Too Much Cash

[Which Roger]

At this point I'm looking for advice and opinions whether to put the $200,000 back into the market at my chosen asset allocation, all at once, or income average it in over 6 months, one year, or longer. Or, given the current state of the market, maybe hold more in cash than my standard asset allocation.

I would say it depends on what your "chosen asset allocation" is. If it's well-diversified (e.g at least US stocks, foreign stocks, and bonds), then I would be much less hesitant to go all-in immediately than if you were going to put it all into a single asset class.

Most of the "all-in or DCA" discussions I've seen pertain to putting all the money into a single asset class (usually US stocks).

 

[frayne]

Wait until September. There are some prophecies - taken seriously by Christians and Jews - that the stock market will crash in September 2015. If they take their money out it could become a self-fulfilling prophecy and then everything would be on sale.

Dave Ramsey has been alluding to this a lot lately, trying to tell his Christian audience how stupid they are to believe in such things. But the frequency of his references to it just show how pervasive the beliefs are.

Just curious as to what prophecies they are taking about ?

 

[MichaelB]

Just curious as to what prophecies they are taking about ?

The dawning of the age of Aquarius

 

[GTFan]

Gotta admit it was a nice troll from a one-and-done though.

 

[tmm99]

Wait until September. There are some prophecies - taken seriously by Christians and Jews - that the stock market will crash in September 2015. If they take their money out it could become a self-fulfilling prophecy and then everything would be on sale.

Dave Ramsey has been alluding to this a lot lately, trying to tell his Christian audience how stupid they are to believe in such things. But the frequency of his references to it just show how pervasive the beliefs are.

It is very funny to me that you (with the username of TheBuddha) talking about prophecies by Christians and Jews. You have only one post, so maybe you made this username just for this post? (Sorry if I offended anyone with my post...) I had a good laugh.

 

[RunningBum]

I would say it depends on what your "chosen asset allocation" is. If it's well-diversified (e.g at least US stocks, foreign stocks, and bonds), then I would be much less hesitant to go all-in immediately than if you were going to put it all into a single asset class.

Most of the "all-in or DCA" discussions I've seen pertain to putting all the money into a single asset class (usually US stocks).

No, I would say most "all-in" people are saying to allocate your money according to your AA. If you are currently 60/40 stocks and want to stay 60/40 stocks, put 60% of the new money into stocks, and 40% into whatever non-equities you use.

This is also a chance to rebalance, so if your goal it 60/40 but you are actually 65/35, you put less than 60% into stocks to get your AA to 60%.

The only time I'd say to put it into a single asset class is if that was what was required to get your portfolio into your desired AA.

Market timers probably look at this differently, if they think stocks are set to take off they would probably say to put it 100% into stocks. Conversely if it's not a good time, they would say to leave it out of the market until there is a buying opportunity. Or maybe somewhere between the two, to hedge their bets.

 

[TheBuddha]

Just curious as to what prophecies they are taking about ?

I think it's called the Shemitah or Blood Moon.

 

[eta2020]

Wait until September. There are some prophecies - taken seriously by Christians and Jews - that the stock market will crash in September 2015. If they take their money out it could become a self-fulfilling prophecy and then everything would be on sale.

Dave Ramsey has been alluding to this a lot lately, trying to tell his Christian audience how stupid they are to believe in such things. But the frequency of his references to it just show how pervasive the beliefs are.

With this knowledge you are in unique position to make %$#&^% of money

 

[Forever Free To Be Me]

I retired at the end of 2013 and had a lump some of $600,00 from my pension. I was scared of a correction and chose to dollar cost avg over 6 months. My return for 2014 was just over 3% vs about 12% for the S&P that year. My vote is to put all money into your asset allocation and let it ride. Long term investing is the way to go. Just my 2 cents for what it's worth.....

 

[M Paquette]

Oh, gosh. Predicting a downturn in the stock market for a September doesn't exactly require divine powers.

View attachment 22162

http://www.yardeni.com/pub/stmktreturns.pdf

 

[RobLJ]

1. One theory is to allocate it all now, particularly if you're going to put it in a diverse bundle of assets (including bonds) rather than all stocks.
2. Alternative, if you'll regret investing before a 5-15% market correction, dollar cost average into the stock component, over a given period (10% every month for 10 months; or 20% every other month for 10 months or. . . )
3. Or, given your allocation, use whatever percentage is necessary to rebalance your current allocations, then dollar cost average the rest.
4. Or put in a % allocation (30%/40%); wait for a 5-10% correction, put in another 30%, then dollar cost the rest.
Whatever floats your boat and helps you sleep.

 

[Senator]

I had a similar situation a while back when I sold a flip.

Make sure you will not be paying any taxes on any gains. If so, set that aside.

Pay any debt that you have that is > 5%, for sure. I used it to pay off a 5.375% mortgage on a rental property.

If you are worried about the market dropping, buy $10K to $20K a month of your asset allocation.

You can also use it to move income from this year to next. If you have any withholding, or need to pay estimated taxes, send in extra. You will get it back next year, but will get a larger deduction for taxes paid in 2015, and offset income at a higher tax bracket. That effectively switches income from 2015 to 2016, when you will get the excess refunded. Use the cash from the sale to live on, while you increase your withholding.

If you retire mid-next year, any additional taxes paid this year will be saving 25%+ income tax. Next year it might be lower with a lower taxable income.