Hello all. I am 32 and have been a very good saver. On an ordinary income, I managed to save about USD 750,000 mostly due to a very high savings rate and living outside the United States in a country with very low income tax – this amount is not invested and is sitting as cash (both in the US accounts and abroad) earning nothing. There were always reasons for me not to invest, but it was mostly due to lack of financial education and my own ignorance.
First, I was saving money to buy a house as mortgage rates in the country where I live are extremely high and it was logical to buy a house with 100% cash. Then, the stock market crashed and as a young professional I was very hesitant to invest as I could be subject to a redundancy without any severance package as I was not vested. Therefore, due to the great recession and very uncertain economic situation, I was saving cash for the house and was scared to invest – nobody could predict such amazing stock growth between 2009 and 2014. In summary, I simply missed the bull market of the last 4-5 years mostly due to my ignorance and lack of financial education.
I am US citizen (although I have not lived in the US more than 10 yrs now), working for a subsidiary of the UK company in Eastern Europe. I do have an intention to return to the US. I have US bank accounts and US address, but am not US resident at the moment.
My main dilemma is how to invest my money now and where to start. Of course, given the all-time high for the markets and all the negative reports about the economy and another “bubble”, I am not sure this is a right time to enter the market with a lump sum. It would be very painful to miss the bull market of last years and all upside, invest lump sum now at (possible) a peak and lose 20-30-40% in the next 1-2 years if the market indeed corrects/crashes. Ideally, I will be happy with AA of 80stocks/20bonds, but not sure whether now is the right time to enter the market with a lump sum.
My figures are:
Current income: about USD 100,000 per year (no US tax as I live outside the US)
Expenses: USD 36,000-40,000 per year
Cash: USD 640,000 (in USD), USD equivalent 110,000 (in UK pounds – already lost some due to Brexit and devaluation of UK pound this year)
Defined benefit pension: ca. USD 200,000 lump sum if I leave my employer today
Defined contribution plan: ca. USD 85,000 (invested by my employer) with asset allocation of 20% UK equities, 30% developed markets equities, 30% UK fixed interest bonds and 20% UK cash.
I am lost where to start and will appreciate any suggest and if you can recommend some very good books/courses/sites for beginners.