Up until now, I’ve just been saving an emergency fund in a HYSA. I’m getting to the point where I’d like to put excess savings into the market, and am looking at something like the VOO ETF. It seems things are essentially at an ATH right now, and there are a lot of big political things happening at the same time.
Would it be ill advised to buy into VOO right now? I could hold this in my HYSA but at the same time, I’m not needing this money for a while and long term I would think the market will continue to rise.
I know there was news a couple days ago about Berkshire Hathaway selling their S&P 500 ETFs, but this made up ~0.01% of their total portfolio.
For other people’s benefit:
VOO: Vanguard S&P 500 ETF, the ETF version of VFIAX
ATH: “all time high”
As for the question, if the choice of putting money into VOO will be made based primarily on the market conditions, that is market timing, using the definition from the Boglehead wiki here. Part of the Boglehead investment philosophy is to “stay the course”, which means following through with whatever your asset allocation plan is, irrespective of market conditions. The primary benefit of this is to control risk, since although no one can predict the future of stock prices, one’s exposure to the markets (or lack thereof) is directly controllable.
If you don’t currently have an asset allocation plan, then at least think about what you want this money to do: is it retirement, late-life healthcare, early-life healthcare, child education fund, emergency fund, or just spare money? The objective and the time horizon for that objective will indicate whether VOO is a good choice or not.
Any goal short of 5 years is, IMO, generally not a good choice to put into a large-cap index, because the market can – and has – suffer sustained downturns for as long, meaning the goal could be missed and without any time for a positive correction.
Those are all great points. This would basically be a longer term general savings fund. I have other funds for retirement, education, etc.
I do have a goal of buying a house in the next 5 years, but that would basically be putting RSUs into this (or another) account as they vest over the next 5 years. So maybe this wouldn’t be the best choice for that type of strategy