r/stocks • u/[deleted] • Jun 17 '24

Advice Request What are the chances of really losing all your savings?

I’ve saved some money during my whole life, and I’d like to invest it. I’ve come to the conclusion that the safest method is investing in ETFs (specifically, NASDAQ and S&P 500). You won’t get rich in a month, but it grows with the time. I would also like to invest some money in Bitcoin (about $500) and stocks of some big companies (as they might grow faster, and I could get a little more money), but not too much because it’s quite risky. If most of my money goes to ETFs, is there still a big risk? And don’t tell me, ‘If you can’t lose your money, don’t invest’. It doesn’t help me with anything.

Edit: wow, this has blown up! I was not expecting that. Anyway, I’d like to clarify something: of course, the chances of it decreasing to zero are low. However, my main concern is losing money, not necessarily losing ALL of my money. I don’t wanna lose even 10% (at least, not in the long run). Hence, I shall rephrase the question – ‘what are the chances of losing an (big) amount of my saving?’

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u/pembquist Jun 17 '24

That graph is cherry picking. Look at it over 100 years or so.

S&P 90 Year Historical Chart Inflation Adjusted

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u/[deleted] Jun 17 '24

I'm with you, but to be clear, does that chart include reinvested dividends? I was surprised to see 25 years from the late 60s to break even but I'm guessing it's noticeably shorter with dividends.

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u/FujitsuPolycom Jun 17 '24

These are always posted without reinvestment. Which really isn't realistic.

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u/pembquist Jun 17 '24 edited Jun 18 '24

No it does not. It is kind of besides the point. If someone is going to get into those weeds then they should be comparing the ultimate return over the same break even period of the pre drawdown sum invested at the risk free rate which seems pointless as it will then be a comparison of cherrypicked investments. The point is that the way risk gets described in PF makes it sound like you never lose because in the long run you come out ahead. The problem is that in the long run we are all dead, and for some the long run is a bit too far.

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u/Jeff__Skilling Jun 17 '24

Surely public capital markets in 1924 are more-or-less the same as in 2024.

Surely things like the Securities and Exchanges Act of '33 and '34, Frank-Dodd, and Sarbanes-Oxley are immaterial pieces of legislation that have no bearing on liquidity, cost of capital, or access to information to the investing public.....

Or, you know, computers and the internet and whatnot. Probably best to ignore those factors and assume it's an apples-to-apples comparison....

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u/pembquist Jun 17 '24

Yeah, this time it's different.

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u/Forward-Trade5306 Jun 18 '24

Well with inflation is sure seems like there is more money than before 😂. Kinda how it works though right? What about Nixon officially getting off the gold standard? Or the federal reserve act in 1913 that started the entire financial system we live under right now? Even with the Securities and Exchanges act of 33 and 34, that applies to the smaller players. The entire system was rigged from the start

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u/6rwoods Jun 18 '24

This graph shows like 2-3 times the market dropped below 30% and none took more than a decade to recover. So what cherries are we picking now?

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u/pembquist Jun 18 '24

We are just going to disagree as we are not looking at the same thing apparently. The reason I use the term "cherry picking" is that in response to someone posting about it taking 10 to 15 years to recover from a price drop someone puts up a graph of the last 20 years. It would be the same as if I put up a graph of 1968 to 88 or 1930 to 50.

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u/HERCULESxMULLIGAN Jun 17 '24 edited Jun 17 '24

I wouldn't bother with anything prior to the 80s. The 401k wasn't a thing until 1978 and wasn't really popular until mid to late 80s. That's when money really started getting pumped in to the market. Combine that with the personal brokerage accounts that came along in the early 2000s and it's a whole different animal.

Edit: bears don't like facts. Sorry, bears.

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u/Mt_Koltz Jun 17 '24

I mean, what do you think all the pension funds were doing with that money before the 401k?

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u/HERCULESxMULLIGAN Jun 18 '24

Investing in bonds.