Join Early Retirement Today
Reply
 
Thread Tools Display Modes
500k Lump Sum...What to do in this market?
Old 12-14-2018, 05:17 PM   #1
Dryer sheet aficionado
 
Join Date: Apr 2014
Posts: 28
500k Lump Sum...What to do in this market?

Just received Lump Sum of $500k from a Pension Distribution......I am a 3 Fund ETF Index believer.....Would you just invest to your chosen AA in this market? I am 40/60....60 Years old and have 1.5 Million total including this new 500k Lump. Also have a small non inflation indexed pension (14.5k) and a strong SS record. Working PT and hope to call it totally quits at 62. Think 90k a year is possible with a 3% withdrawal rate if you include 32k SS and 14k Pension.
Thoughts?
macav933 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 12-14-2018, 05:55 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 10,252
Since things are in correction territory, this is the proverbial time that lots of folks have been waiting to invest for.

Investing is all about losing money, so I say just go for it and invest the whole sum as soon as you want to.
LOL! is offline   Reply With Quote
Old 12-14-2018, 06:02 PM   #3
Thinks s/he gets paid by the post
 
Join Date: Feb 2007
Location: Upstate
Posts: 2,944
Quote:
Originally Posted by macav933 View Post
Just received Lump Sum of $500k from a Pension Distribution......I am a 3 Fund ETF Index believer.....Would you just invest to your chosen AA in this market? I am 40/60....60 Years old and have 1.5 Million total including this new 500k Lump. Also have a small non inflation indexed pension (14.5k) and a strong SS record. Working PT and hope to call it totally quits at 62. Think 90k a year is possible with a 3% withdrawal rate if you include 32k SS and 14k Pension.
Thoughts?
Where is the other $1 Million (1.5 - .5) invested? At your chosen AA?

Free Internet Advice from a Stranger: At 3% WR, 1.5 yields 45K inflation adjusted. Add the 32K SS gives 77K. That leaves 13K which the 14K gives but is not inflation adjusted. Putting the 14K out of the equation, 90K - 32K = 58K. 58K* x WR = 1.5M yields WR = 3.87%. So yes, you can do it - but the WR is pretty close to 4% (but you also have 14K to invest every year).

In terms of investing, this will sound glib, but who knows? Given that, I would DCA in to my target AA, perhaps weighted based on market activity, i.e. increase the DCA amount if market continues to sell off, slow it down if market rallies.
copyright1997reloaded is offline   Reply With Quote
Old 12-14-2018, 06:23 PM   #4
Dryer sheet aficionado
 
Join Date: Apr 2014
Posts: 28
Yes....the other 1 mill is invested at my AA of 40/60. 4% WR is a little rich in my opinion given today’s Bond yields. My goal is to keep my WR as close to 3% as possible. I nibbled a little today and bought some Total Market Index as well as the International Market Index which is at its 52 week old and down some 17% from its high. I wouldn’t mind a further market sell off...
macav933 is offline   Reply With Quote
Old 12-14-2018, 07:09 PM   #5
Thinks s/he gets paid by the post
Ready's Avatar
 
Join Date: Mar 2013
Location: Southern California
Posts: 3,995
I'd probably invest about 1/3 of it right now since we are in the midst of a correction. Then I would DCA the rest of it over the next 18-24 months.
Ready is offline   Reply With Quote
Old 12-14-2018, 10:08 PM   #6
Thinks s/he gets paid by the post
 
Join Date: Jan 2007
Location: Thousand Oaks
Posts: 1,111
Quote:
Originally Posted by Ready View Post
I'd probably invest about 1/3 of it right now since we are in the midst of a correction. Then I would DCA the rest of it over the next 18-24 months.


It all depends on if you think you know how to time the market. If you do , you can come up with some DC averaging scheme. If it’s going to be in there for a number of years, it’s been demonstrated that, in the end, just going all in tends to work better than averaging
mh is offline   Reply With Quote
Old 12-15-2018, 01:39 AM   #7
Thinks s/he gets paid by the post
skipro33's Avatar
 
Join Date: Sep 2011
Location: Placerville
Posts: 1,788
Quote:
Originally Posted by Ready View Post
I'd probably invest about 1/3 of it right now since we are in the midst of a correction. Then I would DCA the rest of it over the next 18-24 months.

That's what I'm doing. I recently fired my FA from managing my funds, which triggered a sell-off of the funds available only with managed funds. With the cash, I bought in at the last two lows @ $100,000 each and likely to invest more if it continues to drop next week @$25,000 a pop until I'm all back in.
skipro33 is offline   Reply With Quote
Old 12-15-2018, 06:21 AM   #8
Thinks s/he gets paid by the post
jimbee's Avatar
 
Join Date: Oct 2010
Posts: 1,211
I would just invest it as directed by my asset allocation. I don't know how to properly time the stock market.
jimbee is offline   Reply With Quote
Old 12-15-2018, 07:34 AM   #9
Full time employment: Posting here.
cooch96's Avatar
 
Join Date: May 2014
Location: Lakewood
Posts: 916
Sounds like you’re doing quite well for yourself with a sound AA, a pension, SS, and a realistic/conservative expectation of future market performance. Congratulations!

I’d take a fraction of that lump sum, maybe 5-10%, and do something extravagant, exciting, and fun. Perhaps an African safari or a ski trip.

I’d invest the rest according to your AA immediately. Not doing so feels like adjusting your AA from bonds/stocks to cash/bonds/stocks. What’s the point of setting an AA if you’re going to change it on mildly bumpy market performance?
__________________
Why be normal when you can be yourself?
cooch96 is offline   Reply With Quote
Old 12-15-2018, 04:39 PM   #10
Thinks s/he gets paid by the post
 
Join Date: Jul 2015
Location: Beaverton
Posts: 1,382
If you're antsy go 6 month, 12 months and two year Treasuries
__________________
Jump in, the water's warm.
Bir48die is offline   Reply With Quote
Old 12-15-2018, 11:46 PM   #11
gone traveling
 
Join Date: Dec 2010
Posts: 538
Isn't the bond market headed towards 3%? Do you really need that $90k a year right now? If you were 1:2 stock: bond, that might put you at 3% very soon, and you need not be in a hurry to increase the stock fraction.
Bongleur is offline   Reply With Quote
Old 12-16-2018, 04:22 AM   #12
Thinks s/he gets paid by the post
DrRoy's Avatar
 
Join Date: Dec 2015
Location: Michigan
Posts: 4,939
Quote:
I'd probably invest about 1/3 of it right now since we are in the midst of a correction. Then I would DCA the rest of it over the next 18-24 months.
I would say 1/2 now and the rest over 6-12 mo.
__________________
"The mountains are calling, and I must go." John Muir
DrRoy is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Lump sum of 500K or $3500 PM @ age 65 MN_1021 FIRE and Money 9 01-12-2017 02:56 PM
When would you get in the market with a lump sum? amy5708 Active Investing, Market Strategies & Alternative Assets 69 02-24-2008 08:30 AM
Lump sum to invest, DCA in or go lump? Olav23 FIRE and Money 4 03-03-2007 03:22 PM
So what's wrong with 500k in a sheltered 4+% money market? windsurf FIRE and Money 22 11-29-2006 06:13 PM
Annuity vs Lump Sum Pension moguls FIRE and Money 5 05-26-2003 02:09 PM

» Quick Links

 
All times are GMT -6. The time now is 12:18 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.