Personal Investments • If the stock market corrects itself right now,

If you truly can't afford to lose 15-20% (or up to 50% of your stock holdings), then you probably need to have a more conservative asset allocation. But if you're ten years away from retiring and thus presumably don't need to access your savings for another decade, then you probably can afford to weather a likely temporary decline in the value of your investments.

How do you know that the stock market is in a bubble right now and overdue for a correction? What is your current asset allocation and how did you decide on that allocation? Has anything in your personal circumstances changed or are you just reacting to what you're seeing and reading about the markets?

As for what I would do in your shoes: I pay no attention whatever to the the financial news and pundits. I maintain the AA that makes sense for my personal financial/behavioral circumstances; if the markets crash or skyrocket, I rebalance accordingly. I'd sum everything up with the following quote from The Boglehead's Guide to Investing:
“Effective investing can be incredibly simple: Create a simple, diversified asset allocation plan. Invest a part of each paycheck in low-cost, no-load index funds according to your plan. Check your investments periodically, rebalance when necessary, then stay the course.”

Statistics: Posted by Rocinante Rider — Sun Nov 17, 2024 6:41 am — Replies 3 — Views 179

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