Author Topic: $40K in cash... invest now?  (Read 2618 times)

brainfart

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$40K in cash... invest now?
« on: August 24, 2015, 06:22:31 PM »
I will have a big chunk of cash in a few days, about 38K. Need another (of course used, beater!) car in a few months, or buy my mom's well maintained, low mileage, business VW Golf for 4.5 grand (book value=bargain!), current beater car is about to break down and uneconomical to repair to get it through inspections. Savings rate about 50%. Girlfriend currently on sick leave, earning only a fraction of her usual (rather low) income. Her daughter just made her a grandma at below 40. Yay, awesome. SO's driving a beater car, too. Only one car currently not an option. Might face loss of job in the not too distant future (6 months-1 year?), probably can't or shouldn't continue my current job for medical reasons, which means I might go back to school in a distant town for a year to build on past experiences and improve my income in the future (school fees plus second household/room/travel). Have a house which is rented out, so I need to deal with unforeseeable expenses if they arise (like heating breaking down and needing repairs, worst case of course). We live in a rented apartment , moving is not an option. Can't keep my SO on a short leash financially forever... been really tight with my money for the last year or two, living on bare minimum to save. Nearly all I saved during the last year was wiped out in the last few days. Yes I know... first world problems. It could be worse, I could be a Syrian refugee instead of a EU citizen in a wealthy nation.

Invest now? DCA? Just turn off the TV and don't pay attention to the news?

I guess the obvious answer is just stick to the plan and rebalance. Put a third or half of the money into investments and hope for the best. Sell some shit to TLH, or sell all the few remaining individual stocks and put the money in index ETFs. But since I can't have a real Tesla anytime soon I will keep those stocks and hope for the best. Willing to take the risk and hope to make some money.

forummm

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Re: $40K in cash... invest now?
« Reply #1 on: August 24, 2015, 07:52:37 PM »
Stick with your AA. The market could go up or keep going down. You have no idea. Stick with your AA.

Heckler

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brainfart

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Re: $40K in cash... invest now?
« Reply #3 on: August 25, 2015, 12:12:51 AM »
So I'll do a back-of-napkin worst case scenario calculation. Assume I lose job and go to school, replace two cars, need 10K for house repairs and keep that much cash around for near future expenses (or something like 75% of that sum since that truly would be worst case) and throw the rest at the market, if there is anything left.

patrickza

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Re: $40K in cash... invest now?
« Reply #4 on: August 25, 2015, 04:13:22 AM »
Stick with your AA. The market could go up or keep going down. You have no idea. Stick with your AA.
Mind if I ask what an AA is?

I don't like having cash, ever. In my view, and as per the law of averages, it's better to invest it when you get it.

brainfart

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Re: $40K in cash... invest now?
« Reply #5 on: August 25, 2015, 05:56:23 AM »
AA = asset allocation

Unfortunately I don't earn that much money that I can easily pay whatever expenses might coming at me with my monthly salary. Especially if I lose my job and might be without regular income for some time. So a little saving can't hurt.
And when I receive money from somewhere it's usually in the form of cash, or bank transfer. Checks were phased out about 20 years ago.
Unfortunately nobody pays with stocks, funds or ETFs here.

Being located in Europe it currently makes no sense for me to invest in bonds as the risk-free investment. I get more interest in a savings account (currently 3%for a limited time, one year), which is risk-free. Inflation is close to zero, interest rates are at an all-time low, effectively zero. So cash is currently considered a normal part of your investment, like bonds in other parts of the world.

Bought some index funds today, according to my IPS.  It felt good, at least I can tell myself I did something. Will buy more in 4 weeks when more money is available.