Author Topic: Invest in stocks or hold out?  (Read 4326 times)

PeachFuzzStacher

  • 5 O'Clock Shadow
  • *
  • Posts: 43
Invest in stocks or hold out?
« on: September 19, 2013, 06:52:42 AM »
Hey everyone,
So my wife and I just started getting our sh** together in the last couple of months (she paid off her student loans!) after spending most of our cash on a home down payment.  We currently have a few thousand in VTSMX after I cashed in some stock from the last company I worked in.  With the current rally though, I'm wondering if I should hold out and keep some cash / put into mortgage (307k @ 3.625%) / bonds instead of continuing to invest in stocks since it is so high right now, or is it best to just throw in a little at a time - set it and forget it?  I was also considering some home improvements.

Thanks for any and all opinions.  I'm hoping to see some variations in thought.

NumberCruncher

  • Pencil Stache
  • ****
  • Posts: 612
Re: Invest in stocks or hold out?
« Reply #1 on: September 19, 2013, 07:04:39 AM »
It really depends on your personal goals and risk level. If you want the most gains in the long term (>5 years), it's probably best to just invest the excess now. If the idea of doing that makes you queasy (afraid it will drop), dollar cost average (DCA) over a period of months is best. My husband and I are currently DCAing a chunk of change we had sitting in savings for a downpayment after we decided not to buy. Trying to time the market is stressful and almost always just doesn't work.

If you just really hate being in debt, pay off your mortgage.

What kind of home improvements were you considering? How long do you plan on staying in the house?

PeachFuzzStacher

  • 5 O'Clock Shadow
  • *
  • Posts: 43
Re: Invest in stocks or hold out?
« Reply #2 on: September 19, 2013, 07:18:42 AM »
We weren't sure at first beyond 5 years of staying in the house to move away, but I just landed an awesome job developing software in sports, so we may stay after all, but 5 years minimum.  The house has a lot of beautiful rocky land but no garage or basement.  We were thinking of adding either a garage or very large Amish shed for outdoor storage.  Also, we want to get some retaining walls put in to expand our driveway since our street is very narrow.  There's a huge lack of guest parking.

I like the thought of dollar cost averaging.  Maybe I'll just put a little in each at a time.

PeachFuzzStacher

  • 5 O'Clock Shadow
  • *
  • Posts: 43
Re: Invest in stocks or hold out?
« Reply #3 on: September 19, 2013, 07:25:09 AM »
Another improvement - Solar water heaters, since we have an oil furnace which heats the water as well.  I don't like the idea of burning oil in the summer.

matchewed

  • Magnum Stache
  • ******
  • Posts: 4381
  • Location: CT
Re: Invest in stocks or hold out?
« Reply #4 on: September 19, 2013, 07:26:52 AM »
Most of the advice for investing will be to invest in equities (primarily through index funds). Regarding concerns for investing at a high point - over the long term this is not a problem as today's high point is a blip over the long time frame. DCA is the nice "set it and forget it" method while you get on with your other goals like home improvement.

You haven't put much details behind your question. If you are sitting on a large chunk of cash that you don't need for other goals and you won't touch it for the long term then investing it as a lump sum is a superior investing decision even with the "record" highs.

PeachFuzzStacher

  • 5 O'Clock Shadow
  • *
  • Posts: 43
Re: Invest in stocks or hold out?
« Reply #5 on: September 19, 2013, 08:16:50 AM »
Hey matchewed,
We don't really have a large cash stache right now, but are starting to see what others would call "disposable" income, an extra 1500 - 2k per month, sitting on about 12k cash.

Everyone - thanks for your help.  I think we'll probably go with a little bit of DCA now and more after saving some more cash immediately for the projects we want to do.

brewer12345

  • Handlebar Stache
  • *****
  • Posts: 1383
Re: Invest in stocks or hold out?
« Reply #6 on: September 19, 2013, 11:17:10 AM »
I will take a bit of a different tack.  Fiirst and foremost, you should build up a sizable emergency fund.  6 months to a year's worth of all-in expenses would be a reasonable amount.  Bad things happen that require cash,  and more of them tend to happen when you own a house.

After you get that built up, before you go willy-nilly investing, you should figure out what your goals are for the money and how much risk you are willing to take to get there.  This may require some navel-gazing and discussions with your spouse, but the effort is very worthwhile.  You do not want to be in the position of "I don't know where I am going, but I am on my way!"  When you have a firm plan (preferably put down on paper), you can translate that to a target asset allocation and then commence DCAing into it.

Along the way, make sure you have sufficient life insurance and disability income insurance protection.

PeachFuzzStacher

  • 5 O'Clock Shadow
  • *
  • Posts: 43
Re: Invest in stocks or hold out?
« Reply #7 on: September 19, 2013, 12:47:15 PM »
Thanks Dad!  :)

Jk, it is always sound advice to be safe over sorry.  I honestly would have waited for more of a cushion beyond the down payment, especially while going/paying for my masters, but the rates were not going to hold and I got in a month before they went up a point.

I've never heard of navel-gazing before.  I immediately thought of staring at oranges.

Thanks!

Iron Mike Sharpe

  • Bristles
  • ***
  • Posts: 397
Re: Invest in stocks or hold out?
« Reply #8 on: September 19, 2013, 01:08:54 PM »
Read a good introductory book like The Bogleheads Guide to Investing.  That should give you enough information to start putting together a plan and get you pointed in the right direction. 

It's an easy read.

Kriegsspiel

  • Guest
Re: Invest in stocks or hold out?
« Reply #9 on: September 19, 2013, 04:32:57 PM »
I believe in diversifying and using rebalancing bands.