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What Would You Do With $100,000 Right Now
Old 02-03-2018, 02:41 PM   #1
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What Would You Do With $100,000 Right Now

Like the title of this post asks: What would you do with $100,000 in cash (in taxable account) right now if you were close (< 6 years) to FIRE?

Half of DW's and my NW is in taxable accounts and half in tax-sheltered accounts.

In our taxable accounts, we have a combination of stock mutual funds and individual stocks and would like to dedicate this cash to something less risky but something that hopefully returns a little more than a bank account.

I'm 51 and DW is 52, and we have no kids.

Please let me know if you need any other information in order for you to provide advice. Thanks in advance.
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Old 02-03-2018, 02:44 PM   #2
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I'd wait until Monday, then I would invest it in whatever tax-efficient equity ETF is down the mostest (or up the least) by about midday. Choices: VTI, VEA, VV.

I'd adjust from equities to bonds in my tax-deferred account to keep my asset allocation the same.
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Old 02-03-2018, 03:03 PM   #3
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Wouldn’t it depend on your target AA? Our deferred accounts are 100% bond funds and I’m still overweighted equity right now (common I assume), so I’d add to my muni bond fund in taxable. But I’m not recommending that’s right for everyone by any means.
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Old 02-03-2018, 03:42 PM   #4
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Old 02-03-2018, 03:49 PM   #5
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Municipal bond fund.
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Old 02-03-2018, 04:15 PM   #6
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depends, is the 100k above and beyond (surplus) to what you need to be FI?
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Old 02-03-2018, 04:22 PM   #7
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depends, is the 100k above and beyond (surplus) to what you need to be FI?
Yes, above and beyond, but we're overweight stocks in taxable, and we may not be able to retire early with a market downturn with so much in stocks and no access to my tax-sheltered money.
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Old 02-03-2018, 04:26 PM   #8
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I will write that I don't see a need for bonds in taxable at all. Your wife will be 58 in 6 years, so it really doesn't matter if your taxable account is 100% equities or not. As long as your overall portfolio meets your desired asset allocation, equities are gonna do what equities do. If they go down, it won't matter if they are in taxable or tax-advantaged because you are going to re-think your retirement date anyways based on the value of your entire portfolio. If they go up, then you may move up your retirement date.

Since you have half of portfolio in taxable and half in tax-advantaged it seems to me that you have more than enough room to have all your fixed income funds in tax-sheltered.
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Old 02-03-2018, 04:36 PM   #9
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I will write that I don't see a need for bonds in taxable at all. Your wife will be 58 in 6 years, so it really doesn't matter if your taxable account is 100% equities or not. As long as your overall portfolio meets your desired asset allocation, equities are gonna do what equities do. If they go down, it won't matter if they are in taxable or tax-advantaged because you are going to re-think your retirement date anyways based on the value of your entire portfolio. If they go up, then you may move up your retirement date.

Since you have half of portfolio in taxable and half in tax-advantaged it seems to me that you have more than enough room to have all your fixed income funds in tax-sheltered.
I guess I"m not thinking this through enough. You're saying that if we retire today, with ~16 years worth of current expenses in our taxable account, then hit with a sequence of negative returns for six years, we should still be able to make it to 59 without running out of taxable? I suppose that if we adjust our spending, we could.
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Old 02-03-2018, 04:44 PM   #10
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More or less. Equities could drop in half and you would still be OK. But if equities dropped in half, I would expect you would revisit your assumptions well before then.

At least with equities in taxable you could tax-loss harvest and make other taxpayers help pay for your losses. Also with bonds tax-deferred it is likely you would not maximize RMDs when that time comes.

Just imagine what this place would look like if there were 6 years of negative returns. Half the folks posting would probably go back to work.
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Old 02-03-2018, 05:17 PM   #11
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More or less. Equities could drop in half and you would still be OK. But if equities dropped in half, I would expect you would revisit your assumptions well before then.

At least with equities in taxable you could tax-loss harvest and make other taxpayers help pay for your losses. Also with bonds tax-deferred it is likely you would not maximize RMDs when that time comes.
So I just plugged the numbers into FIRECalc (half our NW, 95% stocks, 5% cash, our current expenses, 3% inflation for a six year retirement period), and got 100% success. (Not sure why I didn't think about doing this before). However, I took this further.

From that, I took the lowest balance FIRECalc said we could possibly end up with after six years, added it to our NW/2 (what's in our tax-sheltered accounts - I know I'm not taking market fluctuation for the past six years into account), and ran FIRECalc again (this time, adding SS and lowering the stock holdings to 60% - the allocation in our tax-sheltered accounts, for a 38-year period), and it only gave me a 73% success rate.

Then I ran FIRECalc for a third time with the entire NW, SS, 60% equity allocation, yadda yadda - for a 44 year period, it gives me 100% success.

So I'm a little confused and concerned at the moment.
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Old 02-03-2018, 05:34 PM   #12
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I'd wait until Monday, then I would invest it in whatever tax-efficient equity ETF is down the mostest (or up the least) by about midday. Choices: VTI, VEA, VV.

I'd adjust from equities to bonds in my tax-deferred account to keep my asset allocation the same.
I just put the orders in for market open with limit and leave it alone for the day.

If the market doesn't go way (way) up from here eventually I wont have the funds to retire so I'm already betting on that regardless
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Old 02-03-2018, 05:36 PM   #13
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What do you have for income streams coming in? Pensions, SS, rents, dividends?

I would go 50/50 into IVV (S&P 500 ETF) and 50% in DVY (S&P dividend payers)

Bonds are getting hammered with interest rate hikes. 4% Inflation will decimate them.
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Old 02-03-2018, 05:42 PM   #14
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6 years out.... I would be looking for income generation to maybe get there faster, I’d look at some deed trust investments or REITs that can pay at least 10% or physical real estate, but that’s just my style.... high yields through RE
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Old 02-03-2018, 09:54 PM   #15
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Pay off the mortgage and likely put the rest in vtsax.
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Old 02-03-2018, 10:45 PM   #16
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Old 02-04-2018, 02:18 AM   #17
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Pay off the mortgage and likely put the rest in vtsax.
Forgot to mention - mortgage is already paid off
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Old 02-04-2018, 04:40 AM   #18
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Old 02-04-2018, 11:25 AM   #19
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Old 02-04-2018, 11:31 AM   #20
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Like the title of this post asks: What would you do with $100,000 in cash (in taxable account) right now if you were close (< 6 years) to FIRE?

[snip]

Thanks in advance.
DILLY DILLY!!!

You’re welcome!
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