Author Topic: lump sum is hard!  (Read 5105 times)

SuperSecretName

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lump sum is hard!
« on: March 17, 2017, 11:57:37 AM »
I had a project wind down and now have too much cash (what a problem to have, right?)

I know I should invest it.  I know I should just lump sum it in.  I know the math. 

But, damn if it isn't hard to pull the trigger.

I've resorted to buying between 500-1000 most days to make my AA perfectly match instead of letting it float around in 1% bands.  I've got 7K in the past month, only like another 50k to go....

jjcamembert

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Re: lump sum is hard!
« Reply #1 on: March 17, 2017, 02:50:36 PM »
I don't know what commissions you're paying, but even in $1000 lots if you're paying say $10 commissions you're already starting at -1% doing nothing. Also, depending what you're investing in, you may have just missed (or will be missing) this quarter's dividend (yes I know it's already priced in). Just some ideas if you were looking for motivation!

The 585

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Re: lump sum is hard!
« Reply #2 on: March 17, 2017, 03:23:43 PM »
I had the same problem. I recently had ~$70k in cash on the sideline saved up for a home downpayment, and then decided not to buy a house! So over the past few months I've been throwing large lumps into my taxable investments. Ideally, I would have thrown it all in at once, but splitting it into several lumps eased my nerves a little.

It also made me feel better putting 50% in VTSAX and 50% VTIAX to get a domestic/international split, and fit with my allocation.

Goldielocks

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Re: lump sum is hard!
« Reply #3 on: March 17, 2017, 03:25:25 PM »
The best investing advice I ever read was about how to handle indecision to pull the trigger.

Whatever decision you are having trouble "locking in" when you don't have a solid reason -- split your odds, and only do half.

Instead of full lump sum, why not lump sum 50% now, and average in the rest a quarter at a time?

swashbucklinstache

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Re: lump sum is hard!
« Reply #4 on: March 18, 2017, 10:29:39 PM »
A silly thing helps me as account balances get higher. I used to say, contribute $1,000 on a day that the market dropped my balances $2,000. It looked and felt like that $1,000 just completely went away compared to it being in my bank account. But realistically if the market was down 2% or whatever I only lost the 2% I put in not all of it! If you're talking about something < 10% of your invested net worth I wouldn't sweat it.

WallStreetPhysician

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Re: lump sum is hard!
« Reply #5 on: March 21, 2017, 09:13:27 AM »
I had a project wind down and now have too much cash (what a problem to have, right?)

I know I should invest it.  I know I should just lump sum it in.  I know the math. 

But, damn if it isn't hard to pull the trigger.

I've resorted to buying between 500-1000 most days to make my AA perfectly match instead of letting it float around in 1% bands.  I've got 7K in the past month, only like another 50k to go....

It's hard, but it's the right thing to do. At least, it's the right thing to do 70% of the time, because 30% of the time, dollar cost averaging would have been better.

I did a detailed analysis of lump sum investing vs. dollar cost averaging in a recent post:
MOD EDIT: Spam link removed.

You'll pay 3.8% more for your shares (disregarding dividends, which favors lump sum investing) if you dollar cost average over 1 year, compared to lump sum investing.

-WallStreetPhysician
« Last Edit: March 22, 2017, 06:23:06 AM by arebelspy »

Retire-Canada

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Re: lump sum is hard!
« Reply #6 on: March 21, 2017, 10:20:06 AM »
I lumped in a few times over the last couple years and every time I ended up with more money because I did that than waited or DCA'd.

Cromacster

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Re: lump sum is hard!
« Reply #7 on: March 21, 2017, 10:26:33 AM »
I had to do this recently, but it was a 401k rollover to IRA.  Still makes you second guess yourself when you're buying 70k worth of shares at one go, but also makes you feel pretty badass.

Personally, I would just dump it all in lump sum or automate the DCA.  That way you no longer need to think about it.

thenextguy

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Re: lump sum is hard!
« Reply #8 on: March 21, 2017, 11:37:15 AM »
What are you going to do with what you currently have invested? Are you going to sell that and DCA back into the market? You're already lump summing every you don't do that.

MoonLiteNite

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Re: lump sum is hard!
« Reply #9 on: March 22, 2017, 02:57:42 AM »
Throw it in, i did mine for IRA and HSA, jan 1st!

Even if the market tanks by  80% the next day, the odds are in your favor that you will come out on top in the long run.

Tjat

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Re: lump sum is hard!
« Reply #10 on: March 22, 2017, 07:05:41 PM »
I'm in a similar boat as the OP having received a nice bonus in March, but is currently just sitting in cash as I can't pull the trigger. I have usually subscribed to the whole market timing is for fools mantra, but am not confident enough to just blindly bury my head in the sand. For instance,

1) Market has just gone up double-digits in 5 months with many signs pointing to it being overheated. I'd be more comfortable buying on a correction (or once the "signs" seem to suggest more rationale pricing.

2) This one's my opinion, but I think the market increase was due to nothing more than verbal voice vomit of an Oval Office jackass. Once the healthcare bill fails and/or the tax reform and infrastructure spending falls through, I think the market will lose quite a bit of confidence and overreact downward.

Granted, I could be a complete moron here but so far no damage done as the market is down from when I made this decision. I'm also reassured by the fact that I still have over 200k invested in equities, but have just shifted my AA a bit more towards cash due to my inaction. Hopefully having a little bit of dry powder at an all-time market high will come in handy.

MoonLiteNite

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Re: lump sum is hard!
« Reply #11 on: March 23, 2017, 03:16:22 AM »
Also, some super simple TA way to time it, just buy when the S&P hits its 50 or 100 SMA.
It may not hit the 200SMA  unless there is a hard crash, but it wouldn't be too hard to hit the 50.
That would get you in the market when it is a tiny dip, and it shouldn't be too long for that happen

I just used VOO and yahoo cause i am in a hurry :D
But here, you can see we're about to hit the 50


Crazycarl

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Re: lump sum is hard!
« Reply #12 on: March 23, 2017, 10:37:19 AM »
I am hoping you are maxing any and all other retirement tax deferred accounts. When I have received a lump sum, I would earmark a chunk for everyday expenses for the rest of the year or so, and then up my 401k to max out and any others that needed. Just an idea if not doing so already.

talltexan

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Re: lump sum is hard!
« Reply #13 on: March 24, 2017, 07:27:40 AM »
I'm experiencing the inverse problem: just received a large bonus at work, thought I was committed to paying down debt, but now...I have the cash, and the debt is 0% interest, and I'm wondering, "what's the rush?"


Retire-Canada

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Re: lump sum is hard!
« Reply #14 on: March 24, 2017, 07:38:27 AM »
I have the cash, and the debt is 0% interest, and I'm wondering, "what's the rush?"

Doesn't sound like there is a rush. ;)

MoonLiteNite

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Re: lump sum is hard!
« Reply #15 on: April 06, 2017, 03:48:35 AM »
Well if you were using my advice to time and wait until you hit the 50SMA, today is your day to buy hahaha just dropped like a rock!