Trying to time the market usually results in less returns over time, as most of us are not that great at timing it. (Apparently, neither are most of our mutual fund managers, as shown by recent events
) We invest every month, regardless of if the markets are up or down. If the market is up, we get less shares for our money. If the market is down, we get more shares for our money. If we tried to time it, we would most likely be selling too late and buying too late, on average. That's our plan. The last time things tanked, we kept in it and got all of our value back in two years and then it really took off because we had accumulated so many shares in so many things while the market was down. Of course, as we get older, we move a bit towards safer investments. Not much was safe in the last month, however, but we are confident that we will get back our value in the next few years and then some.
As for being retired and putting all of your investments in safe places, you are playing the waiting game. Let's say you retire at 60 and put your million bucks in a CD at 2%. You'll earn 20,000 a year in interest, but inflation runs at 3-4 percent. So each year, your million bucks has less buying power, as does your 20K in interest. You are losing 2-3% of your investment value each year. Now let's say you live to be 90....
I think you have to have a mix of investments both safe and mildly aggressive, even when you are older, so that you are bringing in more than inflation is eating up just in case you liver to a ripe old age. Yes, you take a risk, but hopefully your home is long paid off and all you have to do is pay for heat, food and taxes by then and your safe bet is enough to tide you over until things turn around.
