Get our FREE Guide: 21 Days to a Better Financial Life! Get My FREE Guide! Are you trying to get your financial house in order? Then you’re probably looking for the best apps to help you with your journey. Today, I’m comparing two of the most popular options: YNAB vs Personal Capital. You’ll learn which of these two services is right for you and how they can help you meet your financial goals. Let’s start with […]
There’s no denying that society still has numerous challenges to overcome, and some of those come down to a person’s skin color. It’s no secret… The post How to Build Wealth in a Society Filled With Inequality appeared first on Savings and Sangria.
Like birds chirping at the rising sun, investors tweet “buy the dip!” at the first hint of the stock market dropping. While it makes sense at first blush, this is a losing investing strategy. Let’s discuss why. The Basic “Buy The Dip” Argument Buying stocks is a risk. The price might go down after you buy it. But holding onto cash is a risk, too. That cash could be invested—and potentially growing with the market! This is the opportunity cost of not investing. Each decision has a risk and a reward. The risk is that the market moves in the wrong direction. The reward is that the market moves in your favor. So how do we answer whether ‘buying the dip’ works? Sadly, we can’t predict what the market will do in the future. But we can look at previous market data. This is what professionals typically do. We’ll do that today. Two Kinds of “Buy The Dip” Before I insult too many people, let’s baseline ourselves. There are two common definitions of ‘buy the dip.’ As my good friend Andy wrote: I call it “timing the market” when people tell me they are mostly a cash position waiting for a big crash. A singular event that they will almost certainly miss (but you can't tell them that).”Buying the dip” is what I call my DCA strategy of buying repeatedly and often.— Your Friend Andy 📺💸 (@OhHaiAndy) May 11, 2021 Scenario 1: You’re holding lots of cash for many years, waiting for a big crash. And then you buy after the crash. This is certainly a form of “timing the market.” But is it the same as “buying the dip?” Scenario 2: You’re holding a small amount of cash, expecting to deploy it in the market in the next few weeks. You wait for a single “red day” of stock market decreases before buying. Even if the market only drops ~1%, you “buy that dip.” Rinse and repeat on a weekly or monthly basis. I consider both these scenarios to be a form of bad market timing. I say both are “buying the dip.” But Andy and many others disagree. One argument they make is this: since they are dollar-cost averaging (DCA) anyway, why not wait for a red day to execute their purchase? Buy low—it makes sense. And in Andy’s defense, I do see a significant difference between the two scenarios. It’s not just my opinion. The difference between the two scenarios is backed up by analytical data. Holding onto cash for years is a huge losing scenario. It could cost you millions of dollars (seriously) over the course of a 30-year investing timeline. It underperforms basic dollar-cost averaging by as much as 800% in historical backtests. Holding onto cash for a few weeks is a slightly losing scenario. Over most historical 30-year investing periods, attempting to buy every dip would drag your overall portfolio down
This week FI Guy puts on his futurist hat and time travels to the year 2040 to talk about global trends and how things like crypto currencies, robots and debt might impact the economy and our portfolio.
Dividend Increase Announcement On May 10th, Viatris announced their 1st dividend. This will increase their dividend per quarter from $0.00 to $0.11. It is payable on June 26th for shareholders of record on May 24th. The new quarterly dividend represents an annualized dividend amount of $0.44 per share as compared to the current annualized dividend […] The post Viatris Announces Their 1st Dividend in 2021 first appeared on MoreDividends.com.