JohnnyBGoode
Recycles dryer sheets
Would love to get the collective wisdom here.
As part of FIRE this year, I have some vested stock options that I have to exercise within 90 days of last day of employment or I lose them. The net total will be in the mid/high six figures after taxes - so definitely a "good" problem to have.
I could exercise to just hold the shares and wait for long term cap gains to kick in, but then it would be a large tax hit now and could be a big downside if the stock went down in the next 12 months. So I'd rather just take the tax hit at the cash all at once as a known quantity.
We don't need the money any time soon, so I'm planning to roll it into my retirement account leveraging my desired allocation: 65% stocks, 20% bonds, 15% cash/cash equivalent.
But what is the best way to incorporate it into my account? I was planning on sweeping it in through 10 or 12 equal monthly payments so I could just dollar-cost-average my way in. But then just yesterday I saw this article (Is dollar-cost averaging the cure for market jitters? - May. 3, 2017) that indicated that according to a Vanguard Study 2/3 of the time lump sum deposit is better than dollar-cost averaging.
So go in now or dollar-cost average? Or something else I haven't thought of? Would love to get some opinions on this. Thanks!
As part of FIRE this year, I have some vested stock options that I have to exercise within 90 days of last day of employment or I lose them. The net total will be in the mid/high six figures after taxes - so definitely a "good" problem to have.
I could exercise to just hold the shares and wait for long term cap gains to kick in, but then it would be a large tax hit now and could be a big downside if the stock went down in the next 12 months. So I'd rather just take the tax hit at the cash all at once as a known quantity.
We don't need the money any time soon, so I'm planning to roll it into my retirement account leveraging my desired allocation: 65% stocks, 20% bonds, 15% cash/cash equivalent.
But what is the best way to incorporate it into my account? I was planning on sweeping it in through 10 or 12 equal monthly payments so I could just dollar-cost-average my way in. But then just yesterday I saw this article (Is dollar-cost averaging the cure for market jitters? - May. 3, 2017) that indicated that according to a Vanguard Study 2/3 of the time lump sum deposit is better than dollar-cost averaging.
So, for example, when Vanguard researchers looked at how someone investing a lump sum of cash all at once into a portfolio of 60% stocks-40% bonds vs. moving the cash into that 60-40 blend over a period of 12 months, they found that investing the lump immediately beat dollar-cost averaging about two-thirds of the time in the 1,069 rolling 12-month periods from 1926 through 2015.
So go in now or dollar-cost average? Or something else I haven't thought of? Would love to get some opinions on this. Thanks!