Is it wise to switch investment strategy frequently?
I understand you're trying to ask a narrow question, but you're basically asking whether you should time the market.  You can find tons of books saying you shouldn't try it, and tons more confirming that you can.  Both will have data and anecdotes to back them up.  So I'll give you my own opinion. Market timing, especially in a macro sense, is a zero-sum game.  Your first thought should be: I'm smarter than the average person; the average person is an idiot.  However, remember that a whole lot of the money in the market is not controlled by idiots.  You really need to ask yourself if you can compete with people who get paid to spend 12 hours a day trying to beat the market. Stick with a mid-range strategy for now.  Your convictions aren't and shouldn't be strong enough at the moment to do otherwise.  But, if you can't resist, I say go ahead and do what you feel.  Regardless of what you do, your returns over the next 3 years won't be life changing.  In the meantime, learn as much as you can about investing, and keep a journal of your investment activity to keep yourself honest. My super fund and I would say many other funds give you one free switch of strategies per year.  Some suggest you should change from high growth option to a more balance option once you are say about 10 to 15 years from retirement, and then change to a more capital guaranteed option a few years from retirement. This is a more passive approach and has benefits as well as disadvantages. The benefit is that there is not much work involved, you just change your investment option based on your life stage, 2 to 3 times during your lifetime. This allows you to take more risk when you are young to aim for higher returns, take a balanced approach with moderate risk and returns during the middle part of your working life, and take less risk with lower returns (above inflation) during the latter part of your working life. A possible disadvantage of this strategy is you may be in the higher risk/ higher growth option during a market correction and then change to a more balanced option just when the market starts to pick up again. So your funds will be hit with large losses whilst the market is in retreat and just when things look to be getting better you change to a more balanced portfolio and miss out on the big gains. A second more active approach would be to track the market and change investment option as the market changes. One approach which shouldn't take much time is to track the index such as the ASX200 (if you investment option is mainly invested in the Australian stock market) with a 200 day Simple Moving Average (SMA). The concept is that if the index crosses above the 200 day SMA the market is bullish and if it crosses below it is bearish. See the chart below:  This strategy will work well when the market is trending up or down but not very well when the market is going sideways, as you will be changing from aggressive to balanced and back too often. Possibly a more appropriate option would be a combination of the two. Use the first passive approach to change investment option from aggressive to balanced to capital guaranteed with your life stages, however use the second active approach to time the change. For example, if you were say in your late 40s now and were looking to change from aggressive to balanced in the near future, you could wait until the ASX200 crosses below the 200 day SMA before making the change. This way you could capture the majority of the uptrend (which could go on for years) before changing from the high growth/aggressive option to the balanced option. If you where after more control over your superannuation assets another option open to you is to start a SMSF, however I would recommend having at least $300K to $400K in assets before starting a SMSF, or else the annual costs would be too high as a percentage of your total super assets. A guy who does a sports talk show here in the US can be pretty smart about some things.  His advice:  If you are wondering if something is a good idea, say it out loud.  In his book he cites the fact that people thought, at one time, it would be a good idea to allow smoking on airline flights.  Keep in mind you are using liquid oxygen, news paper, and are 10,000+ feet up in the air.  Say it like that and you hit yourself in the forehead. Read the title of your question in a day or two, and you can answer it yourself with a resounding NO.
"This is the best tl;dr I could make, [original](https://www.quantamagazine.org/in-game-theory-no-clear-path-to-equilibrium-20170718/) reduced by 95%. (I'm a bot) ***** &gt; His crucial, yet utterly simple, idea was that any competitive game has a notion of equilibrium: a collection of strategies, one for each player, such that no player can win more by unilaterally switching to a different strategy.  &gt; How do players get to equilibrium in the first place? In contrast with, say, a ball rolling downhill and coming to rest in a valley, there is no obvious force guiding game players toward a Nash equilibrium.  &gt; The new result says that economists can&amp;#039;t assume that game players will get to a Nash equilibrium, unless they can justify what is special about the particular game in question.   ***** [**Extended Summary**](http://np.reddit.com/r/autotldr/comments/6oz36i/sounds_like_ouroboros_pos_is_right_on_the_money/) | [FAQ](http://np.reddit.com/r/autotldr/comments/31b9fm/faq_autotldr_bot/ ""Version 1.65, ~173468 tl;drs so far."") | [Feedback](http://np.reddit.com/message/compose?to=%23autotldr ""PM's and comments are monitored, constructive feedback is welcome."") | *Top* *keywords*: **play**^#1 **equilibrium**^#2 **game**^#3 **Nash**^#4 **each**^#5" Starting with the Dummy Forex account is a wise move for every new forex trader. Do forex trading with a dummy account at least for a year. Startling directly with real money is a terribly costly move. Therefore, it is wise to have a solid trading strategy to execute. Make sure that your strategy is realistic and practical. Most importantly, using your dummy forex account, it is must for you to make at least one or two profits in a year. At last, be sure to invest money that you can recover without any tension. If it's money you can lose, and you're young, why not?  Another would be motifinvesting where you can invest in ideas as opposed to picking companies. However, blindly following other investors is not a good idea.  Big investors strategies might not be similar to yours, they might be looking for something different than you.  If you're going to do that, find someone with similar goals. Having investments, and a strategy, that you believe in and understand is paramount to investing.  It's that belief, strategy, and understanding that will give you direction.  Otherwise you're just going to follow the herd and as they say, sheep get slaughtered. "So, what's your actual plan/strategy/suggestion to combat this, again?   Are you planning on buying physical gold, other precious metals (again, tangible--not paper), and buying &amp; investing in real estate?       This isn't a sarcastic question; I want to go down this hypothetical path in the thought experiment a bit further.       For example: for a US investor, could *part* of the strategy be to ""move to a state with no state income tax"" to preserve as much income as possible in order to invest that income in one of the target categories?     Is careful selection of primary residence (real estate) in a location most likely to appreciate part of the strategy?      Is moving your investment accounts offshore to a tax haven part of the strategy?" It varies. Depending on your brokerage, they may charge you per transaction, so the more transactions, the higher the cost. Though this (from what I've seen), is uncommon with many index funds. In terms of how aggressive you want to be with your investment varies on your comfort with risk, timeline of investment and many other factors beyond the scope of this question.  The biggest issue you may need to be aware of is if you are looking at mutual funds, they may have minimum investments. Depending on what that minimum investment is set to, you may not be able to split your $5500 into more than one fund.  A lot of this comes down to the specific funds in which your are anticipating investing, as well as the service you use to do so (Fidelity, Vanguard, etc). Ultimately, diversification can be a lot safer, but there are logistics to consider. Personally, I began with a target fund (a mutual fund with adjusted risk based on the estimated year of retirement) and add additional mutual funds, stocks and ETFs as time goes on. What you choose to invest in depends largely on your own goals and time horizon.  You state that your time horizon is a few decades. Most studies have shown that the equity market as a whole has outperformed most other asset types (except perhaps property in some cases) over the long term.  The reason that time horizon is important is that equities are quite volatile. Who knows whether your value will halve in the next year? But we hope that over the longer term, things come out in the wash, and tomorrow's market crash will recover, etc.  However, you must realize that if your goals change, and you suddenly need your money after 2 years, it might be worth less in two years than you expect. "There isn't really a generic options strategy that gives you higher returns with lower risk than an equivalent non-options strategy. There are lots of options strategies that give you about the same returns with the same risk, but most of the time they are a lot more work and less tax-efficient than the non-options strategy. When I say ""generic"" I mean there may be strategies that rely on special situations (analysis of market inefficiencies or fundamentals on particular securities) that you could take advantage of, but you'd have to be extremely expert and spend a lot of time. A ""generic"" strategy would be a thing like ""write such-and-such sort of spreads"" without reference to the particular security or situation. As far as strategies that give you about the same risk/return, for example you can use options collars to create about the same effect as a balanced fund (Gateway Fund does this, Bridgeway Balanced does stuff like it I think); but you could also just use a balanced fund. You can use covered calls to make income on your stocks, but you of course lose some of the stock upside. You can use protective puts to protect downside, but they cost so much money that on average you lose money or make very little. You can invest cash plus a call option, which is equivalent to stock plus a protective put, i.e on average again you don't make much money. Options don't offer any free lunches not found elsewhere. Occasionally they are useful for tax reasons (for example to avoid selling something but avoid risk) or for technical reasons (for example a stock isn't available to short, but you can do something with options)." Common financial advice is just that - it is common and general in nature and not specific for your financial needs, your goals and your risk tolerance. Regarding the possibility of a US market not going anywhere over a long period of time, well it is not a possibility, it has happened. See chart below:  It took 13 years for the S&P 500 to break through 1550, a level first reached in March 2000, tested in October 2007 (just before the GFC) and finally broken through in March 2013. If you had bought in early 2000 you would still be behind when you take inflation into account. If you took the strategy of dollar cost averaging and bought the same dollar value (say $10,000) of the index every six months (beginning of each January and each July) starting from the start of 2000 and bought your last portion in January 2013, you would have a return of about 35% over 13.5 years (or an average of 2.6% per year). Now lets look at the same chart below, but this time add some trend lines.  If we instead bought whenever the price crossed above the downtrend-line and sold whenever the price crossed below the uptrend-line (with the first purchase at the start of January 2000), we would have a return of 93% over the 13.5 years (or an average of 6.9% per year). Another more aggressive option (but manageable if you incorporate a risk management strategy) is to buy long when the price crosses the downtrend-line and sell your existing long position and sell short when the price drops below the uptrend-line. That is profiting both up-trending and down-trending markets. Again we start our buying at the start of January 2000. By shorting the index when the market is in a down-trend you could increase the above returns of 93% by another 54%, for a total return of 147% over 13.5 years (or an average of 10.9% per year). To conclude, using a simple long term strategy to time the markets may result in considerably higher returns than dollar cost averaging over the medium to long term, and I know which strategy would help me sleep better at night.