I'm 47, investing for retirement in 20-25 years. I've been disciplined with my strategy: between 20 to 25k /year into broad market index funds (similar to VT/VEQT), split between retirement accounts.
Recently, I've been feeling FOMO watching various sectors rally (space, commodities, mega-cap tech). My strategy has been working, but I'm tempted to allocate 5-8% into speculative plays like:
Space sector ETFs or individual names
Mega-cap tech that's "lagging" (thinking it'll catch up)
Commodities riding recent momentum.
My concern: Am I letting recency bias and FOMO drive me away from a solid long-term strategy?
Questions for the community:
For those 10+ years into index investing, have you successfully added speculative positions without derailing your plan?
Is there merit to "scratching the itch" with a small allocation to stay disciplined on the core, or does it usually snowball?
At what point does "diversification into sectors" become counterproductive stock-picking?
Not looking for specific ticker advice, just perspective from experienced investors who've navigated this psychological challenge.
Thanks
Long-term investor (47, 20-25 year horizon) – Tempted by speculative plays after years of index investing. Looking for perspective.
byu/jauch888888 instocks
Posted by jauch888888
12 Comments
Do whatever allows you to sleep at night.
A lot of the bogleheads will scream and cry about this, but I think you should dedicate some % to speculative plays. Its definitely fun to throw chunks of money at some reddit plays or meme stocks and see what happens but again, dont gamble with money you cant afford to lose
Even if you’re an index investor, nothing too wrong about allocating a small % of your portfolio for fun money/scratching the itch. The trick I feel is to stay disciplined with your regular index investments, and any fun money is whatever extra you manage to save.
Definitely not the time to do that.
Just make a bet with yourself to start speculating when the index is down 25%, preferably more. But at least this way you know you won’t top tick the market.
Take 10k and go for it
ROKT – Spdr etf. Space and deep sea. Has some of my favorite stocks in its top allocation.
Where are you now and where do you want to be in 20 years? It doesn’t hurt to test the waters with a small amount. At the same time, will you regret if try and your wrong?
Seems like you prefer to play it safe. In the long run the steady approach typically works out.
If you need that itch scratched.. scratch it.
Allocate the vast majority (95%) of ur portfolio to ‘safe’ stuff, and 5% as ‘fun’ money. Best of both worlds
Now is the time where swapping from speculative to index is the safe move. Doing what you’re talking about is a good way to wipe out a huge portion of your portfolio quickly
Couple of things:
1. I think you’re under-exposed to non-US markets. The US has been on a multiple expansion run, but something like a VEA or VYMI would do well to complement having more exposure to markets that could do well in the next 20 years – on top of your VT allocation.
2. I think 5-10% of “fun money” would be appropriate – to take calculated bets on companies that you do appropriate research on and think have a 10 year runway to do well (ie SOFI, AMZN, GOOGL, MELI, BN, etc). There are good companies this consistently outperform the S&P500 or are the companies hitting their growth curve that will be reflected in their stock price. But be disciplined and don’t put money in that you’re not prepared to lose. Do your research – there are several good YouTubers that talk about narratives & fundamentals of stocks (Patient Investor, Joseph Carlson, Daniel Pronk) – they might be good ideas to get stock picks from or cross reference ideas.
i wouldnt do it. I did just that cuz i had the itch, while my mom stayed in safer etf’s. her money is nicely growing and mine is chit. hurts to look.
Don’t fomo, not only is space stocks at the top, but they are also at PLTR valuation now. Not saying it won’t continue, but wait until a correction happens or try to find companies that havnt rallied yet and have solid growth (go through earnings and use LLM). Honestly you will be most succesful continuing what you’re doing and save alot of headache.