Index funds: investing when everyone else is already in

Index funds: when everyone is investing, is it time to get in?

A long-term investor is considering a portfolio of 75% MSCI World and 25% emerging markets, with monthly contributions. He doesn't need the money in the short term. But a reasonable doubt crosses his mind: if "everyone" is talking about index funds, maybe a correction is near. And he's not the only one asking.

Some answer with the classic playbook: keep contributing in up markets and down markets, automatically. The uncomfortable question is whether the investor can live with a 30% or even 40% drop for a year without running for the exit. If he can't, indexing isn't for him, no matter how good the product is.

Others go further and suggest not investing all the capital at once. One option is to split it into four equal blocks (25 25 25 25) and buy at several points in time, so you don't get demoralized if the market falls the very next day. Dollar-cost averaging wins out over trying to guess the perfect entry point.

The suspicion that "everyone is already in" is real. But so is the counterargument: if you're investing for the long term, buying during a moment of euphoria is offset by later contributions made during moments of panic. What sets those who stick it out apart is discipline, not timing.

The platform mentioned, MyInvestor, has the advantage of allowing fund transfers without going through Spain's tax authority (Hacienda), making it easy to change strategy without a tax cost. But the core decision doesn't depend on the platform — it depends on the ability to withstand 40% drops without selling.

Here's the paradox that throws people off: those who spend years waiting for a correction usually lose more return than those who got in and held. Nobody knows when the crash will come. The only certainty is that it will, and those who stayed out will regret it more than those who held on.