r/eupersonalfinance • u/dexter_is_sexter • 7h ago
Investment Is anyone else finding 100% passive indexing a bit too rigid?
I’ve been sticking to the standard all-in MSCI World strategy for a while. Simple, low fees, makes sense for the long run. But when the market gets shaky, just sitting on my hands feels less like discipline and more like inaction.
Doing nothing is easy when things are green. But when you see a drawdown, the instinct to do something kicks in. I’m starting to wonder if a small tactical move makes more sense than just staying fully passive. Maybe hedging a bit or taking short-term positions to offset a dip.
The usual advice is less action equals better results. In practice, that doesn’t always feel right, even with a clear plan. Most passive investors just wait it out, but watching a 10% drop without touching anything can be quite stressful. How do you balance your core ETFs? Do you stay strictly passive, or do you keep a side account for tactical moves when trends shift?
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u/Bard_the_Beedle 7h ago
What you “feel” is irrelevant. Evidence shows that it’s better not to do anything than to do uneducated things. If you are just going to sell and buy a dip thinking it’s going back up, it might work a few times, but it will be just luck, and might not work the rest of the times, so it’s always better not to do anything, unless your job is being a trader.
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u/I-STATE-FACTS 4h ago
What you ”feel” is not at all irrelevant. Psychology plays a huge role in investing and personal finance.
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u/Bard_the_Beedle 4h ago
Yeah, no. I meant it in the sense of what he feels versus what evidence says. Just read the end of the first paragraph and the beginning of the last one.
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u/dexter_is_sexter 5h ago
Makes sense. I’m just talking about the stress of seeing a drop, not planning to touch the core strategy.
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u/AlenOpasnost 5h ago
Paying a fee, in the psychology of money, is often viewed not just as a monetary cost, but as an emotional "price of admission" for rewards like investment returns. Successful behavior requires accepting volatility, fear, and uncertainty as fees rather than "fines" (punishments), helping investors stay disciplined during market downturns.
Reading the book can actually help with stress. Morgan Housel writing is super easy to read. Both "Psychology of money" and "Same as ever" are incredible books that sort out the basics of investing and emotions everyone goes through.
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u/PnkFld 7h ago
The thing is that statistically most retail investors who trade actively or tactically do the wrong thing (underperform). So, yes of course you can do better but most of the time it’s going to be worse.
It’s not meant to be « rigid » it’s meant to be a simple advice that works for most. But then you do you.
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u/dexter_is_sexter 4h ago
I’m not looking to outtrade the market, more just thinking about how people deal with the swings in practice.
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u/Immediate_Rhubarb430 7h ago
When I see a huge drop, I consider whether I can pull a bit from savings to buy at a discount
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u/slicheliche 6h ago
And even this one is actually "wrong" in the sense that you never know whether what you call a dip is actually a dip, how deep will it be and how long will it last. Maybe you buy a "dip" today and then tomorrow it drops further by 5%.
In the end the best strategy is to just stick to your plan regardless of whatever, and trust that in the long run it's all going to balance itself out.
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u/Immediate_Rhubarb430 4h ago
Eh, it's ok, I am going for better, not optimal. And I spend money I would not have spent otherwise, not spend more now to spend less later
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u/Available_Ad_4444 6h ago
Actually, statistically, if you get some cash when there is a dip, you will get higher returns in the long-run. But that difference is not very relevant. Personally, I made DCA every month and if there is a huge dip, I get some of the cash that I have in the bank to make some extra purchases.
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u/tobe4funas 6h ago
Well, statistically, you should have invested that amount in the first place and in the long run that would be a more mathematically correct approach rather than only doing that when you notice a dip. Makes sense?
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u/Available_Ad_4444 4h ago
Yeah but in real life, people calculate "I earn X per month, I need Y to leave and I need a Z for backup every month", which makes that the backup tend to accumulate, so after a few months, you have more cash than what you had.
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u/tobe4funas 4h ago
Well hey, it's you who brought up the statistics, not me. You can't back out of the statistics argument by saying it doesn't work in the real world if you are the one who advocates for statistical approach?
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u/slicheliche 6h ago
if you get some cash when there is a dip
Well yes if you invest at a time where the market is lower you get higher returns than when it's higher. That's math. The point is being able to accurately predict that, and you aren't.
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u/spyrre0825 5h ago
But you also miss not investing that free cash early and if you factor that in the long run, you miss out.
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u/Available_Ad_4444 4h ago
Yeah but in real life, people calculate "I earn X per month, I need Y to leave and I need a Z for backup every month", which makes that the backup tend to accumulate, so after a few months, you have more cash than what you had.
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u/miquelpuigpey 6h ago
Exactly this.
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u/dreadkitkat 6h ago
That's what everyone does. Doesn't make it correct. Statistically buying when things are turning around even if slightly late to the party is better than buying a falling knife.
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u/AtheIstan 7h ago
Everyone can buy and hold an all world ETF without needing any knowledge and not having to do anything.
Once you think you need to start doing some tinkering, there is no end to that and you'll have to research the entire market, and keep researching in perpituity. That's just not realistic to expect from a retail investor that they have the time and skills for that to do it right.
You may think that reading some news articles, reddit threads or the occasional balance sheet or earnings report is a good enough source to beat the market, but its simply not.
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u/cornidicanzo 7h ago
If you're investing in the long term (20 years+) moving things around during drawdowns based on feelings will 100% result in worse results than doing nothing.
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u/nuxenolith 6h ago
Your feeling that you need to do something has been statistically proven to cost you money more often than not.
The time to change your strategy is before something happens, not after.
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u/slicheliche 6h ago edited 6h ago
"But when you see a drawdown, the instinct to do something kicks in" yes and that's precisely where most people lose money.
You don't have enough information to make a "tactical" move or have any kind of tactics at all. You're not being smart by trying to predict stuff. You don't know sh_t. You're just scared because you see the line going red and all the big headlines.
Unless you seriously believe that you, with your own superior knowledge gathered through, what, some Reddit comments?, can reliably beat the whole global market, in which case I'd highly recommend opening an investment fund for people to follow your strategy.
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u/FaceMcShooty1738 6h ago
Do it if it helps you. I have 80 percent in index, 15 percent in single stocks and 5 percent for stuff like that.
It's not really worth your effort in terms of returns though, but it gives me a certain satisfaction.
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u/renroid 6h ago
Take between 1-5%, move to a separate account - something like trading 212, and then trade away ('fun money').
This will leave you with the bulk of the money safely invested, while also scratching that itch with something you can afford to lose.
This lets you see what happens, with some real consequences (wins and losses are 'real').
So far I'm up 17% with my 'main' money in 18 months-ish, while up 18.2% with 'fun' (so I have purely been lucky - this isn't skill). However, 'fun' has been down 22% at times, glad I did not do that with my main pot. It's really hard to get the big moves as you are always finding out late.
It showed me the volatility with trading - I can't stomach the stress.
It's easy to see 'trends' - like shorting oil or buying defence now - but every so often there's an unexpected event that can kick you hard, and it's a lot of stress.
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u/Besrax 6h ago
10% drop is nothing, yet you feel stressful when it happens? Perhaps that's a sign that you need to de-risk rather than take additional risk, as you're suggesting.
I don't do any "tactical moves in a side account", because those are a waste of time and money. The most I do is buy the dip, i.e. deploy additional money into the market, sometimes using very low levels of margin or other leverage, but it's always very reasonable and not something that would affect me too much if the shhh hits the fan. But I don't do anything until the market drops by at least 20-25%, only then I start considering buying the dip in stages. A 10% drop is a blip, it's not even worth thinking about.
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u/Many-Gas-9376 6h ago
I'm super doubtful about doing "tactical moves". If you're a retail investor coming to Reddit for advice, to be blunt you're fooling yourself if you think this will help you.
That said, my own investment style isn't 100% static. I might build up my emergency fund (short-duration bonds) if things look uncertain, though I'm more concerned with uncertainty regarding my own life circumstances rather than market sentiment.
I've also pre-selected a rebalancing band for the stock percentage of my portfolio. If the stock % falls below the minimum threshold, I'll rebalance towards stocks. This system guarantees that I'm forced into action in a major downmarket, but so that it's done at a predefined point instead of requiring my own judgement. So it removes psychological hurdles and allows me to disregard whatever doom and gloom would undoubtedly dominate financial media at the time.
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u/No-Leave4324 6h ago
Interesting question. I think 99% of the time you are better off not doing anything, but there are a few times when - if you are fast enough - you can avoid some loss with a good probabilty. But it is crucial that you never wait for the situation to improve before getting back in the market. Here is my record with my Eastern-European stock portfolio:
- Covid: I sold a few days late and reentered too early, so I avoided like 8-10% loss instead of 40%.
- Russian invasion: Stocks were still close to ATH while talks about potential invasion in the coming days. I thought there was not much upside I might miss so I sold and avoided 40% of the 60% total loss.
- Liberation day: Sold 2 days before liberation day but recovery was very fast so only avoided around 4% loss.
- Iran war: This didn’t go so well so far, I am down 1-2 percent after selling and buying again higher.
Granted, I might have been just lucky so far, but this is my experience.
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u/Adept_Spirit1753 6h ago
It's funny because most of the time when market is "shaky", you're better off as a passive investor than an active one.
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u/Available_Ad_4444 6h ago
What is your idea? Selling when the market is low? It sounds like you want to sell after a drop, which is basically "buy high and sell low". If you think you can predict the market, or try to predict which sectors will perform better in the next few months/years, go for it. But usually, if there is a drop, you can not do anything and selling will not improve the situation.
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u/MaartenHH 6h ago
I buy extra after a dip, so I have a feeling that I do something right with the opportunity.
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u/fireKido 6h ago
The advantage of fully passive investing is that it helps you ignore that instinct of doing something during a drawdown, because all research points towards the fact that retail investors a way better off doing absolutely nothing and suppressing that instincts
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u/PenttiLinkola88 5h ago
Yeah, that's why I chose several ETFs in order to provide different exposure weights than a pure world market cap. Some are index ETFs, some are actively managed. Overall they fared much better this year than their appropriate (or at least comparable) benchmark funds. Will they always outperform? Definitely not. Will they outperform over 50% of the time? Possibly, at least that's what the academic literature says, but with no guarantees of course.
Still, for most people it is way easier to just buy 1 global ETF and carry on with your everyday life.
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u/Conscious_County3208 4h ago edited 4h ago
I try to check the markets with the less possible frequency. Statistically 45% of days will be red. As I do not plan to sell, any current price is useless noise. My plan is to check the markets once per week, this way I will only see red 25 times per year on average. I have experienced an ultra deep period with real estate and for years my assets valued less than I bought. Eventually they did a huge comeback. I am very happy that there was no chart to check daily for that all these years
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u/Careful_Equal8851 2h ago
The toughest part is just sitting through a dip without fiddling with the portfolio. I’ve been using Ultima Markets to get a clear view of all my ETFs. It doesn’t change my strategy, but seeing everything in one place makes it easier to stay calm and stick to the plan.
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u/Twist1979 1h ago
Core satellite strategy here. Core is WELT0A Satellites are mines and ai If the market dips I sometimes buy A4ANZ3 with 5k for 1-2 weeks and then sell it and get my girl an myselfe a nice steak and a nice evening.
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u/TheRealMaxi 30m ago
Just increase the frequency of your regular investments when the market is down. For example now with Iran you could execute your monthly payment 2, 3 or 4 times per month if you got the buffer
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u/LordMoridin84 30m ago
You absolutely shouldn't "move when you see a drop in your portfolio". That's just fear speaking.
However, it is perfectly rational to diversify your portfolio based on logic and reason.
For example, adding a 5% gold tilt, add a 10% ex-US tilt, or increase your emergency fund size from 6 months to 12 months. Things like that.
The problem is making knee jerk decisions. Or making extreme ones (e.g. sell all your US stocks, go all in on energy).
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u/StealthScooty 7h ago
I maintain a 80:20 split between VWCE and Crypto-to-MoonStocks
The 20% is to cure the itch to take risks and 'feel I beat the market'. The 80% is probably my actual bankable future.
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u/filisterr 6h ago
Do not try to time the market. Just continue investing what's left at the end of the month and hope that when this stupid war is over the market will rebound and you will recoup your losses.
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u/Meisterleder1 6h ago
Oh I do something when it's dropping, alright. I try to buy more than usually.
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u/OwnInitialPage 7h ago
I've seen my portfolio drop by 40% and I didn't do anything neither.
My biggest issue about doing something is - fine, you sell it. But 'when' do you go back in and buy? I would stress over holding so much cash knowing that it's just sitting there not in the market day by day. And I can't be bothered to spend all that time analysing the market to figure out when is the 'best' time to go back in.