Hey hello,I had some concerns on climate change and low cost index fund investing over a long term and how the uncertainty of our lives due to climate change 30-40 years from now will affect long term investing.
Hey Fresco!
Well, here’s the deal. I can’t tell you what the future holds. The oceans may rise and the world may end. I really don’t know because I can’t see the future. So we have to look at our options. If you believe in some sort of economic apocalypse then cash, or gold, or any kind of tradeable currency aren’t going to be good either. If the stock market goes to zero (the only way your low cost index funds will go to zero) then that means there are no businesses at all. No one is selling anything. If humans still exist, you’ll need canned goods and gunpowder. And like I said, I can’t tell you that won’t happen, but if it does your no WORSE off by investing in index funds.
Now let’s say that doesn’t quite happen. Let’s say climate change has a real devastating impact on the planet, but humanity charges on. In that scenario businesses and economies still exist. The most successful businesses may look DIFFERENT, but one cool thing about index funds is that they’re “self cleansing”. As the top companies shift, the under performing ones are automatically swapped out and the rising ones swapped in. So you still own a share of all the profits and growth of whatever the new economy is.
Basically, on a personal and environmental level, I share your concern. But from an investing perspective, buying and holding index funds is still likely to be your best way to navigate the brave new world.
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Thankyou for your insight.