Hello,
I am new to the forum, but discovered that I have been a mustachian all my adult life, as I went through the blog archive; or at least half mustachian? I have the savings side, but I fear that I am missing the investing half. I'd like this community to provide some advice. Perhaps it requires a case study, but would like to keep it simple for now and see what I get.
I have a relatively high income, about 90k/yr, single, no debt and a frugal lifestyle. Therefore I have saved a lot, in the last few years. My net worth is approximately 300k, of which approximately 120k is in cash, the rest is invested. I never bought a house, as I thought in my case the economics did not make much sense due to instability at work and other issues, such as immigration, but that is a long story. I am now permanent resident and going on citizenship very soon.
Few interlocked issues are making my investment decision hard. The main issue I need advice on is how to allocate the 'stash: why so much cash? I simply did not know of an investment strategy that made me feel cozy. It did not help that I started investing in the stock market in 2008 (through the company 401k). I did not know anything about investing at that time, so I trusted the financial advisers, who gave me the usual run-of-the-mill directions, which I followed, not knowing any better. The result was poor, also due to the terrible timing: the image of the 100-ton weight falling on my head in the form of 45% loss and subsequent roller coaster comes to mind. The best outcome of that experience has been that I decided to learn: I have read books and got myself a financial education. Finally, just last year, I started investing on my own. So far I have invested in index fund ETFs and few stocks of major corporations that pay dividends. The returns I am getting are much better than the money I (still) have invested through the "professionals."
My dilemma is the following: I understand that the best option for people like me is to invest in index funds, but we are in a bull market.. I also know that timing the market is only a matter of luck, not skill, and is risky at best. Yet.. should I buy funds now that we know we are in a market high, or should I spread the buys in the next months (years)? I hate taking unnecessary risks and playing lotteries, in fact I very much agree with Buffett on this: "I'll take the gift of a lottery ticket, but I'd never buy one."
On the other end, every additional month the cash stay unused, inflation erodes a little more of it, although we are in a low inflation cycle. I already have a "high-yielding" (0.75 APY) savings account, but it is still well below even the low inflation rate (~1.7% ?); this is not to mention the loss of opportunity.
The other issue is the following: should I fire my money managers? The money they allocated "only" made 15% last year (on a roughly 25% S&P 500 surge though) and this year we are in the 1% range, while the market has at least 5% YTD gain. Clearly an index fund would have done better (surprise!), and I am not counting their 2% fees. I would feel however very dumb if I made a mistake in allocating the funds myself: I have just been lucky this last 18 months?
Finally, the instability at work continues: I have no doubts I can find another job, if it is needed, that would even pay better, but now I live in a small town and my commute time to work is 5 minutes (by bike!) Another job would likely be in a large urban area which I hate. In fact, my tolerance for the cubicle life has become so low that I fear snapping at any time even as it is. The uselessness of a life spent writing progress reports for projects nobody really cares about is really crushing me. I need an out, as quickly as possible. I do have an alternate job on weekends that I love, which however pays little (25k/yr when full time?)
So, please chime in if you understand what is going on; I admit it is not straightforward!