Now that the bear market is over, with the US stock market having reclaimed its pre-coronavirus peak in August, it’s a good time to ask how well investors navigated the market’s breakneck plunge and recovery, the fastest round-trip on record.
Or is it? Money managers like to say that investors are better off hiring a professional, even after accounting for fees, because the manager will stop them from making costly mistakes. Chief among them is investors’ reputation for ill-timed investment moves, loading up on stocks during booms and dumping them during busts.
Investors appear to have learned from that experience, as the positive behaviour gap during the last 10 years suggests. But the last decade was also notable for an unusually long and uninterrupted bull market, and investing is obviously a lot easier when stocks are surging. The recent, albeit brief, bear market was the first opportunity since the financial crisis to gauge how investors would hold up during a market plunge.
In any combination, that two-fund portfolio will cost investors 0.03%-0.08% of their money a year, which is about as close to zero as it gets In any combination, that two-fund portfolio will cost investors 0.03%-0.08% of their money a year, which is about as close to zero as it gets. And the ETFs can be bought commission free on most trading apps. Striking a balance between stocks and bonds needn’t be complicated, either. One simple way to do it is to decide how much risk you want to take on a scale from one to 10, one being low risk. Then, multiply that number by 10 and that’s your allocation to stocks.
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Market data — October 4 2020Market data including bonds and fuel prices
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