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Old 12-07-2016, 10:44 PM   #1
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When to jump in?

Hi all, its taking me years to finally decide where to move my 401 acct. I've decided on Vanguard . Right now the funds have been transferred and sitting in a Vanguard Money Market Acct. (aprox. 1 million). In talking to my advisor there I was questioning if now is a good time to invest in funds since the market is at its all time high or wait for a slight dip. any thoughts on the timing? thanks
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Old 12-08-2016, 05:41 AM   #2
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My crystal ball is a little cloudy right now, but one way to do it, would be to dollar cost average "your selections" over the next 12 months, just blindly picking a day of the month to do it, and then do it. That might make you feel a little better about not putting it in all at once.

I probably would not go much beyond a year in doing it.

So, if you think about it, you pulled funds out of the market and if you hadn't decided to "move", you'd still be in the market, riding whichever way it goes. You'd probably not be trying "market timing"?

If someone were to ask me when the best time is to invest what money they had, I'd say invest it when you have the money and don't look back. When you look at a chart of the Dow or S&P, over the last 50 years, there probably wasn't a bad time to invest "for the long term". If you need the money in a year or two, that's a different story.

When you listen to talking heads on tv you have just as many telling you to panic now as there is to "go long!" Nobody knows ..... really.
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Old 12-08-2016, 05:55 AM   #3
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Quote:
My crystal ball is a little cloudy right now, but one way to do it, would be to dollar cost average "your selections", just blindly picking a day of the month to do it, and then do it. That might make you feel a little better about not putting it in all at once.

So, if you think about it, you pulled funds out of the market and if you hadn't decided to "move", you'd still be in the market, riding whichever way it goes. You'd probably not be trying "market timing"?

When you look at a chart of the Dow or S&P, over the last 50 years, there probably wasn't a bad time to invest "for the long term".
You cannot know what the "right" time to get the funds back in the market is. When you are "waiting for a dip", the market can keep running higher. When you do get a dip, you have no idea where the turn will come, and while waiting for it to dip more, it reverses and makes a new high. Pick an interval of months (probably not as long as a year) and put a portion of the money in on fixed dates. Take the emotion of the decision out of it. You might also make the first installment larger than the others to get established. Be prepared for the market to drop after one of the buy points. It is bound to happen. You still could not have predicted the exact right timing.
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Old 12-08-2016, 07:29 AM   #4
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Here is where having a sensible asset allocation can help you quite a bit. I faced the same circumstance earlier in the year when DW's and my pensions were rolled over to IRAs.

What I did was set an AA that would keep me in mac & cheese even if there were a 40% crash, living off of the bond side, with some bond money then to buy equities in order to rebalance the AA after such a crash.

It's not about "maximizing returns", it's about insuring as well as you can, that you can survive a bad scenario, early in your retirement years.
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Old 12-08-2016, 07:38 AM   #5
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I would have went all in as soon as the funds hit the IRA account.The funds were invested in the 401K, just move and buy a similar mix - Right away. Time in the market is what wins, not timing.

December through May is the best time. Do not miss it.
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Old 12-08-2016, 09:07 AM   #6
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OP - I certainly hope your money has only been in cash a very short while, or you have missed on the past month long climb.

This is why folks should transfer as much as possible "IN KIND" when doing these transfer's to stay in the market and avoid the dreaded when should I get back in question.
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Old 12-08-2016, 09:37 AM   #7
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I would have went all in as soon as the funds hit the IRA account.The funds were invested in the 401K, just move and buy a similar mix - Right away. Time in the market is what wins, not timing.

December through May is the best time. Do not miss it.
I was faced with this same situation last year. I was transferring my 403b to a Vanguard IRA. I decided to go immediately all in at once. I found out that I had a greater fear of not being in the market than investing all at once.
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Old 12-08-2016, 09:41 AM   #8
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Here is where having a sensible asset allocation can help you quite a bit. I faced the same circumstance earlier in the year when DW's and my pensions were rolled over to IRAs.

What I did was set an AA that would keep me in mac & cheese even if there were a 40% crash, living off of the bond side, with some bond money then to buy equities in order to rebalance the AA after such a crash.

It's not about "maximizing returns", it's about insuring as well as you can, that you can survive a bad scenario, early in your retirement years.

thanks for the reply ,I think I understand what your saying but what exactly is AA? again thank you
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Old 12-08-2016, 10:02 AM   #9
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I would have went all in as soon as the funds hit the IRA account.The funds were invested in the 401K, just move and buy a similar mix - Right away. Time in the market is what wins, not timing.

December through May is the best time. Do not miss it.
+1 on that! I too would have kept to the same type of investment allocations you had in the 401k and put the cash to work immediately.
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Old 12-08-2016, 10:03 AM   #10
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(AA is asset allocation.)

What I do when I'm not sure about timing for investing a big chunk of money, is to invest a fraction of it each month, a big enough fraction that it is all invested within about 5-10 months. Then I won't feel badly about the timing. It's not necessarily the best financial strategy but it lets me sleep at night.
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Old 12-08-2016, 10:07 AM   #11
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I was faced with this same situation last year. I was transferring my 403b to a Vanguard IRA. I decided to go immediately all in at once. I found out that I had a greater fear of not being in the market than investing all at once.
I have always gone immediately in. Studies have proved this is usually the best approach.
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Old 12-08-2016, 10:07 AM   #12
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There will always be new highs, so even if you invest now, history says there will be many more highs in the future - it just won't be a straight line upward, there will be setbacks as always.

Whether to go all in, wait or dollar-cost-average in can never be known in advance, and academic studies don't favor one over another either. If investing at the current all time high worries you, dollar-cost-average in - lots of people do so for the exact same reasons you're hesitating. In the long run, it's not likely to make much difference based on all past history. Good luck...
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Old 12-08-2016, 10:08 AM   #13
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I have always gone immediately in. Studies have proved this is usually the best approach.
I can show you studies that also favor dollar-cost-averaging, but only slightly. There's no definitive study that I've seen, have you? It can matter over the short run, but over the long term, it makes little difference.
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Old 12-08-2016, 10:23 AM   #14
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I was always glad I too knew two years to average in when I retire in 1999, but you never know.......

This was when I sold a bunch of company stock to retire and invest in my retirement portfolio.

When rolling over to an IRA or transferring assets I transferred in kind when I could or reinvested immediately in the same allocation. Otherwise it's just crazy making.
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Old 12-08-2016, 10:41 AM   #15
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thanks for the reply ,I think I understand what your saying but what exactly is AA? again thank you
If you don't know what AA stands for, I suggest you read this page before doing anything:

https://www.bogleheads.org/wiki/Bogl...g_start-up_kit
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Old 12-08-2016, 10:51 AM   #16
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+1 for Bogleheads. You can get quite an education there, and the startup kit is a good place to, well, start.

There's also a page there that directly addresses the original question:

https://www.bogleheads.org/wiki/Doll...ersus_lump_sum

Don't be intimidated if you don't understand the lingo at first. The main takeaway (IMHO) from that article is that there's no "right" answer. To quote, "As such [dollar cost averaging vs. lump sum investing] is a technique to overcome fear in investing by mitigating the risk of loss over the short term."
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Old 12-08-2016, 12:39 PM   #17
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I would have went all in as soon as the funds hit the IRA account.The funds were invested in the 401K, just move and buy a similar mix - Right away. Time in the market is what wins, not timing.

December through May is the best time. Do not miss it.
This was my strategy when I moved part of my 401k to Vanguard
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Old 12-08-2016, 12:48 PM   #18
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Don't be intimidated by the lingo. Asset Allocation is simply how you slice up your pie of investments, into either Stocks, Bonds or Fixed Income (and treasuries)

Five years ago I had no clue what AA was, and after a year of actually accomplishing my own AA strategy I felt quite a bit more comfortable. Basically with those three slices of pie or what many here call "buckets" of AA above, you will then want to ensure that each of these buckets maintains their level of "fullness" by re-allocating aka re balance (usually 1-2x per year). What is accomplished in the re balance, is selling enough out of the bucket that grew (for instance your stock bucket) and moving the proceeds into the bucket that is below your defined AA (bonds). Think of it as a teeter totter and you are trying to keep the teeter as close to the middle without filling one bucket too much or the other not enough.

Hope that strange analogy is understood lol

Fast forward five years I am now the executor of a multi-million dollar trust. I didn't even know what AA was five years ago, so if anything there is hope for the rest of humanity.
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Old 12-08-2016, 12:58 PM   #19
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Originally Posted by lacawac View Post
what exactly is AA?
http://www.early-retirement.org/foru...rum-34884.html
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Old 12-08-2016, 02:38 PM   #20
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You would have said the same all time high thing in July, or August or November... best to get in right away.

What was the Dow or S&P when you got out?
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