Useful Links

cbo111 · 08-01-2016, 03:07 PM

So, finally selling my Florida condo which will net about $220,000. DW and I are retired, in our mid-50s (is 58 still mid?). We pretty much live off our pensions and don't touch investments, which include about $800K in Vanguard, and about $200K in CD's, Ibonds, cash. We own our home, no mortgage.
Because of current downturn in the world economy and my fear of what may transpire after the Nov 16 election, I am a little hesitant to just drop all of it into Vanguard.
Any ideas out there for a safe investment that will keep up with inflation?
Chuck

JohnnyBGoode · 08-01-2016, 03:19 PM

Similar question here! I have been transitioning from a FA-driven highly diversified portfolio to a simple 4-fund portfolio over the last several months. I have about $500K in cash fund right now at Fidelity and I'm really not sure if I want to pull the trigger and put it in any sort of index fund right now. I'm thinking I want to keep it right where it is til after the election.

I know timing the market is wrong, but US markets looks pretty frothy right now and I have no idea what to make of post-brexit international markets.

I think waiting might be the right move. There's bound to be some sort of correction at some point. Seems like there is a lot more downside opportunity than upside.

DrRoy · 08-01-2016, 03:39 PM

Quote:

I'm really not sure if I want to pull the trigger and put it in any sort of index fund right now. I'm thinking I want to keep it right where it is til after the election.

I know timing the market is wrong, but US markets looks pretty frothy right now and I have no idea what to make of post-brexit international markets.
There's bound to be some sort of correction at some point. Seems like there is a lot more downside opportunity than upside.

Timing is folly, but you don't have to go all the way with anything. Also, even if there is a correction, that doesn't mean you would catch it. At the bottom of a correction it usually looks like the market will keep falling, so you don't buy. Then it's gone back up and you don't want to buy still.

I would suggest putting in 25-33% to equity index, and perhaps go with investment grade, intermediate term bonds. That should beat inflation when held to maturity.

**MichaelB** · 08-01-2016, 03:51 PM

Quote:

Originally Posted by cbo111

Because of current downturn in the world economy

Curious. Global growth is positive, earlier this year hit a multi-year low of 2.2%, low but still growth, and has since recovered to over 4%. Are you sure you want to bet on a global downturn?

mpeirce · 08-01-2016, 03:52 PM

Average into the market over six months? Even a year?

What's the hurry if this is long term money. If it's not long term money, buy a CD of the appropriate term.

VFK57 · 08-01-2016, 03:59 PM

You should decide where to invest for yourself. I listened for advise here on stock selection at the end of last year and now face a huge loss on it, dividends went down a lot too. Very few stocks / bonds are safe now, RE prices may go down in near future if we head to a recession again, CDs, although safe and insured, do not pay much vs inflation and rates easily may go negative depending on future inflation numbers.

Bamaman · 08-01-2016, 06:11 PM

Last time I had such funds, I went thru Fidelity and put the money into 3 diversified ETF's. I did very well with them too--enough to pay some income taxes when I sold'em.

Put the $ into a large house foreclosure that was purchased far below market value.

**sengsational** · 08-01-2016, 07:03 PM

Changing ones asset allocation based on an influx of cash is kind of against the grain. If you want to make a permanent change to your allocation percentages, then do it. But if you don't stick to those new percentages, that would sound to me like market timing.

I think US equities are overvalued, so I pulled down my asset allocation for those, but there's no alterations until the PE10 flips, which happens only every decade or so.

dallas27 · 08-01-2016, 07:22 PM

All these people say equities will fall, how many can say they are buying puts?

Sent from my iPhone using Early Retirement Forum

VFK57 · 08-01-2016, 07:43 PM

Quote:

Originally Posted by dallas27

All these people say equities will fall, how many can say they are buying puts?

Sent from my iPhone using Early Retirement Forum

It is all depend on the Feds policies. If they would continue "easy money" or start negative rates or QE4, the stocks will go much higher and inflation as well. On the other hand if they will not do all of the above and possibly increase the rate, stocks will go down a lot.

rayinpenn · 08-01-2016, 07:44 PM

A feeling like I'll play it safe until after the elections is timing the market... In that six months even if nothing moves you'll lose 1.7% in dividends if you invested in a less volatile dividend fund. I gave up trying to guess years ago - for now I just buy and hold its boring but it works.

Sent from my iPad using Early Retirement Forum

**sengsational** · 08-01-2016, 07:54 PM

Quote:

Originally Posted by dallas27

All these people say equities will fall, how many can say they are buying puts?

Sent from my iPhone using Early Retirement Forum

Puts are a short term play. I don't do those. I certainly didn't say an overvalued US equity market couldn't become an even more overvalued equity market, putting the gamblers in the ditch. I'm simply less exposed than before, and that AA will persist until the indicators change. Much like counting cards in black jack...the end of this shoe might be ripe, but there's no guarantee that the big bets will come my way. Right now, this shoe seems not to be ripe, so I'll pull just a bit off the table.

Dog · 08-01-2016, 08:16 PM

We are in the same situation after selling a home. Not sure where to put the cash. Market seems high right now.

Sent from my iPhone using Early Retirement Forum

Fermion · 08-01-2016, 08:46 PM

I am confused. You live off your pensions, so what reason do you need the $220K to keep up with inflation? Are you worried about your pension getting cut in the future or do you have plans for something big to purchase later?

But I am in the same position with about $350K to invest. We do need that money to keep up with and surpass inflation.

DROPOUT · 08-01-2016, 08:51 PM

We have QUITE a bit sitting in cash. I bit the bullet, and dropped $300k in about 2 months ago. Its paid off incredibly well. We still have quite a bit more, but I think I will continue my DCA'ing in as it allows me to sleep better at night

We've set up $10k/month transfer in to an allocated 6 fund portfolio (split ofcourse) ... It allows me not to overthink and just go with it! Ideally, I'd like to keep a large cash position for a major market drop. Seeing as that could be next month or 5 years down the road, I will continue my small DCA'ing until that large market drop!

cbo111 · 08-02-2016, 06:58 AM

Quote:

Originally Posted by Fermion

I am confused. You live off your pensions, so what reason do you need the $220K to keep up with inflation? Are you worried about your pension getting cut in the future or do you have plans for something big to purchase later?

But I am in the same position with about $350K to invest. We do need that money to keep up with and surpass inflation.

We are fortunate in that both pensions (mil and teacher) are cola'd. I am simply looking for a relatively secure vehicle that can earn about 3%. I may just slowly feed half of it into my index funds at Vanguard and put the rest in long-term CD's.

Fermion · 08-02-2016, 07:27 AM

As stupid as it sounds, I would probably buy a large amount of gold if I were in your position.

My reasoning is that with COLA'd government pensions covering all of your expenses, your only risk in life (other than health) is a collapse of the government. Gold is probably the single best protection against that event.

But if you need cash for a trip to Mars in 2035 on Space-X, then I can see putting money in the stock market