New to E-R and need help / suggestions

[i2d2]

Hi

I am new to E-R and joined this forum recently and need your help. Thanks in advance, for your perspective, suggestions and help..

Brief background -- self 55, still in wf, wife 49, stay at home mom.. recently sold my primary residence with a plan to down-size and relocate during retirement...most likely in 2-3 years, still working on those details..as I am working those details, I need to invest the cash of about $1M the sale has resulted... This is my primary source for my retirement and am worried not to blew up....

I am thinking of opening VG or Fidelity and dca into s&p500 over the next 12 months or so, to keep it simple...is this a good strategy? I am worried about the plan, keeping in view of the stock market being all time high currently....

any suggestions, help or perspectives please?

tia..

[hnzw_rui]

Don't put all your funds in an S&P 500 Index. Diversify between stocks and bonds. Here are a few balanced Vanguard funds you might want to consider if you want a simple all-in-one fund as well as their stock/bond split:

Balanced Index (60/40)
Wellington (65/35)
Wellesley (37/63)
Target Retirement Income (30/70)
LifeStrategy Income (20/80)
LifeStrategy Conservative Growth (40/60)
LifeStrategy Moderate Growth (60/40)

Iirc, Balanced, Wellington and Wellesley funds are primarily US. Target Retirement and LifeStrategy funds also have international equity and bond allocations (30-40%).

[travelover]

The funds listed above are a good choice for simplicity, but for tax efficiency, you may want to consider a simple portfolio which has most of your bonds in an IRA (if you have one) and stocks in your after tax account. Do you have any other funds in an IRA or 401(k)?

Also, it is not clear when you need these funds - are you planning to use them to buy another house?

[Golden sunsets]

I would segregate those funds you intend to use to purchase your downsized retirement home and keep those funds liquid or in very safe short term obligations so that there is no chance of depreciation. With the remainder I would select a reasonable AA for your risk profile(factoring in your other investments) and invest in low cost index funds. DCA would be logical. Have you calculated your estimated expenses in retirement vs your revenue sources(pensions/annuities/pt work)?

[Exrook]

There is a good write-up over on the boglehead wiki that might provide some insight for you:

https://www.bogleheads.org/wiki/Managing_a_windfall

[i2d2]

Thanks travelover and others for the insight...

I have other funds in IRA/401(k) and others to take care of new home purchase. I want to use this money only for and during retirement....Not intending to use it for any other planned purpose.... Those retirement accounts are dcaed over a long period of time into S&P and this is a lumpsum which I am worried to handle diligently.....and at the same time don't want to go to an 'expert financial advisor', want to evaluate 'wealthfront' and 'betterment', but don't know, if I will complicate things with all this, than just going with simple approach of dcaing into a simple product...I don't know, if I am thinking 'straight'.

Exrook->Thanks for the link, I will look at the bogle heads write-up, hopefully will get some good ideas from there...

GoldenSunsets->I haven't yet calculated my expenses during the retirement, but would anticipate them to be substantially lower than they are currently, still planning for that.

thanks again...for any more insights.

Quote:

Originally Posted by travelover The funds listed above are a good choice for simplicity, but for tax efficiency, you may want to consider a simple portfolio which has most of your bonds in an IRA (if you have one) and stocks in your after tax account. Do you have any other funds in an IRA or 401(k)? Also, it is not clear when you need these funds - are you planning to use them to buy another house?

[travelover]

Quote:

Originally Posted by i2d2 Thanks travelover for the insight... I have other funds in IRA/401(k) and others to take care of new home purchase. I want to use this money only for and during retirement....Not intending to use it for any other planned purpose.... Those retirement accounts are dcaed over a long period of time into S&P and this is a lumpsum which I am worried to handle diligently... I will look at the bogle heads write-up, hopefully will get some good ideas from there...

Just a little more complicated than a single fund, are these simple portfolios. As I mentioned, you can separate your bonds (to the extent that you have room) into an IRA and hold the stock in an after tax account. This will help minimize taxes.

Lazy portfolios - Bogleheads

[W2R]

Quote:

Originally Posted by i2d2 Hi I am new to E-R and joined this forum recently and need your help. Thanks in advance, for your perspective, suggestions and help.. Brief background -- self 55, still in wf, wife 49, stay at home mom.. recently sold my primary residence with a plan to down-size and relocate during retirement...most likely in 2-3 years, still working on those details..as I am working those details, I need to invest the cash of about $1M the sale has resulted... This is my primary source for my retirement and am worried not to blew up.... I am thinking of opening VG or Fidelity and dca into s&p500 over the next 12 months or so, to keep it simple...is this a good strategy? I am worried about the plan, keeping in view of the stock market being all time high currently.... any suggestions, help or perspectives please? tia..

It's great to suddenly have a million dollars available for retirement. Managing a large portfolio is not easy, and it's an awesome responsibility, that's for sure. Sounds like you need to become an expert in your own right, and fast.

My recommendation would be to choose three or four books from this list that seem like they might be helpful:

Investment Books

and work hard to read and understand them as a first step.

Also I found the Four Pillars of Investing, by Bernstein, to be the best way for me to develop good investing instincts. It was also unbelievably boring. That said, I gritted my teeth and read it twice, without skipping a single word. At some point you might want to do the same.

[MBAustin]

The advice you have received not to put everything into S&P500 is spot on.

Ideally you would look at your total asset allocation (including IRAs, etc., and this new money) and invest this so that your overall allocation is where you want it to be (60-40, 70-30, whatever) as well as your international exposure. After you set aside the $$ for the retirement house in a safe place as Golden sunsets suggested (fwiw, I would use a limited term municipal bond fund such as VMLUX), then allocate the rest using something like Lazy Portfolios. Personally I wouldn't DCA over a long period, although I might spread it out over a few months just because of short term market volatility that seems to be more common.

Hope this is helpful. All the best with your planning!

[hnzw_rui]

This is a somewhat humorous take on investing:
How a Second Grader Beats Wall Street

And yes, I've pretty much got a Second Grader Portfolio plus a small allocation of Total Intl Bond because all Vanguard Target Retirement funds have it. Once I have enough funds in the Roth IRA to go Admiral shares, I'll switch out of the Target Retirement and simplify to just VTSAX, VTIAX and VBTLX.

Also, instead of DCA, look into value cost averaging.

[i2d2]

Thanks for the advise....

Are the target retirement funds have the AA built into them, already?

For example, if I don't need this money, say for 10 years ie. 2025, can I just buy the Vanguard Target Retirement Fund 2025 and be done with my AA?

I am sorry, if I sound too novice and lazy to read...I have been reading, as much, but don't want to make any mistake, as it may be costly and I can't afford it.

Also, any one here using - Wealthfront or Betterment for AA and Automatic re-balancing? Another question is, if Tax-loss harvesting may not necessarily a 'good' thing always..

TIA.

i2d2

Quote:

Originally Posted by hnzw_rui This is a somewhat humorous take on investing: How a Second Grader Beats Wall Street And yes, I've pretty much got a Second Grader Portfolio plus a small allocation of Total Intl Bond because all Vanguard Target Retirement funds have it. Once I have enough funds in the Roth IRA to go Admiral shares, I'll switch out of the Target Retirement and simplify to just VTSAX, VTIAX and VBTLX. Also, instead of DCA, look into value cost averaging.

[hnzw_rui]

Quote:

Originally Posted by i2d2 Thanks for the advise.... Are the target retirement funds have the AA built into them, already? For example, if I don't need this money, say for 10 years ie. 2025, can I just buy the Vanguard Target Retirement Fund 2025 and be done with my AA? I am sorry, if I sound too novice and lazy to read...I have been reading, as much, but don't want to make any mistake, as it may be costly and I can't afford it.

AA and rebalancing is automatic on the Target Retirement and LifeStrategy funds. The main difference is AA for LifeStrategy is static (e.g. 40/60 fixed the entire time) while Target Retirement funds follow a glide path.

How well that glide path might fit investors is another matter. With a 10 year horizon, an aggressive investor might prefer the Target 2030 or 2035. Meanwhile, a more conservative investor might be better off with the Target Income, 2010, 2015 or 2020 fund. Vanguard has the AA and glide path in the prospectus.