How to invest when stocks hit all-time highs
🔸 Plus: The most expensive Easter chocolate you can buy 🔸 What happens if they ban TikTok 🔸 99,000 people are on the waiting list for Soho House 🔸
Hello! Here’s today’s 2-minute guide to demystifying money and making you richer
Stocks hit an all-time high — here’s why you should not sell.
The most expensive Easter chocolate is the Lindt Gold Bunny Mini Milk.
What happens if they ban TikTok.
Notting Hill residents made more in capital gains than Liverpool, Manchester, and Newcastle combined.
A banker describes how the brutal expectations of the job cost him his marriage.
Jeremy Hunt said £100,000 was not a huge salary. Hmm.
99,000 people are on the waiting list for memberships to Soho House.
The markets, year-to-date
S&P 500: 5,234.18 ⬆️ 10.36%
FTSE 100: 7,930.92 ⬆️ 2.71%
Bitcoin: $66,958.80 ⬆️ 51.59%
GBP to USD: $1.2601 ⬇️ 1.00%
GBP to EUR: €1.1599 ⬆️ 0.58%
Based on the most recent data or previous market close.
The market hit record highs — should you sell?
The stock markets hit new all-time highs recently:
The S&P 500 has been trading above 5,000 for roughly a month.
The Nasdaq 100 is over 18,000.
The FTSE 100 is over 7900.
If you are new to investing you might be thinking, is this a bad time to buy, at the top of the market?
If you’ve already got money invested, you’re probably feeling pretty happy! But maybe you’re tempted … should I sell and take the gains?
After all, buy low and sell high, right?
Actually, no.
If you’re trying to build wealth to become financially secure or independent, then you need to be in this for the long haul.
Yes, the markets may pull back a little as investors cash in some gains. But all-time highs tend to be followed by more all-time highs. In fact, the markets hit all-time highs on 6.7% of all trading days, according to Ben Carlson, a wealth management guru. All the little dots on this chart represent yet another new record for stocks:
If you had sold on any of those days you’d have missed the gains that followed.
Nonetheless, it is likely that the markets may take a breather as some investors cash out. If you’re saving and investing regularly, that may mean you will be putting money into a market that goes through a decline.
That won’t feel very good.
But you should keep buying anyway.
There are four reasons why:
It’s bargain season. If you are putting a percentage of your pay into an S&P 500 ETF each month (as part of your employer pension plan, or into an ISA, for instance), that sum will buy more stocks per pound as the price gets cheaper. When the market rebounds, as it inevitably will, you’ll be owning more shares than your money would have bought had the dip never occurred. That will magnify your gains. This process is called “pound cost averaging”. PCA describes the fact that when you buy stocks regularly, come what may, you get more of them on average than if you try to time the dips and highs. And you get them at an average price that is lower than the market rate when stocks go up. It’s the cheap way to invest, basically.
Paying tax = losing cash. If you are saving into a pension plan the money you put into it won’t be taxed. If you’re using a SIPP you’ll get a 20% tax break. The basic rate of UK income tax is 20%. If you take all your salary as cash, and put zero into a pension or SIPP, you’ll lose 20% automatically in tax. But you keep 100% of any money you put into your pension savings. So even if stocks declined by 10%, you’d still have more money than if you took the cash and lost 20% in tax.
Only morons try to time the market. You’re going to hear this a lot from us at Moneyin2: Attempting to time the market — buying at the bottom or cashing out at the top — is for morons. It is impossible to time the market perfectly. In reality, you’re going to make those trades somewhere in the mushy middle. We know this because investment managers who try to pick stocks usually do less well than the S&P 500 as a whole.
Pain is temporary. Market declines don’t last forever. You should be investing for the long-term, for your entire life. Take another look at that S&P 500 chart above. Clearly, selling on the highs is a pretty good way to miss out on the much, much larger gains you get by staying in, even when it feels painful.
This is how rich people and professionals invest. They do it regularly, on a schedule, because it’s cheaper than guessing, and because it leads to outsized gains when the market goes up again.
Related from Moneyin2:
And for dessert …
The Lindt Gold Bunny Mini Milk is the most expensive Easter chocolate you can buy. The tiny thing only weighs 10g and costs 75p — but that’s the equivalent of £7.50 for each 100g, making it the priciest chocolate by weight according to The Guardian.
Here’s what happens if they ban TikTok. The US is considering breaking up the company and the UK government restricts its use by government employees. But India banned the app in 2020 … and everyone was OK! They just went to Instagram and YouTube.
People who live in Notting Hill — the trendy London neighbourhood favoured by politicians — made more money from capital gains than everyone in Liverpool, Manchester, and Newcastle combined, according to a study from the University of Warwick and the London School of Economics.
Investment banker describes how the brutal expectations of the job cost him his marriage. "I have flown six million air miles and worked 20 years of 70-90 hour weeks,” says John Metz.
Chancellor Jeremy Hunt said £100,000 was not a huge salary for people who live in Surrey. Controversy ensued.
99,000 people are on the waiting list for memberships to Soho House. The chain of private clubs currently has 193,865 members, up 19.7% from the prior year. This explains why it’s always so crowded.
More from Moneyin2:
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Photo: Justin De La Ornellas, Flickr; Lindt.