Author Topic: Lump Sum  (Read 6674 times)

dalekeener

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Lump Sum
« on: July 16, 2015, 01:07:52 PM »
I am receiving a lump sum around 30k for an estate settlement. My IRA is maxed out on an ongoing basis.  I am 54 almost 55 and earlier stupid decisions have getting a late start. Only around 10k in the IRA but will be contributing until retirement. The IRA is investment balanced between stock and high yield bond mutual funds at Schwab. I was hoping for some advice on allocating the lump sum in the taxable account that will be at Schwab as well. Shouldn't need that money for at least 10-15 years and will be adding an additional $200-$400 per month.

 I look at this inheritance as sort of a last chance opportunity to fund a late start at retirement with no 401k at work.  Fortunately except a small house payment of $780 per month that will be paid off before I retire that is the only debt I have.    I have a few thousand in savings as an emergence fund.  Any suggestions would be so very appreciated.

Thanks,

Dale

Financial.Velociraptor

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Re: Lump Sum
« Reply #1 on: July 16, 2015, 01:33:30 PM »
Do you have any high or even medium interest rate debt?  Pay that off first.

dalekeener

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Re: Lump Sum
« Reply #2 on: July 16, 2015, 02:00:34 PM »
Do you have any high or even medium interest rate debt?  Pay that off first.


No debt except 3.75% mortgage that will be paid off before I retire.

dalekeener

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Re: Lump Sum
« Reply #3 on: July 16, 2015, 02:01:18 PM »
Do you have any high or even medium interest rate debt?  Pay that off first.


Employer doesn't offer 401K. I am maxing out my IRA with the catch up provision.

MDM

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Re: Lump Sum
« Reply #4 on: July 16, 2015, 06:20:42 PM »
Are you (or could you be) eligible for an HSA?

innerscorecard

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Re: Lump Sum
« Reply #5 on: July 17, 2015, 01:11:12 AM »
It is so little money that you may as well invest it all at once, then forget about it. The mental effort you would spend dollar-cost-averaging that money would be more harmful than the psychological benefit of not dumping it in all at once.

milesdividendmd

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Lump Sum
« Reply #6 on: July 17, 2015, 09:40:35 AM »
Agree that an HSA would be ideal.

In terms of your asset allocation, I would run for the hills away from high yield bonds.

Either invest in treasuries/investment grade/ munis for your bonds or just plug it all in equities.

With high yield you are taking on equity like risk without the upside. Very poor diverdifier to stocks.

In terms of how to invest it in taxable, betterment with TLH should be cheaper than vanguard with tax savings for this application.
« Last Edit: July 17, 2015, 12:50:31 PM by milesdividendmd »

mrpercentage

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Re: Lump Sum
« Reply #7 on: July 21, 2015, 04:28:03 AM »
I am receiving a lump sum around 30k for an estate settlement. My IRA is maxed out on an ongoing basis.  I am 54 almost 55 and earlier stupid decisions have getting a late start. Only around 10k in the IRA but will be contributing until retirement. The IRA is investment balanced between stock and high yield bond mutual funds at Schwab. I was hoping for some advice on allocating the lump sum in the taxable account that will be at Schwab as well. Shouldn't need that money for at least 10-15 years and will be adding an additional $200-$400 per month.

 I look at this inheritance as sort of a last chance opportunity to fund a late start at retirement with no 401k at work.  Fortunately except a small house payment of $780 per month that will be paid off before I retire that is the only debt I have.    I have a few thousand in savings as an emergence fund.  Any suggestions would be so very appreciated.

Thanks,

Dale

Buy ticker O let it compound.. If I had 30k that is exactly what I would do. If it takes a hit because of interest rates you will buy even more shares with its own dividends. Its retail property. Its assets are rock solid.
or
DISNEY!!!!!!!!!!!!!!!!!!!!!!!      !!!!!!!!!    !!!!!!!!! !!!!!!!!

Khan

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Re: Lump Sum
« Reply #8 on: July 21, 2015, 09:20:17 PM »
MrPercentage, please keep your specific stock advice, and dividend dogma to only those threads within which it is asked for.

The only free lunch in investing is diversifying. Throwing 30k into a single stock or two is not diversification.

milesdividendmd

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Re: Lump Sum
« Reply #9 on: July 21, 2015, 09:39:49 PM »

MrPercentage, please keep your specific stock advice, and dividend dogma to only those threads within which it is asked for.

The only free lunch in investing is diversifying. Throwing 30k into a single stock or two is not diversification.

I don't agree with his advice, but instead asking him not to post I feel it would be more informative to simply refute his argument.

Ie the second paragraph was spot on, but I vote against the first.

mrpercentage

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Re: Lump Sum
« Reply #10 on: July 22, 2015, 03:07:34 AM »
MrPercentage, please keep your specific stock advice, and dividend dogma to only those threads within which it is asked for.

The only free lunch in investing is diversifying. Throwing 30k into a single stock or two is not diversification.

Guess what portfolio 1 is.. go ahead, random guess. I thought he said he already had other investments. Just so you know that would pay you $1,390 a month in dividends

« Last Edit: July 22, 2015, 03:14:35 AM by mrpercentage »

thd7t

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Re: Lump Sum
« Reply #11 on: July 22, 2015, 07:11:19 AM »
MrPercentage, please keep your specific stock advice, and dividend dogma to only those threads within which it is asked for.

The only free lunch in investing is diversifying. Throwing 30k into a single stock or two is not diversification.

Guess what portfolio 1 is.. go ahead, random guess. I thought he said he already had other investments. Just so you know that would pay you $1,390 a month in dividends


You got in on Portfolio 1 in 2000!  Congratulations!  I'm sure you're pretty much FI now!  Can you give me some great picks that I can make in 2000?

mrpercentage

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Re: Lump Sum
« Reply #12 on: July 22, 2015, 07:14:00 AM »
Can you give me any great performing index without any history? Can you? No, then don't hold me to a standard you can't live up to yourself

James

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Re: Lump Sum
« Reply #13 on: July 22, 2015, 07:24:40 AM »
Toss it in taxable account in full index sounds good to me.


What are your fees at Schwab? Make sure you are at the lowest fees available, compare with others like vanguard to verify you aren't paying more fees than needed.



mrpercentage, you advice is bull shit and you know it. Doesn't need to be refuted around here, we aren't stupid, just pointing out the obvious.


Congrats on the lump sum and great to hear you aren't thinking of spending any of it!

mrpercentage

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Re: Lump Sum
« Reply #14 on: July 22, 2015, 04:54:06 PM »

mrpercentage, you advice is bull shit and you know it. Doesn't need to be refuted around here, we aren't stupid, just pointing out the obvious.


That's what I would do with the money. If that makes me a bullshit artist so be it. I do things differently. I decided what to do with my money long before I walked into an Internet forum. That advice actually came from a financial advisor I know personally. I asked if he was going to pick one dividend stock what would it be. He said O. He said if he was 100% O he would have retired a few years ago. So there you have it. But I'm just someone in an Internet forum not a financial advisor you know handling millions.

Bearded Man

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Re: Lump Sum
« Reply #15 on: July 22, 2015, 05:11:08 PM »
Wow, this thread derailed quickly.

milesdividendmd

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Re: Lump Sum
« Reply #16 on: July 22, 2015, 06:24:45 PM »


mrpercentage, you advice is bull shit and you know it. Doesn't need to be refuted around here, we aren't stupid, just pointing out the obvious.


That's what I would do with the money. If that makes me a bullshit artist so be it. I do things differently. I decided what to do with my money long before I walked into an Internet forum. That advice actually came from a financial advisor I know personally. I asked if he was going to pick one dividend stock what would it be. He said O. He said if he was 100% O he would have retired a few years ago. So there you have it. But I'm just someone in an Internet forum not a financial advisor you know handling millions.

The issue is not whether or not this is what you would do with your money, or who you got your advice from.

The issue is whether or not investing in a single stock with an impressive history is a wise bit of advise for anyone going forward.

It doesn't take much skill to figure out which stock beat the market in the past, but figuring  out which one will beat the market going forward is very hard indeed.

mrpercentage

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Re: Lump Sum
« Reply #17 on: July 22, 2015, 09:35:22 PM »
My first post said that it would give him over a hundred a month in dividends and would compound quickly. You can lead a horse to water. Anyways.. He will do what he wants with the money, its not like Im getting paid to help. It's not like he going to take a random posters suggestion, but he might look into a suggestion and make an informed decision later. My best advice would be not to take all of your advice from unknown people in internet forums. Investigate everything mentioned that you think is worth while and consider a professional consultation considering the amount of money you referred to. My friend just pointed me to something that I concurred with after investigating it on my own. Plenty of people would have talked me out of Disney, and definitely would have said not to put that much of my money into one stock. Im not sorry I did. I wish I did more.

Ohio Teacher

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Re: Lump Sum
« Reply #18 on: July 23, 2015, 07:35:16 AM »
That advice actually came from a financial advisor I know personally. I asked if he was going to pick one dividend stock what would it be. He said O. He said if he was 100% O he would have retired a few years ago. So there you have it. But I'm just someone in an Internet forum not a financial advisor you know handling millions.
I see you've added appeal to authority to the list of fallacies and cognitive biases you regularly display in your posts.  It's good to be well-rounded.

mrpercentage

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Re: Lump Sum
« Reply #19 on: July 23, 2015, 08:15:03 AM »
Okay. Interesting that the poster asked and you are all refuting an answer. Why don't you just give a different answer. I'm not arguing; I'm suggesting.

zephyr911

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Re: Lump Sum
« Reply #20 on: July 23, 2015, 09:30:39 AM »
I'm saving for a 20% down payment on a $100K vacation rental that grosses $17K/yr. I expect leveraged returns of 20-25% depending on my exact costs, including full-service management.

If you handed me $30K, I'd buy this rental now and park the rest in index funds.