Pull Out Some of Lump Sum, then Reinvest (or save for Down Payment)

[gpmaxwell28]

Getting into some speculation here but curious for feedback/opinion.  I sold a house in March 2021 and put 300k Lump Sum into VTSAX.  Bought at 106/share.  Haven't touched it, been keeping an eye on it, and VTSAX closed at 102.25/share today (2/2/23).  If many people are predicting a recession, anyone think it would be smart to pull some out if it get's closer to original 106 and save some for a dip? 

The other option is we are looking to buy a place in next 6-12 months and could look to use a portion (20% down would be about 125-150k).  Anyone think to pull that out, put in HY Savings Account while the market is back to 'my buy in'?

Just thinking out loud but would love some perspective from others on this.  Thanks in advance.

[EverythingisNew]

I would definitely move the down payment amount to a HY money market account. My reasoning is that a downturn in the market might make you delay buying a house when you need it. Never put investing plans ahead of life plans… it’s not worth it! I’m getting 3.99% in FDRXX right now. You can also get 4.7% in a 3 month US government bond. I’m not that familiar with what is the highest yields right now, but there are many good, no risk, short term opportunities right now!

[gpmaxwell28]

Good perspective.  Thank you for that. 

[Dicey]

The key to the test is in your question: perspective. You should be in it for the long haul. Look at the number of shares you own, not the individual share price.

Exception, as Everythingisnew observed, is DP money.

[JAYSLOL]

Nothing to do with the price coming back to your buy-in, but definitely if you plan to use $125k or whatever within 6-12 months, that amount should not be in the market.  Move the downpayment money to high yield cash, and everything else you don’t plan to touch keep it invested for the long haul

[nereo]

Getting into some speculation here but curious for feedback/opinion.  I sold a house in March 2021 and put 300k Lump Sum into VTSAX.  Bought at 106/share.  Haven't touched it, been keeping an eye on it, and VTSAX closed at 102.25/share today (2/2/23).  If many people are predicting a recession, anyone think it would be smart to pull some out if it get's closer to original 106 and save some for a dip? 

The other option is we are looking to buy a place in next 6-12 months and could look to use a portion (20% down would be about 125-150k).  Anyone think to pull that out, put in HY Savings Account while the market is back to 'my buy in'?

Just thinking out loud but would love some perspective from others on this.  Thanks in advance.

Well, consider that "many" anticipated the January jobs report would be fairly week, far below the 212k reported for December.  Today that number came in at 517k.  Oops.  The thing about when "many" are predicting a recession, if it winds up being just "less bad" than anticipated the market will (often) react positively, because it's already pricing that in and companies are bulking up their balance sheets in anticipation.

As Jayslol said - any capital you need in the next 6-12 months shouldn't be in the market anyway.

[PDXTabs]

Getting into some speculation here but curious for feedback/opinion.  I sold a house in March 2021 and put 300k Lump Sum into VTSAX.  Bought at 106/share.  Haven't touched it, been keeping an eye on it, and VTSAX closed at 102.25/share today (2/2/23).  If many people are predicting a recession, anyone think it would be smart to pull some out if it get's closer to original 106 and save some for a dip? 

The other option is we are looking to buy a place in next 6-12 months and could look to use a portion (20% down would be about 125-150k).  Anyone think to pull that out, put in HY Savings Account while the market is back to 'my buy in'?

Just thinking out loud but would love some perspective from others on this.  Thanks in advance.

Well, consider that "many" anticipated the January jobs report would be fairly week, far below the 212k reported for December.  Today that number came in at 517k.  Oops.  The thing about when "many" are predicting a recession, if it winds up being just "less bad" than anticipated the market will (often) react positively, because it's already pricing that in and companies are bulking up their balance sheets in anticipation.

As Jayslol said - any capital you need in the next 6-12 months shouldn't be in the market anyway.

gpmaxwell28 this is all about your risk tolerance. If you need money in the next 12 months and you couldn't stand watching the market go down and realizing a loss then that money should be in a savings account or some sort of cash equivalent like t-bills. But do you need to buy a house? I mean, probably not, you are unlikely to die if you don't buy one. So this is all up to your risk tolerance and your desires in life (and possibly your tax situation if you are forced to realize losses).

But I would not time the market. Either you can stomach having your down payment in the market (mine is) or you can't. But I'm also happy renting and have no immediate plans to buy.

[gpmaxwell28]

Thank you all for providing some feedback, really appreciate it.  Great points made, (i.e. - risk tolerance, need to buy, etc). 

Planned on pulling some of this for a DP at some point, I think I might look to set a threshold to look to pull some out. Thank you again!

[Heckler]

I think I might look to set a threshold to look to pull some out.

I'm curious which threshold you are thinking of setting - high, low, or both?   

And the original post had two options as I understood
1.  to sell to wait for a dip to buy back in or
2.  to sell to make a down payment in 6-12 months. 

If it's for selling to wait for a dip and buying back in, I offer you a no-risk test: https://www.personalfinanceclub.com/time-the-market-game/

If it's a threshold to lock in funds for a down payment this year, why not simply use today's known price of "102"?   Mr Market goes both directions.  If you set to sell at 106 (+4), will you also sell at 98 (-4)?

[gpmaxwell28]

The market test was a good one.  Thanks for sharing, Heckler. 

The DP is more important than Option A, timing the market.  Selling the funds Monday.  Thanks MMM Community.