How much does the initial investing time matter for Index funds?

People like to believe they can accurately pick buy and sell points at the peaks. Very few people ever do either, and the odds of being able to pick both are astronomical. Tech analysts do their tea leaves voodoo trying to ID these inflection points, but it's mostly subjective Rorschach tests.

What he means by reentry is people selling at what they believe to be a top and then buying back in at what they believe to be a low. The type of mentality that causes people to sell is fear, and that's usually at it's worse as the market is dropping. Likewise buying - people tend to add to their positions as the market goes up.

If you have Spock's level of rational, logical thinking and discipline you might be able to follow Buffet's adage:"Get fearful when the market us greedy, and greedy when the market is fearful." The rest of us are human and tend to trade in and out of positions based on intuition, emotion, and voodoo indicators. Black swans happen, but ultimately it's just about staying invested if your horizon is more than 15 years. By retirement you should be diversified and largely invested in stuff that spits off dividends and yield. That's the rebalancing, but picking a top or bottom is tough for humans.

Ultimately if you can't sleep at night or spend more than 5 minutes per day second guessing yourself then you should probably rebalance or take some money off the table.

Hardcore Buy and Hold (which in theory doesnt have to be done with index funds, but who cares) means you pull out when you need the money.
If you need it and the market just crashed - tough luck.

>What does He mean getting the Entry right?
In order to make money, you have to be invested. Money sitting on the sideline isn't growing, and it's actually losing inflation at a steady rate.

So the point is: Even if you guess correctly and pick a smart exit point and miss a bear market, you have to ALSO pick the next entry point correct or you'll miss the next bull market.

The two biggest mistakes people made in the 2008 recession were (a) selling too late, and eating most of the decline, AND (b) not getting back in soon enough, and missing the incredible bull market of 2009-2012.

Well i thought the idea of Index funds is that i can invest in it until retirement.

So now retirement comes around, market just crashed and i lost 75% of my money?

That doesnt sound very safe

1. -75% is doomsday tier, you will most likely have other worries like soldiers fighting in your backyard at that point
2. Risk is shit, thats why it pays. If you cant handle losing 5.000 $ in a casino, dont bring 5.000 $ to a casino.

No, index funds just try to mimic the performance of some arbitrary index. And funny thing is those indices in themselves rebalance to become a benchmark, etc. and everyone compares their returns to these arbitrary benchmarks so it becomes a self fulfulling prophecy that everyone reverts to mean returns. You need to understand what's in an index and why so you know what you're buying.

I think what you're describing is a target date fund, which is semi-actively managed to rebalance to reduce "beta" volatility as the target date is reached. They're not a bad way to invest if you just want to put it all on autopilot, but you pay a small fee for this.

Heres what i know:

An Index Shows the Change in value for a batch of stocks (e.g only Japanese companies)

If i buy an Index fund, i buy diversified stocks from that batch to mimick its Performance.

I make Profit when the Index rises, which in this example means the Japanese industry does Well.

What im not sure about is this:

If i buy index Fonds that mimick the worlds biggest companies, why does it rise?

For something to rise in value something else needs to lose value, so does my big-company-index rise when the rich companies get sicher and the small poorer?

Why can't you write funds?

>So now retirement comes around, market just crashed and i lost 75% of my money?
As you approached retirement you would have shifted your portfolio into less risky allocations, so you wouldn't have a major decline.

This is why your bond percentage tends to increase as you get older.

>If i buy index Fonds that mimick the worlds biggest companies, why does it rise?
Primarily because stocks have an inherent long-term positive bias. Nationalistic factors, such a GDP growth and population growth, positively influence local markets. Certain cultural changes also positively influence markets, such as women entering the work force, trends towards longer working hours, and less vacations. Developments in legal and regulatory structures eliminate market inefficiencies, such as corruption, price manipulation, and insider trading. And lastly, technological advancement generally contributes to both demand and efficiency gains, providing a strong positive bias in affected markets.

The fund actually owns those stocks, just as you would if you bought them yourself.

So if you bought a share of DIA, an ETF which tracks the Dow Industrial Index, so are basically buying a share of each of those 30 stocks in the "Dow". (Actually it's a fraction of each share, but I digress)

ETFs are efficient because you buy and sell them like stocks, meaning you only generate capital gains /losses when you sell. Mutual funds can and do generate capital gains at least annually because they are constantly rebalancing and trading shares in and out actively. This can be less tax efficient.

Both ETFs and mutual funds regularly spin off dividends and those are taxed if they are not in a retirement plan.

For most investors today the ETFs bought through an online broker are the most efficient. They can be index funds or some other strategy (eg XLE focuses on the energy /petroleum industry). There are well over 10k ETFs now, so you have a bewildering array of choices. You need to look at the fund's prospectus to see it's goals and whether it attempts to mimic an index. SPY (from Blackrock?) is a very common one that tracks the S&P500.

On a german phone and Auto correct screws me

Oh ok thanks