Author Topic: Not sure what to do with the excess cash!  (Read 1967 times)

Jenny1974

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Not sure what to do with the excess cash!
« on: August 06, 2014, 03:01:32 PM »
Every month, I keep a detailed budget and, at the end of the month, to the extent inflows exceed outflows, I sweep that excess from my checking into savings.  This is usually anywhere from $2,000 - $3,000 month.  I have an automatic investment set up with TDAmeritrade to invest $1,000 in VTSMX each month.  On occasion, when my remaining balance in savings (in excess of my EF needs) gets a little high, I will make a large one-time investment in an index fund.

Right now, I'm sitting with approximately about $40,000 excess in my savings account but I'm not sure if it would be smarter to just lump sum invest it now . . . . across a couple Vanguard funds . . . or just increase my automatic investment to say $5,000 a month until the excess is eaten up and then go back to the $1,000.  I know there's no benefit to be had trying to time the market but . . . . at the same time . . . is it wise to throw a big chunk in the market at one time when it appears a little inflated?

Thanks

NoraLenderbee

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Re: Not sure what to do with the excess cash!
« Reply #1 on: August 06, 2014, 03:36:42 PM »
There's a thread somewhere about the math of whether it's better to invest DCA or lump sum. If you're into financial math, check it out. If you aren't so into it, then you should do the thing that will let you sleep best at night, because neither option is bad. I would be more comfortable upping the automatic monthly investment than throwing the whole thing in at once. You just need to decide which you can live with. It's a good problem to have.

With 2-3 K extra per month, you might consider increasing your regular monthly investment from 1K to 2K, maybe splitting it across a couple of different investments.

RyeWhiskey

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Re: Not sure what to do with the excess cash!
« Reply #2 on: August 06, 2014, 04:16:49 PM »
What does your IPS say? I'd think it'd be best to simply increase your monthly contributions so long as that's what your plan says.

fartface

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Re: Not sure what to do with the excess cash!
« Reply #3 on: August 07, 2014, 12:29:52 PM »
If you love Vanguard (as I do) I'd recommend rolling all your Vanguard funds from TD to Vanguard. I did this last year w/my Etrade account after I realized #1, you can't buy Vanguard Admiral shares through Etrade and #2 Etrade was going to charge me a $19.99 commission just to purchase a Vanguard fund!

I immediately rolled about $50,000 from Etrade to Vanguard...was able to keep the individual stock positions as well....and bought my Vanguard index funds directly from them at no cost and MUCH lower expense ratio (when you purchase $10,000 increment admiral shares).

At any rate, nice job on your savings hoard...you have a great plan of dollar cost averaging into Vanguard index funds...only thing I'd change is what I mentioned above. Good luck!