International How do you invest property equity in bear market?

Hey guys,

I've got property equity on standby to invest in VGS in market downturns. This is the plan:

10% drop, invest 10% of lump sum
Further 10% drop (from peak), invest 20%
Further 10% drop (from peak), invest 25%
Further 5% drop (from peak), invest 20%
Further 5% drop (from peak), invest 25

What's your plan?

The first 10% drop has already happened, but now I'm questioning whether my plan should be to start investing when the market drops 20% rather than 10%.

Thanks

 

The old timing the market question.

The general consensus is that its near impossible to reliably do, so your better off dollar cost averaging. If its a lump sum I would probably do it over a year or so.

I try and time the market but for the most part I DCA. If Im still holding cash in my brokerage account after three months I buy regardless, if I think the market has presented and enticing opportunity Ill put that money to work sooner.
Nevertheless, I don't wait longer than 3 months (my self imposed line in the sand) or Ill be forever waiting for 'the best time'.

 

Your plan is great in theory. Might not necessarily work and for a few reasons.
Firstly is the fact that you are already questioning the plan and wether you should wait before you hit buy after hitting mark 1.

Secondly what if we don’t get to 20% down let alone 30% or 40%. It’s not that often that markets drop 20%-40%. You could be waiting years to deploy your cash.

I personally have gone back and forth over the last few years messing around with all sorts of different strategies and approaches. It gets mentally draining after a while not to mention that your more likely to end up underperforming, had you just went with a simpler all in as soon as cash in available approach.

My no real idea but personal opinion of what the market is doing or will go next. The current drop is a good buying opportunity. Possible we go a little lower but I don’t see big drops from here. Lots of bad news an sentiment out there at the moment and the market is holding up reasonably well. Once this bad news cycle passes then I don’t see why markets will sink further. Again there could be more left of field surprises that blindsides everyone.

Said it in another post and will say it again here. I reckon this period of volatility is good for anyone accumulating and not looking at cashing out in the near future. Few years from now we will look back at this and realize what a buying opportunity it was. Have seen this scenario play out a few times in the past 6 years with my own investing experience.

 

November 2021

Listed Investment Companies (LICs) 2021 [LIC & LIT]

January 2022

Today

You seem to be starting to question your own plan. Not a good sign I feel.

 

That’s top sleuthing there @SatayKing !

 

Not at all. I recalled the OP had made similar posts in other threads then used the search function.

 

Have you thought about why you're questioning the plan?

Most likely you're seeing market prices decline and are feeling some anxiety. This is perfectly normal.
The accompanying chart may be useful to see the full range of investor emotions.




How we feel subconsciously affects what we do. This is a reason why people are prone to buying at the top of bull markets, and sell at the bottom of bear markets.

I believe the biggest 2 mistakes an investor can make are buying the wrong thing, and selling at the wrong time. Assuming you've chosen something like an index fund (which I believe to be sound), your number one priority should be to not sell during the panic and capitulation stages shown on the chart.

If you choose to use leverage, you are likely to be influenced by panic and capitulation more easily.

I'd keep these things in mind when making a decision.

 

Backtested strategy: 100% today.

Not advice