Index funds have been considered safe for a long time, but it relies on market prices being an accurate source of information about how profitable companies are, because you are blindly buying everything. If too much money is invested that way, the signal becomes weaker and more irrational, it may not be guaranteed to always be a good long term bet. If all the biggest companies end up with valuations that are entirely fake, you’re pretty screwed. I have money in an index fund because I think it’s probably going to be fine and safer than other options, but it isn’t right to think of it as a sure thing.
Index funds are also still vulnerable to risks that affect the economy as a whole, like – just off the top of my head, for no reason in particular – total collapse caused by mismanagement by fascists.
On a totally unrelated note, my portfolio has always been mostly index funds and still is, but I’ve decreased the percentage of US stock market in favor of international stocks in recent years.
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Index funds have been considered safe for a long time, but it relies on market prices being an accurate source of information about how profitable companies are, because you are blindly buying everything. If too much money is invested that way, the signal becomes weaker and more irrational, it may not be guaranteed to always be a good long term bet. If all the biggest companies end up with valuations that are entirely fake, you’re pretty screwed. I have money in an index fund because I think it’s probably going to be fine and safer than other options, but it isn’t right to think of it as a sure thing.
Index funds are also still vulnerable to risks that affect the economy as a whole, like – just off the top of my head, for no reason in particular – total collapse caused by mismanagement by fascists.
On a totally unrelated note, my portfolio has always been mostly index funds and still is, but I’ve decreased the percentage of US stock market in favor of international stocks in recent years.
Well, this is why you go for global index funds. And if they actually DO fail, you’ve got bigger problems on your hands.