Deploying a large quantity of cash

[Cap_Scarlet]

As we work towards our retirement D-Day I've spend the last year deploying what I accept was a ridiculously large quantity of cash (about 1.5 million). We've now got around 1.5 of 2.2 million invested but are still sitting on around 700k of cash.

I'm nervous about putting it into the stock market (could trickle in over the next 2-3 years) but question is should we park it all in bonds and gradually switch to stocks or would you adopt some other strategy?

 

[Winemaker]

Do you think the market will be higher or lower 5 or 10 years from now?

Do you think interest rates will be higher or lower? Do you think you'll be alive?

The point I'm making is that I'm sure you have an Asset Allocation that you can live with. DCA that allocation and live with it. Good luck Cap.

 

[Koolau]

Without more info, I wouldn't hazard any advice (and if I did, keep in mind it would be worth every penny you paid for it.)

My absolute numbers are different, but you're "cash equivalent" percentage isn't a lot different from mine. I don't keep a lot of "cash" in savings or checking, but the "equivalents" to cash add up to a substantial percentage of my port. And I am happy with that. Some of the vehicles I consider roughly "same as cash" are some old SPDAs earning 4.5%, some old I-bonds (roughly 4%) and a Stable Value fund (or GIF). The penalty I pay for this commitment to cash equivalents is growth potential. The advantage is that I sleep well, knowing that at my age, I'm still not likely to run out of money at my current cash burn - even without the growth potential I'm leaving on the table. Naturally, YMMV.

 

[Sunset]

wow..... I bet OP had wished this money had all been deployed about 6 years earlier.

Would this be one of those cases of keeping it all in cash until the market has recovered for sure and absolutely higher than ever, now it must be time to buy ??

I kick myself as I was slow 6 months ago to invest 50K and so I waited for a correction, and waited and waited and now the darn old market broke 20,000 and then went UP

 

[RunningBum]

My own feeling is that you manage risk by having a proper asset allocation, and you try to stay within it. $700K in cash is probably not the asset allocation you have in mind, so if it were me I'd deploy it immediately.


There is nothing different from your $700K vs my $700K that is already invested. If you invested it all tomorrow and then it tanked, we'd be in the same situation, except for the psychological difference that you made an active decision to invest it, whereas I made a passive decision to keep it invested.


If you would be kicking yourself if it dropped shortly after investing, then trickle it in. I'm the opposite, I'd be kicking myself for having money on the sidelines while watching the market climb. I certainly wouldn't like to see the drop, but I wouldn't kick myself for sticking to my strategy.


Do what helps you sleep at night. It doesn't have to be what I'd do.

 

[akck]

We had the same dilemma with one of my wife's accounts that we transferred to a Rollover IRA around the first of the year. I decided to bite the bullet and invest the majority over a couple of weeks, leaving enough cash to cover a couple of years withdrawals if we need it. I can pat myself on the back as the account has made enough to cover the first year's estimated withdrawal during this short period. Of course, next week it could be in the red, but I felt that action was better than inaction.