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Buying the market? good or bad time for index fund?


i have some spare money,
i can either leave it in a risk-free bank account at 6.5 % +
or i can buy an index fund for the ASX 200 or...i dont know
is this volatile market very bad to do so right now?

You're most like mistaken about the interest rate. 6.5% is not realistic. Banks are lending money for less than that. In any case it is a great time to buy stocks. The market is down about 20%. Buy low sell high.

A risk free 6.5% bank account?

Keep it there !!

If you're a long term investor and do dollar cost averaging, any time is a good time to invest in the market. Taxes on savings accounts is at your ordinary tax rate. Capital gains taxes investments is better. And the longer you stay in a fund the better off tax-wise you are. You should get about 7-8 percent real return in the market in the long term.

Ask yourself : how long you will be invested?

more than 3 years: buy in index ; all
1-3 years: do SIP, sart investing 1/25 this month, 1/25 in next month .. rest you keep in bank

less than 1 year : dont invest in index

Since we are in the beginning of a recession, not a good time to "buy and hold" an index fund. It would be better to "buy and hold" a bear fund.

Learn about the "50% retracement" rule. This is a simple, reliable rule for timing your trades.

You may google for it.

Mike

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