Author Topic: 3 year investment window  (Read 1857 times)

G. Thomas

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3 year investment window
« on: November 12, 2014, 04:46:11 PM »
After maxing out IRA's and a work 401k I have roughly 20k that I want to invest.  I transferred the money into Betterment to hit their "better" thresh-hold on 11/11.  Before I hit "go" on their wealth builder program I stepped back for a second.  The purpose of this money is to grow but be able to stay semi-liquid in the event (next 2-5 year)  I move to purchase property. 

As we are at record highs I felt it would be unwise to put money into 90/10 stock/bonds considering I will potentially be taking the money out in 2-5 years. 

Thoughts?


Dodge

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Re: 3 year investment window
« Reply #1 on: November 12, 2014, 05:12:22 PM »
After maxing out IRA's and a work 401k I have roughly 20k that I want to invest.  I transferred the money into Betterment to hit their "better" thresh-hold on 11/11.  Before I hit "go" on their wealth builder program I stepped back for a second.  The purpose of this money is to grow but be able to stay semi-liquid in the event (next 2-5 year)  I move to purchase property. 

As we are at record highs I felt it would be unwise to put money into 90/10 stock/bonds considering I will potentially be taking the money out in 2-5 years. 

Thoughts?

Just so you know, if your $20,000 gets the long term market average in terms of growth, going with Betterment will cost you about $400 in fees after 5 years. That's the equivalent of a 1.25% Load on your investment.

That said, if you need the money within 2-5 years, you need to determine how much you're willing to lose. Look at the worst years on record, and determine how you'd feel if that happened on the year you needed the money:

https://personal.vanguard.com/us/insights/saving-investing/model-portfolio-allocations

Note, Vanguard's Portfolio Recommendation tool recommends a 40/60 Stock/Bond portfolio with those inputs.

https://personal.vanguard.com/us/funds/tools/recommendation

Lastly, don't try to time the market. Over half of all years on record hit an all-time high. Think about it, if we expect the stock market to continually go up, isn't it inevitable that most years will be at all-time highs?
« Last Edit: November 12, 2014, 06:11:34 PM by Dodge »

G. Thomas

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Re: 3 year investment window
« Reply #2 on: November 12, 2014, 07:10:53 PM »
Thanks Dodge,

After posting I read through the "Betterment" thread resulting in some quality takeaways.