For those who wanted to follow along, this will be the second execution of my refined, structured Market-Based Buying Strategy for investing well with minimal effort: https://brighterdayslifecoaching.com/a-structured-market-based-buying-strategy-for-investing-well-with-minimal-effort/.
If you are a Very High Risk (VHR), High Risk (HR), or Medium Risk (MR) investor, this post is for you – investors of all other risk categories can wait and do nothing if you want. If you aren’t sure what your investment risk category is, scroll down to the bottom of this post.
VHR/HR/MR Investors: As of today’s low earlier today, the S&P 500 index dropped about 6.4% from its all-time high (a 3-5% drop in the S&P 500 index generally happens about three times a year and 10% drop generally happens about once every two years) – so if it continues falling to around 567 for the SPY ETF or 5683 for the S&P 500 index (whichever you prefer to track – the drop doesn’t have to be very precise), you might consider buying:
a. VHR Investors might consider buying up to 100% of their overall investment account (or up to 100% of the cash available to invest) into one of the major market index Exchange Traded Funds (ETFs) (or you can split that across multiple major market indexes if you prefer).
b. HR Investors might consider buying up to 33.3% of their overall investment account (or up to 33.3% of the cash available to invest) into one of the major market index Exchange Traded Funds (ETFs) (or you can split that across multiple major market indexes if you prefer).
c. MR Investors might consider buying up to 15% of their overall investment account (or up to 15% of the cash available to invest) into one of the major market index Exchange Traded Funds (ETFs) (or you can split that across multiple major market indexes if you prefer).
I anticipate there could be an even more substantial decline in the overall S&P 500 index, but I could be wrong – and the longer and the deeper the drop you wait for, the greater the likelihood you’ll miss the rebound. So, VHR and HR investors might want to get ready to buy – other investors might be more inclined to take their chances by waiting for a deeper drop. It’s your financial future so do what you think is best for you.
I currently track five major market index ETFs: S&P 500 index (e.g., SPY ETF), the Nasdaq (e.g., QQQ ETF), a Mid-Cap Stock Index ETF (e.g., IJH ETF), Russell 2000 index (e.g., IWM ETF), and the EFA ETF (or something similar). The first four are major US-based indexes, while the last one tracks international stocks of developed countries outside the U.S. and Canada.
Of the above five major market index ETFs, the most attractive right now appears to be: IWM based on my analysis – which tracks the Russell 2000 index (I actually prefer the SPSM which is similar to IWM but only includes the profitable small businesses contained in the Russell 2000 index). As of today’s low, the IWM dropped 16.2% and the calculated EIRY is the highest across the 4 U.S. index ETFs I track – at 7.25%. The IWM is not without risk, however. In a slowing economy, the IWM tends to drop the fastest and the deepest but usually rebounds sharply at some point. So, if you are very concerned about a potential slowing economy, then you might want to choose a different index to invest in or split your investment across different indexes.
Feel free to start buying in one or more of the aforementioned major market index ETFs if the S&P 500 continues to fall and you are a VHR, HR, or MR investor. You can use the ones specifically above or use a different one that is similar. Just ensure the fees are at least as low as the ones identified above when buying.
You can learn about all of my investing techniques via my “Invest Like a Pro in 10 Minutes a Day!” series of 4 books where you can learn the “end to end” process to investing: https://brighterdayslifecoaching.com/published-books-and-life-coaching-services/.
Also, you can read all about my stock market activities here: https://brighterdayslifecoaching.com/stock-market-activities
I wish you much investing success for 2025 (and beyond!).
selfimprovement #selfhelp #selfdevelopment #success #finance #stocks #investing #stockmarket #bonds #bondmarket
==== INVESTMENT RISK CATEGORIES ====
Important Note: When adding up what you have across your investment accounts, I recommend making the following adjustment for pre-tax type investment accounts (e.g., 401Ks and IRAs without the word “Roth” attached): reduce the total amount by 24% for a conservative overall estimate. We have to pay taxes when withdrawing from these kinds of accounts so this will help to account for that. Feel free to use a different percentage reduction depending on what tax bracket you believe you will fall into when withdrawing money from these accounts.
VERY HIGH-RISK INVESTOR (your investment goal is 8+ times what you presently have in total across your investment accounts – after making adjustments in accordance with the note above). For example, if your investment goal is $2M and you presently have $250k or less in total across your investment accounts then you would be a very high-risk investor.
HIGH-RISK INVESTOR (your investment goal is roughly 4-8 times what you presently have in total across your investment accounts – after making adjustments in accordance with the note above). For example, if your investment goal is $2M and you presently have $250k-$500k in total across your investment accounts then you would be a high-risk investor.
MEDIUM-RISK INVESTOR (your investment goal is roughly 2-4 times what you presently have in total across your investment accounts – after making adjustments in accordance with the note above). For example, if your investment goal is $2M and you presently have $500k-$1M in total across your investment accounts then you would be a medium-risk investor.
LOW-RISK INVESTOR (your investment goal is roughly 1-2 times what you presently have in total across your investment accounts – after making adjustments in accordance with the note above). For example, if your investment goal is $2M and you presently have $1M-$2M in total across your investment accounts then you would be a low-risk investor.
VERY LOW-RISK INVESTOR (what you presently have in total across your investment accounts equals or exceeds your investment goal – after making adjustments in accordance with the note above). For example, if your investment goal is $2M and you presently have $2M or more in total across your investment accounts then you would be a very low-risk investor.