Looking for an advice to park some money

[dberk]

Hello All!

Long-time reader, first time poster. Looking for an advice.

Quick background info - my wife and I are in mid-30s, both are considered in the high-income category, she actually makes more than I but I carry all the benefits. Most of our money (in hundreds of thousands) invested in index funds. We also invested into a real-estate syndicate deal (will probably start paying off in 15-20 years, once the loan is paid off) and other various smaller investments, like stock options at my wife's company (low 5 figure but with big potential down the road). I would say its about 70% index funds (85% stocks and 15% bonds), 20% RE and 10% other misc investments. We hold about 1 year of expenses in Ally bank. Zero debt, our vehicles and our house are paid off, no student or any other loans.

I will have about $30k by the EOY that I would like to invest but I am a little leery of the stock market right now.
I know what the consensus is, I've read plenty of investment books, including JL Collins, Boggleheads and several others. I am a strong index-fund proponent and don't believe in timing the market but I just don't want to put more money into stocks right now. Plus, I would like to diversify our portfolio a little and put more money into RE but I am waiting for the right deal. My wife doesn't want to manage a rental property, so we are passively looking for another syndicate deal and it may take 1-2 years before it comes together.

I am leaning towards putting money into bonds with the idea that:
- if market drops 15-20% I can easily pull that money off and put them into stocks
- if we come across another RE syndicate deal that I like, I can always sell bonds with a lot less volatility compared to stocks (2-5% at most)

Other options I've considered are: Ally Bank (2.0%), CDs (2.00 - 3.00%), Money Market account. Index funds and stocks are always an option as well.

What would you guys say? Also looking for recommendations for the Bond funds (preferably with Vanguard) as well.

Thank you much!

[waltworks]

Write up an IPS and stick to it. You are making random emotional investing decisions - thanks to the run-up in basically everything in the last decade, that hasn't hurt you much, but it might hurt you going forward. If 85/15 is where you want to be, stick to it. If not, decide what your *long term* asset allocation should be and stick to that.

Unsolicited advice: stay away from syndicate deals. If you don't want to be a landlord and want RE exposure, invest in REITs. Syndicates are usually (in my experience) just a way to extract money from gullible "investors". If your deal won't "pay off until the loan is paid off in 15-20 years" you probably are getting screwed. C'est la vie.

-W

[Rob_bob]

Short term money, CD's, MM, short term bonds.

Long term money, stocks.

RE syndicate seems too risk concentrated, not very diversified.  I can't imagine investing in something that won't start to pay off for 15+ years. I use ETF's that invest in REIT's for my RE bucket.

[Radagast]

Bonds seem like a good addition. Practice tax efficient allocation and bond selection, don’t know enough to give specifics. Look into municipal bonds.

 I am confused about this real estate syndicate. The 15-20 years thing seems to imply a 5-6% return or perhaps less. How liquid are these? How risky and what are the risks? Without knowing anything about them, this superficially looks like a poor risk return trade off. I gots me a duplex returning about 10% of down payment as cash flow annually after typical expenses, I can sell anytime, and after the loan is paid off the cash flow as percentage of down payment will become much greater. I consider it borderline as an investment property but it seems way nicer than what you describe.

[COEE]

I created this thread a while back for where to park 0-2 year savings.

I'll warn you against market timing, but you already know the implications it sounds like.  If you are serious about buying RE of some sort - not sure exactly what you're thinking if you don't want to rent out (vacation home or something?) - then 0-2 year savings has lots of options as linked above.

[MustacheAndaHalf]

If you're worried the market might lose more than -10%.... it already has.  Way back 2 months ago everyone discussed the strength of the U.S. economy, and now 2 months later we're down -10% and most of the news is bad.  A market bottom is when everyone avoids buying, and everyone is pessimistic.  The lack of buyers creates the bottom.

I don't know if that's what we have now or not.  But have you looked at the track records of active funds trying to beat the market?  Because that's what you become, when you allocate more to cash and less to equities - an active fund with very little research and resources.  Mutual funds have a full time research staff and millions to spend on research.  And yet they lose against the S&P 500 80%+ of the time.  Are your odds better than a full time research staff at a mutual fund?