Author Topic: Dry Powder and Sitting on Sidelines  (Read 2854 times)

signhere

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Dry Powder and Sitting on Sidelines
« on: April 01, 2016, 12:39:02 PM »
Let me start by saying throughout my entire investing life I've been 100% committed to the "nobody knows what the market is going to do tomorrow, time in market > market timing, etc." mentality. That being said, I'm running into an issue...

A few months ago I pulled out around $250k (all taxable, non-retirement investments)  for a house downpayment, but the closing fell apart at the 11th hour. Since then, I've been sitting with all this money in a savings/checking account - partially because I am still looking to make a home purchase and don't want to take on too much risk but also because I think the market upside is limited and I keep telling myself to just wait for a dip and dump it all back in.

So what's the best way for me to ease back in? Just DCA it? If so, how much should I do per investment and should I do it daily, weekly, etc?


signhere

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Dry Powder and Sitting on Sidelines
« Reply #1 on: April 01, 2016, 12:38:18 PM »
Let me start by saying throughout my entire investing life I've been 100% committed to the "nobody knows what the market is going to do tomorrow, time in market > market timing, etc." mentality. That being said, I'm running into an issue...

A few months ago I pulled out around $250k (all taxable, non-retirement investments)  for a house downpayment, but the closing fell apart at the 11th hour. Since then, I've been sitting with all this money in a savings/checking account - partially because I am still looking to make a home purchase and don't want to take on too much risk but also because I think the market upside is limited and I keep telling myself to just wait for a dip and dump it all back in.

So what's the best way for me to ease back in? Just DCA it? If so, how much should I do per investment and should I do it daily, weekly, etc?


Frankies Girl

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Re: Dry Powder and Sitting on Sidelines
« Reply #2 on: April 01, 2016, 12:43:00 PM »
If you're planning on buying a house with that money in the next year, then you probably shouldn't have it in the market at all. You should just park it in a savings account with as high an interest rate as you can find.

It's not dry powder; you earmarked that money for something specific. So don't risk losing some of it due to short term market fluctuations if you seriously do need it soon.

Kaspian

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Re: Dry Powder and Sitting on Sidelines
« Reply #3 on: April 01, 2016, 01:25:58 PM »
So, if you had $250K sitting in investments would you pull it all out today?  If not, then dump it all in now.  Having $250K currently sitting in investments or $250K sitting on the sidelines is the same question.   

forummm

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Re: Dry Powder and Sitting on Sidelines
« Reply #4 on: April 01, 2016, 01:26:36 PM »
If you're planning on buying a house with that money in the next year, then you probably shouldn't have it in the market at all. You should just park it in a savings account with as high an interest rate as you can find.

It's not dry powder; you earmarked that money for something specific. So don't risk losing some of it due to short term market fluctuations if you seriously do need it soon.

Exactly. If you later decide not to buy a house, then you can put it to more volatile investments.

forummm

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Re: Dry Powder and Sitting on Sidelines
« Reply #5 on: April 01, 2016, 01:27:01 PM »
Looks like a duplicate thread.

mxt0133

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Re: Dry Powder and Sitting on Sidelines
« Reply #6 on: April 01, 2016, 01:40:46 PM »
If you intend to use the money within the next 5 years then the rule of thumb is to keep it in savings or short term bonds/treasuries.  You are not looking for capital growth for those funds you are looking for capital preservation.

How would you feel if it fell 10% in the next six months?  Would you still have enough funds to cover the gap if you do find a house by then?  If not then don't invest it as the risks out weight the expected returns.

TheAnonOne

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Re: Dry Powder and Sitting on Sidelines
« Reply #7 on: April 01, 2016, 02:16:24 PM »
Go for the gold, put it all in Tesla or something. Watch it skyrocket, or tumble. Beer either way though...

Jack

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Re: Dry Powder and Sitting on Sidelines
« Reply #8 on: April 01, 2016, 02:44:21 PM »
You don't have "dry powder," you have a house downpayment (albeit for an extremely expensive house). They're not the same thing.

Eric

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Re: Dry Powder and Sitting on Sidelines
« Reply #9 on: April 01, 2016, 03:34:19 PM »
What's the tax implication of pulling $250k out of the market in one fell swoop?

Agree with everyone else on what to do with it now.

Seppia

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Re: Dry Powder and Sitting on Sidelines
« Reply #10 on: April 01, 2016, 03:42:53 PM »
Definitely agree with the above.
If you're still in purchase mode, you would have all the downside of the higher volatility of stocks without benefiting of the higher long term returns.
Not worth it

soccerluvof4

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Re: Dry Powder and Sitting on Sidelines
« Reply #11 on: April 01, 2016, 04:15:17 PM »
I agree with all the above as well. Seems kinda a no brainer.

CantBanMe

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Re: Dry Powder and Sitting on Sidelines
« Reply #12 on: April 03, 2016, 04:27:22 PM »
Put it all in stocks. Scared money don't make no money.