Still have not put my money in the market. Advice?

[steelyman]

I'm an a similar position, having received a large pile of cash this year in an IRA. I don't want to take the time to hover over that investment, so I've decided to mimic one of the Vanguard target funds using Fidelity index funds (because that's where the money is and there's a fee to buy Vanguard). I'm averaging in over two years and started that earlier in 2013.

 

[LakeTravis]

I've essentially been thinking the same thing because I'll be seeing proceeds in the range of $200K when I sell a property currently on the market.

My plan was to put:

$50K into AGNC
$50K into VTMSX
$100K into VWENX

And I would do it all at once on a day that was looking to be mediocre at best. But that's just me.

 

[jmzf1958]

Thank you for the comments and suggestions. It's good to get different perspectives. I know this money has to go into the market if for no other reason than inflation, as was pointed out. I'm committed to putting it in index funds for the long run, keeping my expenses low, and dollar cost averaging over a period of time. I know once I start doing this, I'll stay the course.

Thanks for the very helpful ideas and encouragement.

 

[AndrewJackson]

If I were you I would invest it all just at the point when you feel that you will miss the boat to perpetually higher levels in stock markets. When you make this transaction, be sure to inform the rest of us, so we can switch allocation from stocks to bonds.

Just kidding. I know the feeling of not putting money in and seeing the market go up...it sucks. Like everyone else said, put a small% and invest it every month/quarter until you are fully invested. This is the only way I know of to cope with a large initial investment (especially when you have that feeling that it is going to crash as soon as you invest).

 

[timo2]

I would venture to guess that the market will be higher 15 years from now. If you just put the money into a dividend ETF you could collect about 3% a year for 15 years. If that's too much for you to handle you can do a 5 year CD ladder.

What I did was, for my 15 year money, I put more in, because i also believe the market will be higher in 15 years, with a couple of crashes inbetween. My 5 year money, I took out of the stock market.

 

[CH]

I posted earlier this year regarding about $200,000 I have in my 401K. It is still in cash. I was advised to put it in the market by posters on this forum, and I have not yet done that. And now, I watch the market go up and up, and I'm still hoping for a pullback that may not come so I can put the money in.

I'm 55, retired, and I will not need this money for fifteen years may not need it even then as I will have enough guaranteed income to live on and will have other savings. If I don't need it, it will go to my kids.

So why can't I bring myself to put the money in? I keep thinking as soon as I put it in, the market will have a big pullback, and I'll regret not waiting. But then I think, so what if it does? After all, I don't need the money for 15 years, if then. In that time, it's logical to believe the market will be much higher, isn't it? Or will it be higher? The market is at its high now. Some people say not to buy in, the insiders are taking their money out. I don't want to buy high. Others say it could be another big bull market. I know nobody really knows what will happen. I keep thinking there will be another crash, and I'd lose it. The market didn't do too much between 2000 and 2012.

I've made mistakes in the last crash. I kept it in until Dow was at 11,000, then I took it out. I also had money in a taxable account that I took out during the crash in early November, 2008. I took the loss and paid off my house, car, and land with the balance. I should have kept that in there, but I panicked big time. I'd have a lot more if I kept it in. Not very logical, I know. I believe I'm watching too much CNN. I know now the right thing to do is to let it ride until the market comes back.

Again, I'd like some advice on what I should do and why it makes sense to do it. I'm just really afraid of making another big mistake with my money. Thanks for any and all advice.

I have heard a number of commentators saying that as the market continues to rise over the next few years, many people like you who took their money out at the bottom of the market will be getting back in, moving the market even higher. So you are in good company.

My advice to you is...if you want to be in the market, be an investor, not a trader and do not time the market. If you want to be in the market, average whatever equity allocation you decide on over a period of 6 months, and then stay the course! Moving in and out of the market is a fool's game. If you cannot stay the course, then don't get back in. There are some programs on line to determine what levels of risk you can tolerate. If you cannot tolerate much risk, then keep your equity allocation low, and maybe then you won't feel the need to bail when the market goes down. Markets will fluctuate!

 

[F4mandolin]

I have $70k waiting in Vanguard money market....waiting....waiting....waiting......damn, I keep waiting....I want free money......

 

[steelyman]

I have $70k waiting in Vanguard money market....waiting....waiting....waiting......damn, I keep waiting....I want free money......

Just don't let the market time you!

 

[LakeTravis]

I have $70k waiting in Vanguard money market....waiting....waiting....waiting......damn, I keep waiting....I want free money......

LOL! Same here - I've gotten to the point where I feel pretty good about buying something on a day when it's down a few pennies

Took a little while for me to get used to the concept of selling something while it was high (CSRX, for example) and using the proceeds to buy something else while it was low (AGNC). Felt like I was abandoning an investment that was serving me well to chase a falling knife - but then, that's smart investing. So I'm told.

I only do this with a small percentage (<10%) of my portfolio - the remainder I strictly add to (Wellington, Wellesley and other classics) and keep long, long term.

And have a significant amount sitting in the VMM just waiting for a larger buy opportunity.

 

[HighRoller]

I posted earlier this year regarding about $200,000 I have in my 401K. It is still in cash. I was advised to put it in the market by posters on this forum, and I have not yet done that. And now, I watch the market go up and up, and I'm still hoping for a pullback that may not come so I can put the money in.

I'm 55, retired, and I will not need this money for fifteen years may not need it even then as I will have enough guaranteed income to live on and will have other savings. If I don't need it, it will go to my kids.

I really can't advise you but I can say, you are not alone.

 

[Sun456]

I too have a bunch of cash sitting around. Maturing bonds and preferred stocking being called are adding to it all the time. I'm not doing anything with it right now. I did up my annuities a bit but other than that I can't find any place to put it that fits with my risk tolerance level.

 

[Donzo]

I agree with others of going with with a balanced fund like Wellington - the re-balancing of AA is done automatically - you can set it and forget it. Odds are in 15 years you will be glad you did.

 

[dmpi]

I got about 60% in stocks and 40% in bonds & CDs. In the past when the stock market went up I feel bad that I don't have 100% in. When the market went down I feel bad that I have 60% exposure. So the bottom line is that no matter what happens I feel bad. The truth is that this is all mental. You can see things as good or bad it depends on your choice. Over time I have reprogrammed my brain to think good and happy. As far as the OP is concerned, Why does he even want to be in stocks if it's going to drive him crazy.

 

[kcowan]

I think the bitter memory of previous corrections is going got keep you gunshy. Nothing wrong with that. Experience is why we live. Just keep looking at that $200k and imagine how you would feel if it were $190k.

 

[CountryBoy]

I recently went thru something very similar here. I have 225,000 in a regular (American Express) savings account, earning 0.85 interest. Knew I had to do something worthwhile with it, since I plan on retiring in 7-8 years.

Last week I opened a Vanguard account, and put 3K (minimum required) into the LifeStrategy Conservative Growth Fund (a 40/60 mix of stocks and bonds). A couple days later I added another 25K to it.

That was one week ago, it's currently at 28,240.00 (after a couple gains, couple losses). I'm still kind of nervous as the only investing I've done before is with my 401K, but at the same time, 1/10th of my life savings has earned close to twice in one week what the other 9/10 earns in that savings account in a month.

So right now I'm wondering how much of the remaining 195K I want to add to that fund, and keep in savings. I just dont know.

 

[RenoJay]

I strongly recommend you start hanging out on the Boglehead's forum. Their advice is essentially: "No one, not even the so-called professionals, can accurately time the market, so don't even try. Create a plan that determines how much you should have in stocks vs. bonds vs. cash vs. alternate investments and then stick to it. If stocks have a huge sell off, rather than acting emotionally, pull our your plan and see what percent of stocks it calls for and rebalance until you're back at your regular amounts." The emotions are hard to overcome which is why have a real plan in advance is essential. I won't be shocked at all if stocks (or bonds for that matter) take a big swoon. And I already know how I'll react if/when that happens.

 

[jmzf1958]

Great comments. They really help. I am a member of the Boglehead forum. I like the idea of writing down my investment plan and referring to it when I feel I need to. I've gotten some great advice on asset allocation and what index funds to buy. As far as the comment of why do I want to be in stocks if it makes me crazy, the answer is I know over the long term, it's the best place for this money to grow. Now that I have a plan and start implementing it, I'll be committed to keeping it in the funds for the long term. I learned a tough lesson from 2008-2009. I won't pull out my money again. Experience is the best teacher.

 

[hausfrau]

Thank you for the comments and suggestions. It's good to get different perspectives. I know this money has to go into the market if for no other reason than inflation, as was pointed out. I'm committed to putting it in index funds for the long run, keeping my expenses low, and dollar cost averaging over a period of time. I know once I start doing this, I'll stay the course.

Thanks for the very helpful ideas and encouragement.

For another perspective, we took a chunk out of stocks in Sept/Oct 2007 and paid off the house. Great timing, right? Even though we got out at a great time, looking back, I wish we would have kept the money in the market and just refinanced our mortgage instead.

I'd invest the money slowly, if that's more palatable.

 

[padlin00]

Common wisdom is it take roughly 30% equities to keep up with inflation, how about starting at 25% or 30% equities put in a diversified group of low cost index funds, or a single balanced. Put it in either dollar cost averaging or all at once, which ever way makes you more comfortable. Hopefully 30% is not too risky for you and you can at least not be going backwards sitting in cash. Adjust as needed in time as you get more comfortable, in either direction.

 

[obgyn65]

Only do what you feel comfortable with. I am also very conservative and risk averse, avoiding the market. Many others here disagree, so you may hear bias. Which is fine.

Again, I'd like some advice on what I should do and why it makes sense to do it. I'm just really afraid of making another big mistake with my money. Thanks for any and all advice.

 

[clifp]

Depending on how you define the market (S&P, or vanguard total stock market) and when you start measuring the market goes up 9-12% a year of .75% to 1% per month.

Obviously the ride up is anything but smooth. In fact only about 20% does the market go up 8-12% in a year the rest of the time it can be up 25% or down 15% and sometime twice that much.

If you want to maximize your wealth you'd stick the money in market in Monday. If you to sleep better that by all means dollar cost average. I can pretty much guarantee that if you live for another 30 years you will see a least one 30% correction/bear market. (I honestly believe that 2008/2009 is really once in a life time opportunity/catastrophe unless you live to be a 100). The fallacy of waiting for the correction is neither you or I have no real idea if the bear market will happen tomorrow or when the S&P hits 3000.

I consider my self fully invested by I do have 8% of my IRA, sitting around in cash because I also timing the market, or more accurately a price points for a couple of specific companies.

 

[target2019]

Only do what you feel comfortable with. I am also very conservative and risk averse, avoiding the market. Many others here disagree, so you may hear bias. Which is fine.

Every view point is biased. I'd like to point out that "conservative" models at various sites (USAA, Vanguard, Fidelity, etc.) all have allocations to something like 20% in stock mutual funds. Of course someone could say those advisers are biased. However, there is a lot of data that points to conservative models of 20/80 or some variation close to that as being a responsible portfolio.

 

[perrytime]

A morning star plot of AGG, 10 yr, (includes dividends) looks like steady, non-volitile growth. I am eyeing for at least some of my $. has recently had a little pull back, timing looks good to me.

 

[Jay_Gatsby]

Late to the thread and haven't read through it. To answer the OP, look at any sectors of the market that haven't participated in the recent rally. If you have a diversified portfolio, you probably own some of those sectors already. There's nothing wrong with adding to them, even if doing so temporarily puts you out of balance.