When constructing a portfolio for long-term investment, more important than returns is asking oneself if the investor can stick with it to the very end.
Funds not needed for living expenses for at least 3-5 years and the余裕 to withstand a temporary 20-30% asset decline determine the success or failure of a portfolio.
Investment funds must be money that will not be needed for living expenses for at least 3 to 5 years, and a 20-30% asset decline should not disrupt daily life.
If the above two conditions are not met, investors should not press the buy button.
Funds to be used within 6 months to 1 year increase the risk of forced stop-loss in the event of a market downturn.
Short-term market direction is difficult for even Wall Street experts to predict.
It was warned that funds needed within 6 months to 1 year carry a high risk of loss due to stop-loss during a downturn.
After Meta's launch of its AI agent Muse, tech stocks across the board showed strength.
The market reflects signals that AI has evolved beyond chatbots into real-world tools.
It was also interpreted as a positive sign that big tech's actual capital expenditures, such as data center construction, continue, and U.S. corporate earnings forecasts have been upwardly revised for 21 consecutive weeks.
With the U.S. 10-year Treasury yield exceeding 5%, the risk of funds diversifying to investment alternatives other than stocks has increased.
It was warned that strong economic indicators present a paradoxical situation that could provide justification for further interest rate hikes by the U.S. Federal Reserve (Fed), and there is also a possibility that power supply shortages for data centers could slow down the pace of AI investment.
This must be accompanied by understanding the investment period and the amount of loss one can tolerate, not as a percentage but as a concrete figure, and comprehending the ETF's tracking index and constituent stocks.
Additionally, one should ask if they can sufficiently explain the composition of the asset they intend to invest in.
Even during interest rate hikes, tech stocks show resilience with increasing profits, but risks such as additional rate hikes still exist.
When constructing a portfolio, a strategy can be considered that broadly invests in leading U.S. companies while additionally increasing the weight of areas with growth potential, such as semiconductors and AI infrastructure-related fields.
It was advised to note that while growth stocks can expect high returns, their volatility is also significant.
Since each individual's economic situation, monthly living expenses, pension income, etc., are all different, investment portfolios must be customized for each individual.
Even for the same age group, the portfolio's weight should be set differently depending on the presence of pension income and economic conditions.
More important than the size of profits in investment is whether daily life can be maintained in the event of asset loss.
For retirement investing, five important factors must be considered: first, investment size; second, age; third, economic reality; fourth, monthly living expenses and pension flow; and fifth, investment propensity.
It is necessary to thoroughly analyze individual circumstances to establish one's own investment principles.
A 20% loss on 50 million won is 10 million won, but a 20% loss on 1 billion won is 200 million won, making the perceived size of the loss incomparably larger.
Reducing the proportion of volatile assets when there is less time to wait is key to dealing with a market downturn.
Experts analyze that while those in their early 50s have time to wait for recovery after a market downturn, retirees in their late 60s or 70s find it difficult to predict the recovery period and thus hard to respond.
It was advised that the less time one has to wait, the more rational it is to reduce the proportion of volatile assets.
Individuals have different burdens of economic responsibility, such as mortgage loans, children's marriage funds, and supporting parents.
Money that will soon be needed should be classified as prepared expenditure, not investment assets.
Since the nature of funds that can be invested is determined by the presence of debt and economic circumstances, it is important to clearly understand these points.
Even those who believe in long-term investing may lose sleep when their account is down 30%, showing a clear difference between what one knows intellectually and what one can endure physically.
It was advised that one's actual tolerable level is their objective investment propensity, and asset allocation should be decided after accurately judging this.
Answers come from the transcript, with the exact spot cited.
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