Just rolled my work 401ks into Vanguard IRA. It is now all in cash (@1.5M). Just wanted to see what people thought about when to put it back into the market. I am not usually a market timer, but if there are indicators that I should wait for a while to reinvest I will think about it. It seems like most advice out there is to always just invest when you have the money and in the long run it will work out for the best. I do not plan on utilizing this money for at least 10 years (I'm 57yo).
When to reinvest
- Thread starter wompo
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What was your mix of stocks/bonds before you transferred?
I would pick the mix of stocks/bonds you want based on your age, risk appetite and need on Thursday and get to that level.
Say 50/50 is you mix. Get to 50/50 soon. I think 40/60 to 60/40 range would be reasonable.
If anyone knew of indicators, they wouldn't share them. And, they don't know. Nobody knows nothing. At 57, you have 35+ years to invest. Get to it!
I would pick the mix of stocks/bonds you want based on your age, risk appetite and need on Thursday and get to that level.
Say 50/50 is you mix. Get to 50/50 soon. I think 40/60 to 60/40 range would be reasonable.
If anyone knew of indicators, they wouldn't share them. And, they don't know. Nobody knows nothing. At 57, you have 35+ years to invest. Get to it!
I would skip BNDX. Doesn't add anything.
Have you thought of 1 or 2 LifeStrategy funds if you want the 4 fund?
Do a mix of the 40/60 and 60/40 to stay in that 50/50 to 60/40 range.
No fractional shares. The funds are always in balance so no re-balance issues. They might help you stay the course.
My parents are older but use a mix of 20/80 and 40/60 LifeStrategy to be about 35% stocks. Taxable has a couple other funds, but their Rollover IRAs are LifeStrategy funds.
Just an idea. You could jump back in at 50/50 and then adjust if you don't want to jump back at 60/40.
Have you thought of 1 or 2 LifeStrategy funds if you want the 4 fund?
Do a mix of the 40/60 and 60/40 to stay in that 50/50 to 60/40 range.
No fractional shares. The funds are always in balance so no re-balance issues. They might help you stay the course.
My parents are older but use a mix of 20/80 and 40/60 LifeStrategy to be about 35% stocks. Taxable has a couple other funds, but their Rollover IRAs are LifeStrategy funds.
Just an idea. You could jump back in at 50/50 and then adjust if you don't want to jump back at 60/40.
38Chevy454
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For the timing question, answer is now. Since this is longer term money 10 years plus, any market timing will likely be negligible over that time frame. Plus unless you have a better crystal ball, how do you know if you made the right choice except in rear view after the fact? My opinion is just put it in whatever AA you want and get it invested rather than cash.
travelover
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Nobody knows nuthin'. I liquidated my HSA funds to move it to Fidelity and have kept it in CDs ever since waiting for the the big stock drop, when I'd reinvest in stocks . It's been a long time now. 
RunningBum
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My reasoning on this is, if it makes sense for you to keep your $1.5M in cash, would it make sense for someone with $1.5M invested in their IRA to sell out and go to cash? Probably not, so why should you? It just happens you had an event that put you in cash, but why would you use that random event to keep you in cash?
It's just a mental thing. You have to take action to get yourself in the market, and if the market falls next week, you'll regret your action. But if you had kept that $1.5M invested, you probably wouldn't feel so bad, but the reality is that it's the same money.
If you want to try to time the market, go ahead, but I'm a fan of sticking to my AA with my long-term money whether I have a cash infusion, have to withdraw a large amount, or just going from day to day.
It's just a mental thing. You have to take action to get yourself in the market, and if the market falls next week, you'll regret your action. But if you had kept that $1.5M invested, you probably wouldn't feel so bad, but the reality is that it's the same money.
If you want to try to time the market, go ahead, but I'm a fan of sticking to my AA with my long-term money whether I have a cash infusion, have to withdraw a large amount, or just going from day to day.
Thanks for the advice. Sounds like good advice to me. If I did not roll over I would not even be thinking about going all cash.
CardsFan
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Anecdote:
I worked with a lady that was rolling over her 401k, right before the big recession. It was all in cash. She watched the market tumble, and was happy to be in cash.
The big question is, when did she re-invest? (and I don't have an answer to that). To time the market you need to also know when to get back in. You don't have a crystal ball, you don't need the funds for ten years, I would go back in now around where you were before.
I worked with a lady that was rolling over her 401k, right before the big recession. It was all in cash. She watched the market tumble, and was happy to be in cash.
The big question is, when did she re-invest? (and I don't have an answer to that). To time the market you need to also know when to get back in. You don't have a crystal ball, you don't need the funds for ten years, I would go back in now around where you were before.
There are two actions at the time of Market scare: 1. sell everything and wait till Market starts to recover, 2. stay put whatever (needs cash to wait over the turbulence). Personally I belong to 2nd as I am sure nobody could time the Market. However what the Feds action during the Market trouble? Lower the rates, if not possible, print money and buy toxic assets to support economy. All of us had seen it in 2009 - 2014. Means the cash we keep under negative rates may lose even more. Your choice of AA.
Given you have at least 10 years then do the same AA you had before you liquidated. Really comes down to your time horizon, cash flow needs and mental comfort with volatility. 57 , barring a tragedy, gives you a very long time horizon. Age in of itself isn't a big factor in determining your AA.
When did she get back in is the great unknown and chances are , if shes a market timer, she missed the initial big surge following the bear market. That's another reason why being out of the market totally is actually more aggressive and risky than being 100% in!
jollystomper
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Are concerned that the market is "too high" right now?
For money that you are not going to touch for 10 years,the near term fluctuations really do not matter.
For money that you are not going to touch for 10 years,the near term fluctuations really do not matter.
Yes I was thinking that the market is high now. But, I have decided to reinvest this week.
Badger
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I would expect many of the posts to be targeting what someone would do if their age was below 70. After all this is a early retirement forum even though some of us here are getting a little "long in the tooth". But should I expect them to be different if they were older than that when there is much less potential time to recover from a down market?
Cheers!
Cheers!
LRDave
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I don't see anything as of 1/1/2020 that would scream: "Better hold tight on that cash!" Add me to the "nobody knows nuthin" camp - including me, of course.
stephenson
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I would, and have re entered equity markets a bit at a time. Sort of like dollar cost averaging.
pb4uski
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I would have that concern too, given that the indices are at or near market highs and 2019 was so high.
If it were me, I would value average in the equity allocation over 12-18 months.
So for example, let's say that you want to invest $900 over the next 18 months. Invest $50k now.... in a month, add whatever you need to to bring your balance up to $100k... if the market is higher then you'll invest less than $50k and if it is lower you'll invest more... then in a month, add whatever you need to to bring your balance up to $150k.
Repeat until the entire $900k has been invested. In theory, you'll be investing less when the market is relatively high and more when the market is relatively low.... a cousin of buy low/sell high... but rather buy more low/buy less high.
Or you could split the baby and invest $450k now and value average in an additional $50k a month until your equity allocation is fully invested.
not unreasonable if you are coming from real cash..........but OP is coming from temporary cash from liquidating prior holdings.
pb4uski
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I have owned the Admiral shares version.... VTIAX for many years and have never had a corrected 1099 that I can remember.
Why do you ask?
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