Author Topic: Where, and how quickly, to shift savings into investment accounts?  (Read 461 times)

blockzilla

  • 5 O'Clock Shadow
  • *
  • Posts: 18
Hi all, up until recently I'd be socking some cash away in a traditional savings account, for a down payment for a second home, so I've got $200K sitting in there. Plans have now shifted, and we've decided to just rent vacation houses while we travel for the foreseeable future since we're still working with kids and just wouldn't get away enough to justify buying. Not to mention sky high real estate in desirable mountain towns.

The 401k's have been maxed since the start and I'm 100% comfortable with those as is, we almost have the "too much" problem in those as MMM has said in his blog posts. We have some investments in Vanguard funds, 40% VTSAX, 20% VTIAX, 20% VBTLX allocations, and I was thinking I'd like to convert most of the $200K into those funds.  In hindsight I should've been putting it in as we saved it, but now I'm a bit cautious about a one time dump of a large sum like that into a market at an all time high.  I suppose I shouldn't care in the long term, as I do have faith in the markets long term. 

It is reasonably likely that we wouldn't touch this money again for 10-15 years, but may look to bleed it from ages 55 to 62 to supplement our income stream until we tap the 401k's. We're 42 now.

What would you do in this situation? Dump it all in right now, bleed it in $10K a month or something like that? I'm leaning towards putting $150k all in to the fund allocation above, and retaining $50k in a high yield savings to fund the next several years of our vacation rentals in mountain towns, perhaps revisiting the idea of buying down the line.

Appreciate any advice!

waltworks

  • Magnum Stache
  • ******
  • Posts: 4929
Re: Where, and how quickly, to shift savings into investment accounts?
« Reply #1 on: February 02, 2021, 12:10:20 PM »
I'm normally a dump-it-in-and-forget it guy but we're approaching CAPE 40...

I'd DCA $10k a month. Because I'm a sissy.

-W

Posthumane

  • Bristles
  • ***
  • Posts: 318
  • Location: Alberta
    • Getting Around Canada
Re: Where, and how quickly, to shift savings into investment accounts?
« Reply #2 on: February 02, 2021, 12:23:08 PM »
I had a similar situation with the proceeds of a house sale recently. What I did is a simple one time dump into my normal asset allocation. I'm of the opinion that over the 20 months that it would take you to DCA at 10/k a month you are much more likely to see gains on a diversified portfolio than losses. That being said, I'm using a modified Permanent Portfolio which is has a somewhat lower volatility than the pure stock portfolio that many on here favour. A certain percentage of the portfolio is cash (or equivalent) so if I end up with lots of cash I treat it like any other rebalance.

BrightFIRE

  • Stubble
  • **
  • Posts: 223
  • Location: Philadelphia
Re: Where, and how quickly, to shift savings into investment accounts?
« Reply #3 on: February 02, 2021, 12:24:56 PM »
Would you sell all of your current investments? If not, why not? Those are the same reasons to dump it all in according to your predetermined asset allocation. Anything else is market timing based on fearful emotions and gut feelings.

I put my money where my mouth is, btw. I got a pension payout of $100,000 on 11/1 (after getting laid off) - I dumped it all in VTSAX just like I would have if it were only a 401k contribution. I didn't even look at the price, because it's irrelevant for a long term investor.

blockzilla

  • 5 O'Clock Shadow
  • *
  • Posts: 18
Re: Where, and how quickly, to shift savings into investment accounts?
« Reply #4 on: February 02, 2021, 07:16:59 PM »
Good points, and it reinforces my first thought which was an immediate "dump and forget" into my existing Vanguard fund allocations. 10 years was close to my cutoff for having some concern with this, but given the 401k situation I think I'm up for absorbing a bit more risk so I'll roll the dice with the 10 year window.

cool7hand

  • Pencil Stache
  • ****
  • Posts: 525
Re: Where, and how quickly, to shift savings into investment accounts?
« Reply #5 on: February 04, 2021, 05:59:36 AM »
+1 for trusting your asset allocation. If you trust everything else there, why not this pile of cash as well?