Advice with idle funds in Bank & 401K, IRA

[CLD1974]

Hello Gurus,

Thanks for taking time to read my post.

Let me explain my situation, I am 42 year old with two dependents (spouse & child). My child is 11 year old.  We live in an Apartment in San Diego paying $1850 for the rent.

I lost money couple of times in the stocks, so I became over-cautious, and have been too conservative with the investment

I have a 401K with a balance of $145K, with the below allocation.

    Cash    --36%   
    Bonds --20%   
    Balanced/Asset Allocation--22%   
    Stocks --   22%   
 
Break-up of my investments in the 401K is as below

Stable Value Option  51K  ( This fund occasionally gives some dividend)
GNMA Fund(VFIJX)   29 K
VTTVX         1.5K
VTHRX         7.8K
VTTHX         10.5K
VBAIX(30%)      12.2K (30% goes to this fund from my monthly contribution)
VEIRX(40%)      16.8K  (40% goes to this fund from my monthly contribution)
VIGIX         1K
VIMAX(30%)      12K   (30% goes to this fund from my monthly contribution)
VPMAX      1.5K

I know it doesn’t make any sense to have so much in the Cash and Bonds, but I have been waiting for some correction to move the funds from “Stable Value Option” & “GNMA fund(VFIJX). 

Can someone please suggest what should be ratio in which I should spread my investments in my 401K? Also, do I need to wait for any market correction or shall I move funds in regular intervals? And what funds should I invest in?


I also have around $200K in my checking account, I know I am stupid to keep such a large amount in the checking account. The main reason for keeping the funds in checking account was that couple of years back I wanted to purchase a house, however it didn’t materialize. And now the home prices have gone up considerably, and I am little scared to buy the house now, sine some people are suggesting there could be a slowdown in the real estate market.

Please suggest how I should invest this money sitting idle in my checking account? Shall I look to buy a home or invest somewhere else.  If I should invest in the stocks/funds what would you suggest ?
 
I also have the below investments, if I can say so. I invested in Roth IRA & Traditional IRA for tax savings.

Traditional IRA in my spouse’s account 5K ( This money is sitting idle in the IRA Account, not invested in any mutual funds)

Roth IRA 16500 (This money is sitting idle in the IRA Account, not invested in any mutual funds)

Scottrade - $16900 ( In the last five years, I did invest in couple of stocks and made 2K profit on the investment of $10k), now the funds in my trading account are not invested in any stocks/funds.

Can you please suggest how I should be investing my money.

Thanks in advance.

[Frankies Girl]

It honestly sounds like you don't really understand how investing works, and therefore are afraid of the general market volatility instead of looking at the long term view. Not that this is bad, because we all had to start somewhere. I literally had zero knowledge about 3-4 years ago, and I'm confident enough now to even manage my mother's investments thanks in a large part to Jim Collins' site, this forum and the Bogleheads forum. If I can do it, anyone can. ;)

No one here can tell you how much to invest in what funds. You have to figure that part out yourself. But what can help you is for you to start educating yourself on how the market works, what your investor policy statement (goals/aspirations/rules whatever you'd like to call it) should be and what asset allocation works for what you are trying to achieve.

I would suggest you start here:

http://jlcollinsnh.com/stock-series/
^an easy to read and understand primer for learning about how the market works, and how index investing helps take the big scary part out of investing. He wrote a book too, so check it out if you don't like reading on the internet.

https://www.bogleheads.org/wiki/Main_Page
^the gold standard for index investing

https://www.bogleheads.org/wiki/Investment_policy_statement
Figure out this part first as it is going to be your rulebook for what you do going forward.

https://www.bogleheads.org/wiki/Asset_allocation
This part next so you know how much you want to hold in what funds.

https://www.bogleheads.org/wiki/Lazy_portfolios
Jim Collins actually runs his investment portfolio with just 2-3 Vanguard index funds - a "lazy" portfolio, and he's in good company. This is the best for easy, no brain, no strain investing.

You have 10 funds and I'll bet you're not really sure why either. NO one really needs more than a handful of funds - 4 is pushing it! You are uber conservative and missing out on growth, and letting that much cash sit idle means you're acting solely on fear. And if you don't really understand investing in general and are so fearful about loss, playing with stocks is a surefire way of losing even more and becoming even more fearful. It's pure gambling when you don't know what you're doing. Knowledge and education is the remedy.

[AK]

Frankie's Girl summed up what I was thinking too.

[CLD1974]

Thank you Frankies Girl & AK for the suggestion.. I will try to read the material and see what can be done.

[DrF]

Also, don't worry about buying a house if it isn't right for your situation. http://www.mrmoneymustache.com/2015/07/27/rent-vs-buy/

You should also calculate if home ownership is worth it in your area. You can use any of these calculators.
http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=0
http://www.trulia.com/rent_vs_buy/
http://www.bankrate.com/calculators/mortgages/rent-or-buy-home.aspx