market? wrote:
The only flaw in that theory is this: What if you just keep investing (with a 10 year+ horizon) and just as you near the end, the market collapses again. And it takes 10 more years to get back. It just seems like a HUGE gamble. But they say to not time the market, right? It all seems so sketchy.
I will agree with Sagarin that only YOU should decide what you're going to do with your money. To your question though, what if you're 11 years out from retirement and in another year you were going to go more conservative anyway? Now, you see some bad stuff coming -- well, go more conservative then, a year early. You still need to watch the market and react to it -- more and more closely as you get closer and closer to retirement.
The BEST way to cope with a possible big drop right at the wrong time, is to invest early and often -- do so much that you're on pace (if using historical averages) to have twice what you might need by age 65. If the market does really well, you can either retire early or retire with twice what you need. If it does poorly, you either retire with only what you need, or you work for a couple more years.
Playing the stock market, even in the very relatively safe way that I do it, is not without risk. If any level of risk is not your thing, then find another way. CDs and MMAs and high interest accounts will give you guaranteed return on your money...usually way lower than you will get over time in the stock market, but if you don't have the stomach for the ups and downs of the stock market, then do that. Or, you could just make HUGE income and sock it all away in bonds or something like that, or you could start a business that you sell for huge bank when you're ready to retire. Find your own path brother.
The other thing you could do is just live VERY frugally (save up some cash), and retire with NO debt at all. You do that, and you could easily live decently well on saved cash and Social Security. I can get early Social Security in 19.5 years at age 62. The benefits calculator here -
http://www.ssa.gov/OACT/quickcalc/index.htmltells me that I will receive about $51,000 a year based on future dollars. (That is my take plus my wife getting half again what I get, which is the rule for married couples when one spouse didn't make a ton during their careers -- she might end up making enough that she gets even more). $51,000 isn't a lot now and will be less in 20 years, but if you are DEBT FREE then that coupled even with CASH you've saved up -- that's enough to live just fine on. Now, I expect my SS will end up a little less than that, maybe even 70% of that, so this is why I continue to put money in the market -- that and I want to retire BEFORE age 62; 59 1/2 at the latest and perhaps 55 at the earliest.