Scared of investing in the stock market now

[frbinnl]

Mustachians,

I have discovered FI/FIRE quite recently. I am not investment savvy and I have spent the last 6 months discovering investing and have come to the conclusion that I would like to start investing in Index funds/ETFs but I am very scared of investing in the stock market NOW as the market is on an all time high and worried about a recession or stock market collapse.
Am I thinking too much? should I just go an put all my money in VTSAX for example?
Currently all my savings (~100K) are in a savings accounts earning 1%/an. If you advice is to invest in stock market now, do I invest all the 100K in 1 go or should I apply a different strategy?
Additional info:
I am 40, married with 3 kids
I still save about ~1K per month.

Thank you

[slow hand slow plan]

The market always goes up in the long term.  Go to the investment section of this forum and read the 800 other posts like yours. None of them have aged well or worked out . The "Top is in" is a funny post to read too. Stocks are the best bet still even if you think they are overvalued.... I think they will go down up down up down up and be up in 10 years again like they have since the stock market started. your best bet is to start investing now. https://jlcollinsnh.com/stock-series/ is a great place to start learning.

[RWD]

Copy/paste plus some additions since the last time:

1/2013  [SP500 = 1462]
https://forum.mrmoneymustache.com/investor-alley/is-now-a-bad-time-to-invest-in-stock-index-funds/
5/2013  [1583]
https://forum.mrmoneymustache.com/investor-alley/starting-today!/
https://forum.mrmoneymustache.com/investor-alley/$80k-sitting-in-cash-bc-scared-of-high-flying-stock-mkt-punch-me/
10/2013  [1695]
https://forum.mrmoneymustache.com/investor-alley/stock-market-expensive-now-alternatives/
5/2014  [1884]
https://forum.mrmoneymustache.com/investor-alley/stock-market-is-high-am-i-too-late/
https://forum.mrmoneymustache.com/investor-alley/is-the-stock-market-too-expensive-to-get-back-in/
7/2014  [1973]
https://forum.mrmoneymustache.com/investor-alley/current-market-has-me-scared-to-invest/
9/2014  [2002]
https://forum.mrmoneymustache.com/investor-alley/is-it-a-good-time-to-invest-new-money/
10/2014  [1946]
https://forum.mrmoneymustache.com/ask-a-mustachian/stock-market-would-you-buy-now-or-wait/
1/2015  [2058]
https://forum.mrmoneymustache.com/investor-alley/stock-market-should-i-be-concerned/
3/2015  [2117]
https://forum.mrmoneymustache.com/investor-alley/talk-me-out-of-timing-the-australian-market/
12/2015  [2103]
https://forum.mrmoneymustache.com/ask-a-mustachian/where-to-put-a-large-windfall-with-stock-market-near-all-time-highs/
1/2016  [2013]
https://forum.mrmoneymustache.com/investor-alley/about-to-sell-everything-talk-me-off-the-ledge-(or-push-me-off)-please!/
2/2017  [2280]
https://forum.mrmoneymustache.com/investor-alley/does-anyone-think-we-are-in-a-bubble/
4/2017  [2359]
https://forum.mrmoneymustache.com/investor-alley/top-is-in/
6/2017  [2430]
https://forum.mrmoneymustache.com/continue-the-blog-conversation/recession-coming/
8/2017  [2476]
https://forum.mrmoneymustache.com/investor-alley/getting-scared-of-stock-market/
1/2018  [2696]
https://forum.mrmoneymustache.com/investor-alley/nervous-about-the-market/
3/2018  [2678]
https://forum.mrmoneymustache.com/investor-alley/when-would-you-get-back-in/
5/2018  [2655]
https://forum.mrmoneymustache.com/investor-alley/investing-in-a-bull-market/
6/2018  [2735]
https://forum.mrmoneymustache.com/investor-alley/moving-to-cash-market-timing-can%27t-believe-it/
10/2018  [2925]
https://forum.mrmoneymustache.com/welcome-to-the-forum/sell-index-funds-now-for-down-payment-during-recession/
2/2019  [2707]
https://forum.mrmoneymustache.com/investor-alley/welp-i'm-going-to-take-a-stab-at-timing-the-market/
4/2019  [2867]
https://forum.mrmoneymustache.com/investor-alley/buy-vtsax-now-while-its-this-high-or-wait-till-a-drop/
https://forum.mrmoneymustache.com/investor-alley/how-concerned-are-you-about-the-everything-bubble/
5/2019  [2924]
https://forum.mrmoneymustache.com/ask-a-mustachian/scared-of-investing-in-the-stock-market-now/

Miscellaneous
https://forum.mrmoneymustache.com/investor-alley/%27but-right-now-the-market-is-at-an-all-time-high-%27/
https://forum.mrmoneymustache.com/investor-alley/the-great-market-crash-of-2016!/
https://forum.mrmoneymustache.com/investor-alley/how-to-deal-with-losing-$117k-in-stock-market/
https://forum.mrmoneymustache.com/investor-alley/anyone-else-feeling-depressed-about-global-equities-10-year-outlook/
https://forum.mrmoneymustache.com/investor-alley/stocks-will-only-return-4-annually-for-next-decade-john-bogle/

[six-car-habit]

 If you don't have the risk tolerance to put All the money into stocks [ I don't have that that level of risk tolerance either ] you can at least split it up into say- 25K into stocks, 25K into bonds, and the last $50K into a Certificate of deposit / Share certificate - at your local credit union.

  Several places near me are paying 3% on a "share certificate" for 1 years duration.
  If shit hits the fan, you can still pull the money out of the certificate before 1 year has passed, you just lose the interest gained up until the withdrawal.
  Seems like a good gamble, 3% versus 1%, both equally safe, both covered by FDIC.

[RWD]

Thanks for posting those, RWD.  These lessons are much more powerful through concrete examples:

One of the first threads you linked, from May 3, 2013, some person is saying that the market is low, not high...

Just looked up price of VTI on May 3, 2013.  It closed at $83.04. 

It's currently at $145.45.

That gives me a good idea, I should update the post with the S&P 500 numbers for each month.

[NorCal]

Here's how I think about it. 

Also, a fair warning, my asset allocation is more conservative than is commonly recommended here.  But I've come up with an allocation that suits my risk tolerance.  Maybe a similar framework would work for you.

Here's what I do. 

1. I think carefully about how much I'm actually willing to lose in a draw down.  How would I feel if I lost $10,000?  $20,000?  Convert the amount you're willing to lose into a percent of your portfolio.
2. Double the percentage.  This is how much you should allocate to stocks.  So if you're okay losing $20K of a $100K portfolio, your stock allocation should be ~40%.
3. Reduce your stock allocation by 5-10 percentage points if you've never invested through a downturn before.  This will help prevent you from making emotional decisions in a major market drawdown.

My personal risk tolerance works out to 65% stocks (roughly split 2/3 domestic, 1/3 international), 25% bonds, 10% alternatives.

[Buffaloski Boris]

You shouldn’t invest in something you don’t understand or makes you uncomfortable. The blanket advice of “put everything in the stock market NOW” misses the mark a bit in my view. You could do a lot worse than that strategy over the long term. Suggestion: read, read, read. Learn. I’m reading JLCollins right now and who knows? I might be singing the praises of an all stock portfolio as well in 3 months. You have some time and I assume no one is holding a gun to your head. So take some reasonable time and educate yourself.

In the meantime, I agree with other mustachians that you should be getting much more than 1% on cash. Heck, a Vanguard sweep account has been paying more. Fix that and learn is my suggestion. Act once you have enough info to make a decision. And do listen to the minority viewpoint.  Sometimes they end up being right.

[JLee]

Think of it this way -- if the market was not routinely at an all time high, what would be the point of investing at all?  It consistently goes up with time -- it will be at an all time high rather frequently, otherwise would be pointless to invest at all.

[ysette9]

Think of it this way -- if the market was not routinely at an all time high, what would be the point of investing at all?  It consistently goes up with time -- it will be at an all time high rather frequently, otherwise would be pointless to invest at all.

Ding ding!

It is like looking at my kid’s growth chart and seeing an upward trend (with variation) and concluding that her weight must have peaked because it can’t go up forever, therefore I should expect her to start losing soon.

The stock market is inherently something that grows. Not consistently or evenly. There are bumps and snags and periods of doldrums that may last a decade, but the overarching trend is growth.

[TheHardenedInvestor]

What RWD said.

Here’s the reality, if the stock market crashed or we entered a recession and it’s down 40%+ or whatever, you’d be asking the same question.

[maizefolk]

Here’s the reality, if the stock market crashed or we entered a recession and it’s down 40%+ or whatever, you’d be asking the same question.

It took me years to realize this. There is no time when stocks "feel" like a good investment. If they've been going up, you're worried the market has peaked. If they're going down, you're worried they'll just keep falling.

I have regular monthly investments, but the last time I moved a bigger chunk of money from a bank account to the stock market was in mid-September of 2018. If you look at a chart of the S&P 500 you can see what happened next. Sure it didn't feel good at the time, but I just stopped checking the markets much for a while. 10 or 15 years from now I'll be really glad I moved the money rather than letting it loose ground to inflation for years and years more.

[MrThatsDifferent]

Mustachians,

I have discovered FI/FIRE quite recently. I am not investment savvy and I have spent the last 6 months discovering investing and have come to the conclusion that I would like to start investing in Index funds/ETFs but I am very scared of investing in the stock market NOW as the market is on an all time high and worried about a recession or stock market collapse.
Am I thinking too much? should I just go an put all my money in VTSAX for example?
Currently all my savings (~100K) are in a savings accounts earning 1%/an. If you advice is to invest in stock market now, do I invest all the 100K in 1 go or should I apply a different strategy?
Additional info:
I am 40, married with 3 kids
I still save about ~1K per month.

Thank you

I was where you are and felt the same way. I got over it by accepting the mantra that you can’t time the market, so anytime is better than no time. You ain’t making shit in your savings. Since I entered the market 2.5 years ago, I’ve watched non-stop gains. Sure, it’s gone backwards a couple times but hasn’t last that long. I kept DCA (dollar cost averaging) cause I have a goal. The smartest thing you can do is to get your money to make money. Start today, not tomorrow.