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Comment by ThalesX | Hacker News Reader

I have a question and I'm sorry but where I am from, investing in the stock market is not really a big thing so I am really not educated in the matter. Am I dumb for holding on to some cash for when the market inevitably falls down so I can start my investing career with cheap stock?

I plan to just put around 10% of my income every month in it and just let it accumulate, but I have this nagging feeling crash is set for 2020. I have 2021 set as a hard cap if it doesn't fall until then, I plan on buying stocks, but until then I do plan on saving the 10% to be able to buy more when and if it falls.

So, am I dumb with this strategy? Am I better off just starting now and not keeping it in a savings account with a real low yearly yield?

Edit: don't want to pollute the comments so adding it here, thank you for your insights guys! :)

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Your risk with holding onto your cash until a downtown is that the crash won't be more than the rise. The market will need to crash to below current levels for this strategy to come out ahead.

A lot of people have been waiting for a crash for years. People on 2013 were saying that the bull market couldn't last much longer, and here we are in 2019.

At the end of the day, it's a bet on the market. Personal investment is 80% regret-minimization so make your bet but hedge against it somewhat.

Excellent and concise explanation. Thank you.

No, you're not dumb for holding some cash/CDs/other liquid equivalents. But make sure you're getting at least 2% interest at Ally/Marcus/one of the other online banks. That said, I wouldn't go 100% cash, even if you think it's going to crash in the next year - the Fed can probably keep the music going a lot longer than you think it can. I'd set up an asset allocation and stick to it. Here's a rather conservative one, if you're worried: https://portfoliocharts.com/portfolio/golden-butterfly/

Or this one, based on Bridgewater's All Weather portfolio: https://portfoliocharts.com/portfolio/all-seasons-portfolio/

I'd try to understand them before you choose one, though - your asset allocation is one of the most impactful investing decisions you'll ever make. Gold is very divisive, for example, so if you want to go with one of these that includes it, I'd understand why. (It's unproductive, but it's generally anti-correlated with a lot of other assets, which is increasingly rare, and can be very helpful when rebalancing).

The one exception some people have to dollar-cost averaging (investing a fixed amount regularly) is "I have a giant pile of savings and I want to buy into the market". Some people advocate still putting it all in right away and investing for the long term; others advocate gradually moving into investments, such as investing 20% a year for five years.

Either way, though, you should start investing that 10% of your income; the only question is what to do with what you've already saved. You could, for instance, match that 10% every month from your existing savings. That way, you're not dumping a pile of money into stocks all at once.

(Also, in case you don't already have a specific plan for investing: index funds with very low overhead, such as Vanguard's VTSAX.)

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