500k Lump Sum...What to do in this market?

[macav933]

Just received Lump Sum of $500k from a Pension Distribution......I am a 3 Fund ETF Index believer.....Would you just invest to your chosen AA in this market? I am 40/60....60 Years old and have 1.5 Million total including this new 500k Lump. Also have a small non inflation indexed pension (14.5k) and a strong SS record. Working PT and hope to call it totally quits at 62. Think 90k a year is possible with a 3% withdrawal rate if you include 32k SS and 14k Pension.
Thoughts?

 

[LOL!]

Since things are in correction territory, this is the proverbial time that lots of folks have been waiting to invest for.

Investing is all about losing money, so I say just go for it and invest the whole sum as soon as you want to.

 

[copyright1997reloaded]

Just received Lump Sum of $500k from a Pension Distribution......I am a 3 Fund ETF Index believer.....Would you just invest to your chosen AA in this market? I am 40/60....60 Years old and have 1.5 Million total including this new 500k Lump. Also have a small non inflation indexed pension (14.5k) and a strong SS record. Working PT and hope to call it totally quits at 62. Think 90k a year is possible with a 3% withdrawal rate if you include 32k SS and 14k Pension.
Thoughts?

Where is the other $1 Million (1.5 - .5) invested? At your chosen AA?

Free Internet Advice from a Stranger: At 3% WR, 1.5 yields 45K inflation adjusted. Add the 32K SS gives 77K. That leaves 13K which the 14K gives but is not inflation adjusted. Putting the 14K out of the equation, 90K - 32K = 58K. 58K* x WR = 1.5M yields WR = 3.87%. So yes, you can do it - but the WR is pretty close to 4% (but you also have 14K to invest every year).

In terms of investing, this will sound glib, but who knows? Given that, I would DCA in to my target AA, perhaps weighted based on market activity, i.e. increase the DCA amount if market continues to sell off, slow it down if market rallies.

 

[macav933]

Yes....the other 1 mill is invested at my AA of 40/60. 4% WR is a little rich in my opinion given today’s Bond yields. My goal is to keep my WR as close to 3% as possible. I nibbled a little today and bought some Total Market Index as well as the International Market Index which is at its 52 week old and down some 17% from its high. I wouldn’t mind a further market sell off...

 

[Ready]

I'd probably invest about 1/3 of it right now since we are in the midst of a correction. Then I would DCA the rest of it over the next 18-24 months.

 

[mh]

I'd probably invest about 1/3 of it right now since we are in the midst of a correction. Then I would DCA the rest of it over the next 18-24 months.

It all depends on if you think you know how to time the market. If you do , you can come up with some DC averaging scheme. If it’s going to be in there for a number of years, it’s been demonstrated that, in the end, just going all in tends to work better than averaging

 

[skipro33]

I'd probably invest about 1/3 of it right now since we are in the midst of a correction. Then I would DCA the rest of it over the next 18-24 months.

That's what I'm doing. I recently fired my FA from managing my funds, which triggered a sell-off of the funds available only with managed funds. With the cash, I bought in at the last two lows @ $100,000 each and likely to invest more if it continues to drop next week @$25,000 a pop until I'm all back in.

 

[jimbee]

I would just invest it as directed by my asset allocation. I don't know how to properly time the stock market.

 

[cooch96]

Sounds like you’re doing quite well for yourself with a sound AA, a pension, SS, and a realistic/conservative expectation of future market performance. Congratulations!

I’d take a fraction of that lump sum, maybe 5-10%, and do something extravagant, exciting, and fun. Perhaps an African safari or a ski trip.

I’d invest the rest according to your AA immediately. Not doing so feels like adjusting your AA from bonds/stocks to cash/bonds/stocks. What’s the point of setting an AA if you’re going to change it on mildly bumpy market performance?

 

[Bir48die]

If you're antsy go 6 month, 12 months and two year Treasuries

 

[Bongleur]

Isn't the bond market headed towards 3%? Do you really need that $90k a year right now? If you were 1:2 stock: bond, that might put you at 3% very soon, and you need not be in a hurry to increase the stock fraction.

 

[DrRoy]

I'd probably invest about 1/3 of it right now since we are in the midst of a correction. Then I would DCA the rest of it over the next 18-24 months.

I would say 1/2 now and the rest over 6-12 mo.