there is always a cost to everything but higher returns does not always mean higher risk ... i used the fidelity insight growth model for more than 30 years . it is a 100% equities model but it strives to beat the s&p 500 but with a smaller beta .. it has done that very well.. after 30 years the difference between 100k invested in the s&p and the growth model is about 400k and it it did it with about 5-10% less volatility ..pmward wrote: ↑Thu Apr 25, 2019 9:53 amYes, but there is a cost to pursing extra returns. If risk doesn't matter, and returns are all that matters, why not just go 100% SPY leap options? If the stock market will always go up, and returns are that much more important than risk, then why not lever up to high hell? Fear and greed are tricky monsters. There really is a such thing as "enough" money and return. There's a point where the cost in risk is not worth the potential extra return. I think most people in the current market environment are unknowingly assuming more risk than they are truly willing to pay.mathjak107 wrote: ↑Thu Apr 25, 2019 9:40 amthe best is do both... a high savings rate is you working for your money , while the investment returns are your money working for you...there is power there in unity .... i ver made a high salary for nyc so i had to count on my investingKriegsspiel wrote: ↑Thu Apr 25, 2019 9:39 am
I had the same philosophy when I was hyper-accumulating (TRIPLE TWINS). I think MMM and Jacob Lund Fisker both wrote about how having a high savings rate is much more important than investment returns.
Also, I'm finding this board, like bogleheads, to be a very good contrarian indicator. You can see the fear setting in on the board at the times to be greedy, and the greed setting in at the times to be fearful. I find the earlier post about capitulating on gold to be a promising sign for those of us that hold a PP or some variation thereof. The more weak hands capitulate, the more likely we get the next bull leg up. Bull markets don't start when people start buying, they start when the last person that is going to sell sells.
also risk and volatility are not the same thing .... the natural cycles of a broad market over the long term has volatility but little risk .. risk comes when you bet on a particular stock and try to beat the markets at their own game instead of just accepting what the market cycles give you with perhaps a bit of alpha ,. ....
volatility can become risky when you mismatch time frames for the money . but going out the typical 25-40 year accumulation periods all you really have is volatility ..there is little risk of loss unless you turn it in to risk by speculating or really trying to beat the markets at their game.
as the time frames became more defined and shorter i moved away from 100% equities and in to the 40-50% range , but i would certainly do it again the same exact way if we had do overs .
not being a very high earner and living in nyc i needed to max out my money working for me as efficiently as i could .
a penny saved may be a penny earned but that penny will always be a penny , actually less with taxes and inflation , unless it sees good compounding . so i always worked at being a better investor to capitalize on that compounding .
don't forget when rates were rising the pp acted like a huge equity allocation with 3 out of 4 assets moving in the same direction with 3 very powerful asset classes so volatility certainly can pick up ..
so i stopped equating risk ,volatility and returns a long time ago ... the 3 can be all over the map . just look at AT&T , the stock once recommended for widows and orphans .. it has moved the equal of 1000 plus points in a day , provided poor performance for years and can be very risky dividend or not .
rather i try to match the money to the time frames i will need it .