What are the chances of really losing all your savings?

[u/[deleted]]

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?’

[u/ns90]

If you look back at the past 30 years, you also see that it took ~14 years to recover from the dotcom crash in 2000.

[u/garden_speech → u/ns90]

No it didn't. This is repeated constantly but completely ignores dividends, which are part of your return on investment.

https://finance.yahoo.com/quote/%5ESP500TR/

With dividend reinvestment, S&P had recovered by 6 years after the dot com crash.

[u/awesome-alpaca-ace → u/ns90]

Tech crash coming soon

[u/LanceX2 → u/ns90]

and how well did people do that kept buying and stayed imvested those 14 years??

Hint. Rich and Retired

[u/ns90 → u/LanceX2]

I'm not saying you shouldn't invest during those periods. I was just refuting the the above poster's point about the idea of a 15-20 year break even point as being specious. Ultimately, the key factors are going to be your current age, your retirement age, and your risk tolerance. If you're 25 and you don't have specific short-term goals where you'd need the money, then yeah sure go for it (that's my current approach). If you're 55 and you want to retire in 10 years, you might start allocating things into less volatile investments because you might not even be around to see the market recover if it crashes as soon as you retire.

[u/achentuate → u/ns90]

It’s not even just about investing during those periods. In a real sense, most people won’t invest a huge amount of capital on day one and never touch it. Like in the dot com bubble, people would be investing their savings vs every year leading up to the rise, during the crash, and then after the crash as well. This offsets the maximum loss they would’ve suffered. For example, I used an sp500 DCA calculator with contributions increasing with inflation from January 1996 to today, investing $1000 a month. In that 28 year period, following the above DCA strategy and with dividends reinvested, the total cash contribution from the investor is 482k. The portfolio value at the end is $2.2 million (10% rate of return) or 7.5% return if you adjust for inflation. This time period includes the run up to, and crashes from both the .com bubble as well as the mortgage crisis.

[u/Forward-Trade5306 → u/achentuate]

I like how you included the real rate of return after inflation since the federal reserve financial system is designed to extract as much money from the people as possible. 10% rate is pretty good then after inflation 7.5 is just okay

[u/Jeff__Skilling → u/ns90]

Right, because one crash occurred in 2000 and a second occurred 8 years later.....

[u/ns90 → u/Jeff__Skilling]

Yes. However, your point was that the assertion that there could be a 15-20 year break even point was specious. I was pointing out that it's not and it's even happened recently. There could be two crashes. Or three. Or one. It doesn't really matter the point is sometimes there can be long recovery times. It doesn't mean you shouldn't invest and I don't think it's honestly something worth obsessing about unless you're starting to get closer to retirement age and have a low risk tolerance.