Author Topic: Where to put large $$ right now? How soon?  (Read 859 times)

sfc

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Where to put large $$ right now? How soon?
« on: January 12, 2019, 08:41:17 AM »
I have had an IRA with Fidelity and Vanguard for decades, and now mostly put retirement $$ in Vanguard index funds.  I also have a taxable investment account at Fidelity.  I have had a smaller amount of $$ in a handfull of stocks that have done very well (much better than the market).  I buy and hold for the long term. 

Because of low earned income years recently, at the end of the year I sell to capture gains with the plan to buy back soon after.   Yes, not great to sell during a dip, but the plan was just to buy back.  I have done this for many low income years to take advantage of the 0% tax rate on capital gains in the low income bracket. 

This year I sold quite a lot (stocks, and index funds) and now am sitting on a lot of cash.  With the market volatility, part of me is tempted to wait a bit before buying and/or not buy back all at once.

What would you do?  And if I don't buy back immediately, where do I hold the cash in the interium? 

Right now about half my savings is still in the market, and half is in cash. 

Suddenly there is a Fidelity Financial Consultant who is sending me emails, leaving me voice messages.  Before I call him (I am extremely suspicious of Financial Consultants and have not had good experiences with these random low level Fidelity folks in the past), just curious what the community would say?

Financial.Velociraptor

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Re: Where to put large $$ right now? How soon?
« Reply #1 on: January 12, 2019, 08:52:55 AM »
I think it would be unfair to answer this question without knowing more about your situation.  How far are you from retirement?  What is your risk tolerance?  What is your target stock/bonds allocation (see risk tolerance?)  Can you afford to lose this money?

terran

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Re: Where to put large $$ right now? How soon?
« Reply #2 on: January 12, 2019, 08:53:17 AM »
Your capital gains harvesting strategy is good, but I would have reinvested immediately for no time out of the market. Unlike capital loss harvesting, there's no waiting period required for reinvesting in the same investment after selling at a gain. Some investments may have frequent trading restrictions.

Given where you are now, I would invest it all immediately at your desired asset allocation. Anything else is market timing. Lump sum investing is the best option 67% of the time: https://personal.vanguard.com/pdf/ISGDCA.pdf

sfc

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Re: Where to put large $$ right now? How soon?
« Reply #3 on: January 12, 2019, 09:10:35 AM »
I appreciate your thoughts!

Ordinarily I would have bought back quickly, but the market was still actively plunging when I sold and was a little heart stopping.... even for me.  I have a high risk tolerance, generally.

I am single, in my late 40's, no kids, renter for life, frugal.  Still investing for the long term with no need for the $$ in the shorter term.  I probably will not retire as early as most on this website, as I am passionate about my field, which is deeply satisfying.  I am currently on an extended FMLA helping a family member, and am also much more reticent to retire early because of what I have seen happen when you have sudden, unexpected and severe health care needs.  And because I am single (likely for the long term), I wont have anyone to take an extended FMLA to help me when I am older/sick/sudden cancer etc.. so will need to somehow pay for my own care.  And as I have learned from my experience with my parents.... there is a lot that Medicare does not cover, particularly if you have complex medical needs. 

Can I afford to loose half of my savings?  Well....  I'd rather not loose it all, but I can't think of many directions I would pursue that would honestly cause that to happen.
« Last Edit: January 12, 2019, 09:14:22 AM by sfc »

Andy R

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Re: Where to put large $$ right now? How soon?
« Reply #4 on: January 12, 2019, 09:17:30 AM »
Most of the really big sudden upswings occur right after big downswings.
Basically, you are trying to avoid buying when it could go lower, and at the same time will probably end up buying after he has rebounded and you end up worse than just putting the money right back in.