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Investing a lump sum from home sale
Old 06-23-2016, 06:58 PM   #1
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Investing a lump sum from home sale

DW and I are moving from a HCOL area to a LCOL area. Selling our current home and buying another in our new area (both homes currently under contract; closings scheduled for the end of July) will net us just under $300k after we set aside some monies for improvements to our newly purchased home.

I'm struggling with how to invest this money; meaning should I dollar cost average, value average, or just put it into the markets all at once. We're currently invested mostly in index funds through Vanguard and Fidelity and it is my intent to place this money with one or both of those firms. My intent is to match my current asset allocation (65/30/5), and since my DW intends to keep working for 2 or so more years - I'm retiring when the transaction and move occur - we won't "need" the funds for at least that length of time.

I'm not into market timing at all; I've always been a buy and hold kind of guy, but I'm struggling with my perception of a high current market valuation. I keep thinking, "Well, if it were $30k instead of $300k, you'd throw it into the markets without hesitation, so why is $300k different"? Part of the answer for me is that this represents 10% to 15% of my future retirement fund, so THAT makes the decision feel much more consequential.

Any thoughts/advice appreciated.
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Old 06-23-2016, 07:34 PM   #2
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We sold two small rental houses two years ago, I still have the $$ in a low paying money market account. I'm just not interested in putting the dollars in anything related to stocks or a long term commitment. I think we're within a couple years of buying a winter home somewhere and would rather lose a few dollars interest than face the possibility of losing any of the principle. Of course my FA would love to get her hands on it and has tons of suggestions. Probably not going to happen.
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Old 06-23-2016, 07:56 PM   #3
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I'm struggling with how to invest this money; meaning should I dollar cost average, value average, or just put it into the markets all at once. We're currently invested mostly in index funds through Vanguard and Fidelity and it is my intent to place this money with one or both of those firms. My intent is to match my current asset allocation (65/30/5), and since my DW intends to keep working for 2 or so more years - I'm retiring when the transaction and move occur - we won't "need" the funds for at least that length of time.
There are those who would tell you that statistically, you would be better off putting it all in the market immediately. But my thinking is that we are individuals, not statistics. If I invested it at the top of the market, I'd feel awful. As an individual, that is always a possibility if one "puts it all on black" and invests it all on the same day.

Therefore, when investing a large sum of money I generally dollar cost average it over a year or so, give or take a few months I guess. Or, you could dollar value average it in the same way. I keep intending to do that but somehow I end up DCA'ing it instead.


http://www.investopedia.com/articles...07/dcavsva.asp
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Old 06-23-2016, 07:56 PM   #4
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I invested it in our children. I split the 80K proceeds 4 ways, giving each son $20 K.
DW's sons used it for a new roof for one, and child care for the other. One of my sons will save it for my grandchildren's education, and the other one needed a little help through a rough patch.
We are blessed that we do not need the money, as i told our sons that my mom lived to 102, so do not count on it soon.
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Old 06-23-2016, 07:58 PM   #5
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Therefore, when investing a large sum of money I generally dollar cost average it over a year or so, give or take a few months I guess. Or, you could dollar value average it in the same way. I keep intending to do that but somehow I end up DCA'ing it instead.
I think that is a good approach. Your analogy of putting "all on black" is spot on.
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Old 06-23-2016, 08:03 PM   #6
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You answered your own question.

Put 30 grand in the market and stash the rest. Or better put 50 grand in the market and get FDIC on the quarter mill.

Or better yet, 50 G market, 240 G bank and blow 10 grand -

Have fun!
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Old 06-23-2016, 08:17 PM   #7
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You answered your own question.

Put 30 grand in the market and stash the rest. Or better put 50 grand in the market and get FDIC on the quarter mill.

Or better yet, 50 G market, 240 G bank and blow 10 grand -

Have fun!
All those sound like good options to me. Especially the last one since the blow 10 grand part represents only a fraction of 1% percent of the OP's nest egg.
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Old 06-24-2016, 07:46 AM   #8
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I would invest half of it in accordance with your AA right away and then value average the remainder in over 12 months.
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Old 06-24-2016, 08:36 AM   #9
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I would put it all in such that I didn't change my target asset allocation. My thinking goes like this...if you believe in your target asset allocation, why deviate from it? Although if you include your real estate in your AA, and you believed that was your best AA, then you'd be buying an REIT with the funds!

The investment in children sounds kind of like what I did, though. I took the proceeds from a rental house sale, split it in half, and created a target date 529 for each kid (this was when they were 6 and 2).
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Old 06-24-2016, 11:59 AM   #10
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I would put it all in such that I didn't change my target asset allocation. My thinking goes like this...if you believe in your target asset allocation, why deviate from it?...
I completely agree, but ... today with International companies on fire sale, maybe skew a little that way to take advantage!
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Old 06-24-2016, 12:49 PM   #11
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I completely agree, but ... today with International companies on fire sale, maybe skew a little that way to take advantage!
Fire sale, maybe but it could be the beginning of some bad stuff.....anybody got a crystal ball?
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