notice the implicit assumed negative event in your statement. why should we assume that a 2 year window is anything near appropriate for the next recession?
you seem to be falling prey to a psychological tendency that optimizes for protecting against loss rather than missed potential opportunity:
as well as market timing, which is the simply asinine idea that you can pick the "best" moment to invest.
instead, i'd frame the issue thusly: what upside am i missing by sitting on cash for 2 years? or 10 years? or until i'm ready?
you and everyone else necessarily fall into one of two categories: those who believe past performance has some effect on future performance (even slightly), or do not.
if you do not believe past matters, then you necessarily have no insight into what strategies are optimal, so there's no way to answer your question. you should just do whatever your heart tells you, i guess, which may include 'wait 10 years for the market to drop, losing out on 10 years of gains'. that hardly seems rational to me.
if you do believe that past performance is indicative of what to expect in the future, let's consider an example.
practically, if you live in the US you can generally invest a certain amount of money each year in your retirement plan. for example's sake let's say that's capped at $5200. and let's also assume you want to hit the cap.
you could invest $5200 on Jan 1. historically, this is the optimal strategy for long term performance, but it is vulnerable to periods of decline inside those years.
you could also use dollar cost averaging to, say, invest $100 every week * 52 = $5200. you still hit the cap but you "average" the risk over the entire year, so that if Jan 2 the market goes to 0 you aren't left with nothing, trading off the fact that you miss out on the upside of the year as well.
so just generalize that to your own timelines and amount of money. you can do 100% today, which mathematically based on the past is the optimal solution, but get ready for some gut busting potential failures. or smooth out risk by investing small sums periodically. the tradeoff is that smaller sums don't get the same gains as the large sum would.
you seem to be falling prey to a psychological tendency that optimizes for protecting against loss rather than missed potential opportunity:
https://en.wikipedia.org/wiki/Loss_aversion
as well as market timing, which is the simply asinine idea that you can pick the "best" moment to invest.
instead, i'd frame the issue thusly: what upside am i missing by sitting on cash for 2 years? or 10 years? or until i'm ready?
you and everyone else necessarily fall into one of two categories: those who believe past performance has some effect on future performance (even slightly), or do not.
if you do not believe past matters, then you necessarily have no insight into what strategies are optimal, so there's no way to answer your question. you should just do whatever your heart tells you, i guess, which may include 'wait 10 years for the market to drop, losing out on 10 years of gains'. that hardly seems rational to me.
if you do believe that past performance is indicative of what to expect in the future, let's consider an example.
practically, if you live in the US you can generally invest a certain amount of money each year in your retirement plan. for example's sake let's say that's capped at $5200. and let's also assume you want to hit the cap.
you could invest $5200 on Jan 1. historically, this is the optimal strategy for long term performance, but it is vulnerable to periods of decline inside those years.
you could also use dollar cost averaging to, say, invest $100 every week * 52 = $5200. you still hit the cap but you "average" the risk over the entire year, so that if Jan 2 the market goes to 0 you aren't left with nothing, trading off the fact that you miss out on the upside of the year as well.
so just generalize that to your own timelines and amount of money. you can do 100% today, which mathematically based on the past is the optimal solution, but get ready for some gut busting potential failures. or smooth out risk by investing small sums periodically. the tradeoff is that smaller sums don't get the same gains as the large sum would.