correction is the broad equity market down 10% from its recent high. When we say the broad equity market, we usually refer to S&P 500 Index. Based on historical data, US stock market average a correction every 12 months. The most recent one was in October 2023.
While you are waiting for an entry point, I would suggest you to leave your cash in short term CD for now, or you can buy short term US treasury, build a treasury ladder by using 4, 8, 13 and 17-week treasury bills, check the following link.
When the entry point level has reached, you should put the money into the market with a dollar cost average method which will help spread your risk around.
On July 16th, 2024, S&P 500 Index has reached the historical high of 5,669, 10% correction will be around 5,102 level. If we reach that correction level, I would sugguest to use dollar cost average method to get into the stock market.
On July 11th, 2024, Nasdaq Index has reached the historical high of 18,671, the corrections will be 10% 16,804 and 15% 15,871 respectively.
I have listed the following several major entry points in the past 14 years for your reference. As a matter of fact, there were a couple of 10% down entry points in between as well.
回复 'jlx_2010' 的评论 : S&P 500 Growth Index 和 S&P 500 Value Index 的区别是，有的年份，Growth好过Value，有的年份，Value好过Growth。长期投资应该买Index，可以买S&P500 Index Fund (500 stocks) 或者 Total Stock Market Index Fund (3000 stocks).
jlx_2010 发表评论于
S&P 500 Growth Index 和S&P 500 Value Index 有啥区别？长期投资应该买哪种？
We are talking about the broad stock market and the index I am using here is S&P 500. On April 23rd, it closed at 2,670 and last Friday June 1st, it closed at 2,734. It went up about 2%. Not a lot!
