Author Topic: USD 750,000 of cash, not invested, need advice.  (Read 24062 times)

Mother Fussbudget

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #50 on: September 28, 2016, 10:18:55 AM »
can i just point out the appropriateness of dividendman explaining the effects of buying a dividend?  awesome.

+1.  Yep.  Awesome. (Thanks dividendman!)

seattlecyclone

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #51 on: September 28, 2016, 10:20:59 AM »
You didn't lose the game, you just decided not to play for the past several years. However you still probably have a few decades of life ahead of you. The new game starts today. How you play is up to you. Educate yourself about how a bear market is not the end of the world when you're playing the long game and you might be more confident. However I stand by what I said earlier: you need to pick an asset allocation that you're comfortable sticking with through a bear market. Maybe 80/20 is not that allocation for you. The fact that you are concerned about investing a lump sum says that this might be the case.

I am not concerned about investing the lump sum. My main concern is entering the market with basically most of the net worth at the possible peak. I know you cannot time the market, but given all the hype about a major correction the media now - it is not the most comfortable time for me to enter. On the other hand, usually when most people expect a significant collapse, it does not happen.

When you're already in the market, each day you don't sell you're making an implicit decision that things are likely to go up from here. What if you had invested a year ago? Would the doomsday articles cause you enough concern to pull your money out today?

illiterate

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #52 on: September 28, 2016, 01:06:31 PM »
You didn't lose the game, you just decided not to play for the past several years. However you still probably have a few decades of life ahead of you. The new game starts today. How you play is up to you. Educate yourself about how a bear market is not the end of the world when you're playing the long game and you might be more confident. However I stand by what I said earlier: you need to pick an asset allocation that you're comfortable sticking with through a bear market. Maybe 80/20 is not that allocation for you. The fact that you are concerned about investing a lump sum says that this might be the case.

I am not concerned about investing the lump sum. My main concern is entering the market with basically most of the net worth at the possible peak. I know you cannot time the market, but given all the hype about a major correction the media now - it is not the most comfortable time for me to enter. On the other hand, usually when most people expect a significant collapse, it does not happen.

When you're already in the market, each day you don't sell you're making an implicit decision that things are likely to go up from here. What if you had invested a year ago? Would the doomsday articles cause you enough concern to pull your money out today?

No, if I am already in, I wouldn't sell. It was my mistake not to enter due to my ignorance and lack of understanding... However, almost everyone is now screaming that the market is about to collapse - everything is overvalued, economy is not doing great, major correction is coming, etc.. It is mentally tough to enter the market, especially after missing on such an amazing bull run.

illiterate

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #53 on: September 28, 2016, 01:08:48 PM »

If you buy it before October 3rd you'll get the October payout.
I don't know much about dividend investing, but I often hear the advice "don't buy the dividend", meaning something Along the lines of the value of the stock goes down to pay that dividend and then there are tax implications on the dividend. (Or something to that effect?).

Could someone please explain the concept better than I have and explain why it would or wouldn't apply in this case?  I've just don't have a grasp on what it really means practically.

The concept is basically that the stock, on the dividend ex date (the day the stock trades exclusive of the dividend), goes down by the amount the dividend is as a percentage of the company. Essentially, the market is calculating in the fact that the company is losing so much cash of value in the dividend. I agree you shouldn't use dividend timing approaches to buy and sell stocks.

It doesn't really apply in this case that heavily because BSV is a short term government BOND index, not a collection of stocks. The monthly payout is primarily coming from interest payments from the bonds it holds, not dividends.

As for how I came up with $0.09, I just looked at the last 1 year of distributions and saw it was always $0.1 or $0.09. Nothing really scientific about it. I'm sure there is a more precise way to gauge the distributions. So yes, it is the monthly interest payment per unit.

Thank you. Do you guys recommend transferring all amount into one brokerage account or to 3 different accounts (each USD 250,000) with Vanguard, Schwab and Fidelity, for example?

Mother Fussbudget

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #54 on: September 28, 2016, 01:18:02 PM »
One (Vanguard) account.  Lowest possible fees.  No 'stockholders' to satisfy.  Easier to track.

And I found three other articles on "why lump-sum investing beats DCA", if you're still reading:
http://www.mrmoneymustache.com/2014/08/20/how-to-invest-in-overvalued-market/
http://www.rickferri.com/blog/investments/6-things-to-consider-when-investing-a-lump-sum/
https://livingafi.com/2015/12/18/home-ownership-a-retrospective-and-beyond/#more-5794
(this last one references the other two, and Dr. Doom's retrospective of home ownership is a great read)

illiterate

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #55 on: September 28, 2016, 01:21:54 PM »
One (Vanguard) account.  Lowest possible fees.  No 'stockholders' to satisfy.  Easier to track.

And I found three other articles on "why lump-sum investing beats DCA", if you're still reading:
http://www.mrmoneymustache.com/2014/08/20/how-to-invest-in-overvalued-market/
http://www.rickferri.com/blog/investments/6-things-to-consider-when-investing-a-lump-sum/
https://livingafi.com/2015/12/18/home-ownership-a-retrospective-and-beyond/#more-5794
(this last one references the other two, and Dr. Doom's retrospective of home ownership is a great read)

Thanks. What if I also want to buy individual stocks (in the future) - is Vanguard still good for this and are their fees lowest for this as well?

nereo

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #56 on: September 28, 2016, 01:31:14 PM »
One (Vanguard) account.  Lowest possible fees.  No 'stockholders' to satisfy.  Easier to track.

And I found three other articles on "why lump-sum investing beats DCA", if you're still reading:
http://www.mrmoneymustache.com/2014/08/20/how-to-invest-in-overvalued-market/
http://www.rickferri.com/blog/investments/6-things-to-consider-when-investing-a-lump-sum/
https://livingafi.com/2015/12/18/home-ownership-a-retrospective-and-beyond/#more-5794
(this last one references the other two, and Dr. Doom's retrospective of home ownership is a great read)

Thanks. What if I also want to buy individual stocks (in the future) - is Vanguard still good for this and are their fees lowest for this as well?

You can set up a brokerage account with Vanguard and its extremely competitive.  Depending on your account balance and frequency of trades you can buy individual ETFs or stocks with no commission.
To be sure, there are other brokerages out there that offer similar levels of service and fees.

mxt0133

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #57 on: September 28, 2016, 01:45:53 PM »
No, if I am already in, I wouldn't sell. It was my mistake not to enter due to my ignorance and lack of understanding... However, almost everyone is now screaming that the market is about to collapse - everything is overvalued, economy is not doing great, major correction is coming, etc.. It is mentally tough to enter the market, especially after missing on such an amazing bull run.

I was in a similar situation during 2011-13, I decided to keep whatever I had in the market fully invested, but I also didn't add to them.  I contributed to my 401k but kept it in bonds.

What helped was following the low information diet post.

http://www.mrmoneymustache.com/2013/10/01/the-low-information-diet/

All of it really is noise.  As long as you believe the today's companies are providing value and are producing a profit then all the PE, negative interest rates, elections, ect, are irrelevant in the long run.

That along with coming to terms with taking the long term view of these investments really help me make the leap of being fully committed.

illiterate

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #58 on: September 28, 2016, 02:21:12 PM »
Thank you guys for your help and amazing links. I wish I could find MMM site and these forums and was more interested in this thing 6-7 yrs ago. Links to MMM articles are just amazing- the guy is a genius.

seattlecyclone

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #59 on: September 28, 2016, 09:00:17 PM »
You didn't lose the game, you just decided not to play for the past several years. However you still probably have a few decades of life ahead of you. The new game starts today. How you play is up to you. Educate yourself about how a bear market is not the end of the world when you're playing the long game and you might be more confident. However I stand by what I said earlier: you need to pick an asset allocation that you're comfortable sticking with through a bear market. Maybe 80/20 is not that allocation for you. The fact that you are concerned about investing a lump sum says that this might be the case.

I am not concerned about investing the lump sum. My main concern is entering the market with basically most of the net worth at the possible peak. I know you cannot time the market, but given all the hype about a major correction the media now - it is not the most comfortable time for me to enter. On the other hand, usually when most people expect a significant collapse, it does not happen.

When you're already in the market, each day you don't sell you're making an implicit decision that things are likely to go up from here. What if you had invested a year ago? Would the doomsday articles cause you enough concern to pull your money out today?

No, if I am already in, I wouldn't sell. It was my mistake not to enter due to my ignorance and lack of understanding... However, almost everyone is now screaming that the market is about to collapse - everything is overvalued, economy is not doing great, major correction is coming, etc.. It is mentally tough to enter the market, especially after missing on such an amazing bull run.

You seem to still be under the belief that "My money is invested in the market, should I leave it there?" and "My money is in cash, should I put it in the market?" are fundamentally different questions. They are not. Forget about your past decisions. Would have been nice if you had invested earlier, but you didn't. Can't change that. What you can do today and every other day is ask yourself whether you really believe the stock market is likely to provide the best returns over the long run from this point forward. If you believe it will, you should put your money in the market, whether your money was there yesterday or not. If you believe it won't, you should put your money elsewhere, whether your money was in the market yesterday or not.

PizzaSteve

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #60 on: September 28, 2016, 11:33:55 PM »
My 2 cents. 

There is nothing wrong with sitting in cash until your are confident in your plan.

Educate yourself and don't feel rushed.  There is a reason you are holding cash.  You have a low risk tolerance and also thought you might need it for a large purchase (home). 

Maximizing investment returns is a good goal, but not at the expense of peace of mind.  You can hit your goals with 0% returns, if you save and spend within your means.  Learn and be confident, then move.

Worst case, there are online banks paying 1%.  Park the money there while your read the bogleheads wiki.  Good luck.
« Last Edit: September 28, 2016, 11:38:23 PM by PizzaSteve »

doug111

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #61 on: September 29, 2016, 12:40:47 AM »
Quote
I am lost where to start and will appreciate any suggest and if you can recommend some very good books/courses/sites for beginners.


For people just starting out I always recommend JL Collins stock series. 
http://jlcollinsnh.com/stock-series/

Good lord you have a lot in cash.  Understand that every year that goes by your money is worth less due to inflation; with that much cash on hand you are literally loosing about $18k every single year.

Don't worry about whether "now" is a better time to get into the market than yesterday/tomorrow/next-month/last-year.  Time in the market is more important than the time you get into the market.

ON another note, you are very, very close to being completely FI - with a few tweaks to your budget or another couple of years you'll never have to work again, provided you actually INVEST that money.
G'luck.
I would hold off jumping into the market a a little bit since we are in a bubble. I dont believe in market timing but I sure dont believe in jumping in when its in an obvious bubble.

doug111

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #62 on: September 29, 2016, 12:42:28 AM »
That IS a lot of cash.  Personally, I wouldn't invest it all at once.  I would plan to put $10,000 per month in.  If the market tanks, then double that amount.  I know we're not about market timing, but you also don't have to buy on the most expensive day of the month.  Check the Dow or VTI at about 3:30 every day to make sure you don't miss out on a big (400-1000 point) drop. Expect a lot of volatility, especially through the election.  But I would get started now. 

Being in another country, can you buy Vanguard Index Funds?  If so, open an account today and buy some VTSAX.  Don't even waste your time with any transactions under $10K.
Very good advice, you took the words out of my mouth.

illiterate

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #63 on: September 29, 2016, 07:32:02 AM »
Quote
I am lost where to start and will appreciate any suggest and if you can recommend some very good books/courses/sites for beginners.


For people just starting out I always recommend JL Collins stock series. 
http://jlcollinsnh.com/stock-series/

Good lord you have a lot in cash.  Understand that every year that goes by your money is worth less due to inflation; with that much cash on hand you are literally loosing about $18k every single year.

Don't worry about whether "now" is a better time to get into the market than yesterday/tomorrow/next-month/last-year.  Time in the market is more important than the time you get into the market.

ON another note, you are very, very close to being completely FI - with a few tweaks to your budget or another couple of years you'll never have to work again, provided you actually INVEST that money.
G'luck.
I would hold off jumping into the market a a little bit since we are in a bubble. I dont believe in market timing but I sure dont believe in jumping in when its in an obvious bubble.

well, the problem is that I have heard this for the last  3 yrs, but the market is not cooling down, is it? ;)

Retire-Canada

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #64 on: September 29, 2016, 08:10:55 AM »
well, the problem is that I have heard this for the last  3 yrs, but the market is not cooling down, is it? ;)

You'll keep hearing it after a crash as well. People will say this wasn't the big one hang onto your cash a few more years and a few more years after that and a few more years after that. It's easy to look back and pick the best time to invest. It's far harder to do so in real time.

Look at various asset allocations. Find one that can withstand a significant crash well enough that you won't lose your mind and then invest your money. If you can't find a portfolio you can be okay riding through a crash than consider that investing in the stock market may not be for you and look at your alternatives to find something that does make you feel comfortable.


doug111

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #65 on: September 29, 2016, 08:47:00 AM »
Quote
I am lost where to start and will appreciate any suggest and if you can recommend some very good books/courses/sites for beginners.


For people just starting out I always recommend JL Collins stock series. 
http://jlcollinsnh.com/stock-series/

Good lord you have a lot in cash.  Understand that every year that goes by your money is worth less due to inflation; with that much cash on hand you are literally loosing about $18k every single year.

Don't worry about whether "now" is a better time to get into the market than yesterday/tomorrow/next-month/last-year.  Time in the market is more important than the time you get into the market.

ON another note, you are very, very close to being completely FI - with a few tweaks to your budget or another couple of years you'll never have to work again, provided you actually INVEST that money.
G'luck.
I would hold off jumping into the market a a little bit since we are in a bubble. I dont believe in market timing but I sure dont believe in jumping in when its in an obvious bubble.

well, the problem is that I have heard this for the last  3 yrs, but the market is not cooling down, is it? ;)
I think a lot longer term than a short 3 years myself, I think in the terms of at least 10 years cycles.

doug111

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #66 on: September 29, 2016, 08:49:29 AM »
well, the problem is that I have heard this for the last  3 yrs, but the market is not cooling down, is it? ;)

You'll keep hearing it after a crash as well. People will say this wasn't the big one hang onto your cash a few more years and a few more years after that and a few more years after that. It's easy to look back and pick the best time to invest. It's far harder to do so in real time.

Look at various asset allocations. Find one that can withstand a significant crash well enough that you won't lose your mind and then invest your money. If you can't find a portfolio you can be okay riding through a crash than consider that investing in the stock market may not be for you and look at your alternatives to find something that does make you feel comfortable.
Personally I dont invest in the stock market period. I dont trust people and there is a ton of people behind each company. I only trust myself so I make my own companies. I can trust myself and my books.   

nereo

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #67 on: September 29, 2016, 09:49:22 AM »
Quote
I am lost where to start and will appreciate any suggest and if you can recommend some very good books/courses/sites for beginners.


For people just starting out I always recommend JL Collins stock series. 
http://jlcollinsnh.com/stock-series/

Good lord you have a lot in cash.  Understand that every year that goes by your money is worth less due to inflation; with that much cash on hand you are literally loosing about $18k every single year.

Don't worry about whether "now" is a better time to get into the market than yesterday/tomorrow/next-month/last-year.  Time in the market is more important than the time you get into the market.

ON another note, you are very, very close to being completely FI - with a few tweaks to your budget or another couple of years you'll never have to work again, provided you actually INVEST that money.
G'luck.
I would hold off jumping into the market a a little bit since we are in a bubble. I dont believe in market timing but I sure dont believe in jumping in when its in an obvious bubble.

well, the problem is that I have heard this for the last  3 yrs, but the market is not cooling down, is it? ;)
I think a lot longer term than a short 3 years myself, I think in the terms of at least 10 years cycles.

This is exactly why you shouldn't concern yourself with current valuations.  IF your timeline is 10+ years, the important thing is that you are actually invested.  As Retire-Canada has indicated, people have been talking about whether or not we are in a bubble for years, just as they will talk about whether we've reached the bottom during a downturn.  Neither is predictable (hence why market timing doesn't work).
The time IN the market is what matters.

waltworks

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #68 on: September 29, 2016, 10:17:10 AM »
Personally I dont invest in the stock market period. I dont trust people and there is a ton of people behind each company. I only trust myself so I make my own companies. I can trust myself and my books.

That's great, but that's not investing, it's working.

-W

Spork

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #69 on: September 29, 2016, 10:34:52 AM »
Personally I dont invest in the stock market period. I dont trust people and there is a ton of people behind each company. I only trust myself so I make my own companies. I can trust myself and my books.

That's great, but that's not investing, it's working.

-W

And it is difficult to form your own company in such a way as to not utilize any other company.  Even the guy that just mows the lawn buys a Honda lawnmower and Exxon gasoline.

The real answer for non-trust is, of course, extremely wide diversification in something like a total market fund.

Fishfindr

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #70 on: September 29, 2016, 02:03:46 PM »
I'm in the same boat as you (almost to the dollar) and what I've been doing is looking at the charts of various stocks and how they have behaved
in relation to the Dow over the last 10/20 years. Not every stock takes a dive along with the general market, but some drift a little bit lower. Go to
Yahoo Finance and pull up the chart for AWK (American Water Works) for example. Then, choose the compare button and select "Dow". You'll
see that some equities perform quite well (or don't give up much) even in a flat to down market. I'm looking to compile a list of about 10 of these,
especially the ones paying decent dividends and invest about half of my cash in them. The other 50% will be divided between a rental fixer upper,
emergency reserve and a nice chunk to buy and sell deals as I find them - especially on cars and motorcycles.

I'm sure there will be naysayers and that this methodology may not work for this or that reason. But, hey, it's something that feels comfortable
to me.

Find your zone and sleep tight at night.



illiterate

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #71 on: September 29, 2016, 02:16:02 PM »
I'm in the same boat as you (almost to the dollar) and what I've been doing is looking at the charts of various stocks and how they have behaved
in relation to the Dow over the last 10/20 years. Not every stock takes a dive along with the general market, but some drift a little bit lower. Go to
Yahoo Finance and pull up the chart for AWK (American Water Works) for example. Then, choose the compare button and select "Dow". You'll
see that some equities perform quite well (or don't give up much) even in a flat to down market. I'm looking to compile a list of about 10 of these,
especially the ones paying decent dividends and invest about half of my cash in them. The other 50% will be divided between a rental fixer upper,
emergency reserve and a nice chunk to buy and sell deals as I find them - especially on cars and motorcycles.

I'm sure there will be naysayers and that this methodology may not work for this or that reason. But, hey, it's something that feels comfortable
to me.

Find your zone and sleep tight at night.

Isn't individual stock picking more risky than index investing? Of course, if you can find a 1992 Starbucks you will do amazing, but I do not think there are such companies now due to a very hot market :)

Fishfindr

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #72 on: September 29, 2016, 02:28:19 PM »
I'm sure there is less risk in an index fund. But, plot AWK (just one example), against VTSAX and the Dow chart for 10 years.
You would have enjoyed less dramatic falls during the worse times and a tremendous advantage during the good times.

Just my humble opinion. Everyone has to do what makes them sleep better.

illiterate

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #73 on: September 29, 2016, 03:08:03 PM »
I'm sure there is less risk in an index fund. But, plot AWK (just one example), against VTSAX and the Dow chart for 10 years.
You would have enjoyed less dramatic falls during the worse times and a tremendous advantage during the good times.

Just my humble opinion. Everyone has to do what makes them sleep better.

In fact, this is interesting. I need to try plotting a few of these stocks myself ;) Not sure if this is a good strategy for me, but definitely worth doing some analysis

waltworks

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #74 on: September 29, 2016, 03:26:11 PM »
I'm sure there is less risk in an index fund. But, plot AWK (just one example), against VTSAX and the Dow chart for 10 years.
You would have enjoyed less dramatic falls during the worse times and a tremendous advantage during the good times.

Just my humble opinion. Everyone has to do what makes them sleep better.

Plot every stock in the S&P 500. You'll find a bunch like that. Because (wait for it!) RANDOMNESS.

Don't pick stocks, especially with the level of understanding you've displayed here.

_W

dividendman

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #75 on: September 29, 2016, 03:43:56 PM »
I'm sure there is less risk in an index fund. But, plot AWK (just one example), against VTSAX and the Dow chart for 10 years.
You would have enjoyed less dramatic falls during the worse times and a tremendous advantage during the good times.

Just my humble opinion. Everyone has to do what makes them sleep better.

Ah yes, proof by anecdote!

Fishfindr

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #76 on: September 29, 2016, 03:58:46 PM »
Dividendman, maybe i need to look up the definition of that word.
But, I don't think that 10 years of solid performance is anecdotal.

Spork

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #77 on: September 29, 2016, 04:47:09 PM »
Dividendman, maybe i need to look up the definition of that word.
But, I don't think that 10 years of solid performance is anecdotal.

I believe his point is that you can historically find a while lot of companies with 10+ years of solid performance that are out of business today.

Indexing lets you invest tiny shares of ALL OF THEM, which is, IMO, much safer.

I do play with individual stocks.  But I have less than 10% of my stash in them.  I have actually gotten really good returns from them.  Why?  Mostly just lucky.

The wording you used makes it sound like you're planning on tossing a few hundred thousand dollars into "one good stock."  I believe that is what is making dividendman (and myself, for that matter) a little worried about your approach.
« Last Edit: September 29, 2016, 04:52:05 PM by Spork »

dividendman

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #78 on: September 29, 2016, 04:48:31 PM »
Dividendman, maybe i need to look up the definition of that word.
But, I don't think that 10 years of solid performance is anecdotal.

Yeah, I wasn't referring to that. Spork got it. I was referring to the picking of the one stock vs other stocks that did poorly. I can pick out google and say the last 10 years had pretty solid performance. I don't know if 10 years ago I would have picked it over, say, yahoo, or picking apple over blackberry.

So, the anecdote is saying that you could have picked a stock that did better than the index, but of course, you could have just as easily picked one that did worse.

doug111

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #79 on: September 29, 2016, 07:36:59 PM »
Personally I dont invest in the stock market period. I dont trust people and there is a ton of people behind each company. I only trust myself so I make my own companies. I can trust myself and my books.

That's great, but that's not investing, it's working.

-W
Very true sir but the returns are astronomically worth the extra work.

waltworks

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #80 on: September 29, 2016, 09:28:30 PM »
]Very true sir but the returns are astronomically worth the extra work.

Awesome. Keep working...forever? I'll be out riding my bike, because I trust, you know, other people in the aggregate as part of a capitalist system of goods/services exchanges. But to each their own.

-W

doug111

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #81 on: September 29, 2016, 10:33:34 PM »
]Very true sir but the returns are astronomically worth the extra work.

Awesome. Keep working...forever? I'll be out riding my bike, because I trust, you know, other people in the aggregate as part of a capitalist system of goods/services exchanges. But to each their own.

-W
Yes I will keep working, but for me its really not work !!!! Its my hobby !!!! MONEY IS AND ALWAYS WILL BE MY HOBBY !!!! I Love the having money for a hobby because there is always something new to learn and it never gets boring !!!!!

waltworks

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #82 on: September 29, 2016, 10:43:04 PM »
Yes I will keep working, but for me its really not work !!!! Its my hobby !!!! MONEY IS AND ALWAYS WILL BE MY HOBBY !!!! I Love the having money for a hobby because there is always something new to learn and it never gets boring !!!!!

Why on earth are you posting this on an *early retirement* forum in an *investing* thread?

Seriously, WTF?

-W

doug111

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #83 on: September 29, 2016, 10:53:12 PM »
Yes I will keep working, but for me its really not work !!!! Its my hobby !!!! MONEY IS AND ALWAYS WILL BE MY HOBBY !!!! I Love the having money for a hobby because there is always something new to learn and it never gets boring !!!!!

Why on earth are you posting this on an *early retirement* forum in an *investing* thread?

Seriously, WTF?

-W
I dont know maybe I am lost, I once was lost, but now maybe you have found me oh great one. Please direct me to the proper place before I jump off a bridge and go nutty eating cherries in dandelion soup. Am I at the end of the road of gobbily gook ? Why does the pistons in my engine have a knocking noise while the red head lady is stalking me in this forum ?

doug111

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #84 on: September 29, 2016, 10:55:22 PM »
]Very true sir but the returns are astronomically worth the extra work.

Awesome. Keep working...forever? I'll be out riding my bike, because I trust, you know, other people in the aggregate as part of a capitalist system of goods/services exchanges. But to each their own.

-W
Why would you ride a bike ? Too much risk because people can crash into you in the bike lane.

nereo

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #85 on: September 30, 2016, 08:10:56 AM »
]Very true sir but the returns are astronomically worth the extra work.

Awesome. Keep working...forever? I'll be out riding my bike, because I trust, you know, other people in the aggregate as part of a capitalist system of goods/services exchanges. But to each their own.

-W
Why would you ride a bike ? Too much risk because people can crash into you in the bike lane.

well, the benefits are thoroughly discussed throughout this forum and expounded upon by MMM, but they include:
1) riding a bike is extremely enjoyable for many of us
2) it's a great form of exercise, something the vast majority of us need more anyway
3) bikes are better for the environment
4) bike infrastructure costs far less than car infrastructure
5) bike fatalities are proportionately less than car fatalities, particularly when appropriate infrastructure is considered
6) total commuting cost is far less using a bike
7) the purchase cost of bikes is orders of magnitude less, as is maintenance and storage costs.

...there are others, but those are the big ones off the top of my head.
note: this is getting very far off the OP's topic.  If you wish to continue this discussion I suggest you create a new thread.

illiterate

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #86 on: October 01, 2016, 12:59:24 PM »
Dividendman, maybe i need to look up the definition of that word.
But, I don't think that 10 years of solid performance is anecdotal.


I do play with individual stocks.  But I have less than 10% of my stash in them.  I have actually gotten really good returns from them.  Why?  Mostly just lucky.

well, if you can find a nice undervalued company with good growth potential, strong cash flow and good strategy... and the stock does well - this is not lucky

seattlecyclone

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #87 on: October 01, 2016, 02:47:13 PM »
Dividendman, maybe i need to look up the definition of that word.
But, I don't think that 10 years of solid performance is anecdotal.


I do play with individual stocks.  But I have less than 10% of my stash in them.  I have actually gotten really good returns from them.  Why?  Mostly just lucky.

well, if you can find a nice undervalued company with good growth potential, strong cash flow and good strategy... and the stock does well - this is not lucky

Sure, but that's a pretty big "if." Remember, the mutual fund industry is full of people whose full-time job is to find undervalued stocks, and yet on the whole they aren't very good at it. They studied this stuff in school and then spend years immersed in information about different companies. They use that education and experience and time to pick stocks that do no better than index funds before the fund managers take their cut. If you, as an amateur, manage to do better than the pros, I'll say it's probably due more to luck than strategy.

illiterate

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #88 on: October 01, 2016, 03:36:30 PM »
Dividendman, maybe i need to look up the definition of that word.
But, I don't think that 10 years of solid performance is anecdotal.


I do play with individual stocks.  But I have less than 10% of my stash in them.  I have actually gotten really good returns from them.  Why?  Mostly just lucky.

well, if you can find a nice undervalued company with good growth potential, strong cash flow and good strategy... and the stock does well - this is not lucky

Sure, but that's a pretty big "if." Remember, the mutual fund industry is full of people whose full-time job is to find undervalued stocks, and yet on the whole they aren't very good at it. They studied this stuff in school and then spend years immersed in information about different companies. They use that education and experience and time to pick stocks that do no better than index funds before the fund managers take their cut. If you, as an amateur, manage to do better than the pros, I'll say it's probably due more to luck than strategy.

good argument.

drio

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #89 on: October 02, 2016, 02:00:59 PM »
Very good thread. Thank you.

All the replies suggest using Vanguard for your investments. I haven't seen any comments regarding
Betterment or Wealthfront. Could you comment on that or point us to a relevant thread? From what
I have read I don't see major differences as the underlying index funds are from Vanguard. I am still
trying to get my head around Tax loss harvesting and the tax implications.

Congratulations on all those savings. Pretty impressive.

I am in a similar, but a much modest situation. I have 200k I want to invest. I am considering creating
two targets at betterment. One 80/20 and a 50/50. Then invest 75% in my the first and 25% in the other.

Looking forward to seeing what you think about the Betterment/Wealthfront option.

Roland of Gilead

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #90 on: October 02, 2016, 03:06:24 PM »
DCA all the way.  Screw the statistics.   Statistics also say you are unlikely to get hit by lightning but I don't hold up a golf club in a thunderstorm.  If the coming election in November is not a thunderstorm, I don't know what is.

With dividends fairly low and inflation fairly low, it is not like you are losing very much by a modest DCA over lump sum.   

And yes, I have pulled back some stock investments to cash, which is really the same as suggesting someone DCA a lump sum of cash.  I am about 50% stocks, 10% bonds, 40% cash, which is about where I would say you want to DCA.

MustacheAndaHalf

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #91 on: October 03, 2016, 01:54:30 AM »
It was my mistake not to enter due to my ignorance and lack of understanding... However, almost everyone is now screaming that the market is about to collapse - everything is overvalued, economy is not doing great, major correction is coming, etc.. It is mentally tough to enter the market, especially after missing on such an amazing bull run.
The sentiment you read online or see in TV news reflects what's already priced in.  Those people already sold and are refusing to buy, and now stock prices reflect their actions.  You don't really gain from using information that the stock market already knows.  Think of it this way: would you invest right now as if "brexit" was the major news story?  Probably not because of how long has passed.  But the computers hooked up to the stock market respond in fractions of a second.  It's like your information is always months old by the time you want to put it to use.

The average investor sells when the stories scare them, and buys when stories are excited about the market.  And that approach is always too late.  It's why the average investor doesn't get the returns of the funds they own - their "dollar averaged returns" are much worse because of bad timing.  Unfortunately, news stories either need to scare or excite you about the stock market or they won't attract viewers.  So you aren't going to see good, dull advice on TV.

I favor Larry Swedroe's books, because he takes 30+ year performance to reach his main conclusions.  His book "What Wall Street Doesn't Want You To Know" might give you a new perspective on the market news.



robartsd

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #92 on: October 03, 2016, 10:10:19 AM »
All the replies suggest using Vanguard for your investments. I haven't seen any comments regarding
Betterment or Wealthfront. Could you comment on that or point us to a relevant thread? From what
I have read I don't see major differences as the underlying index funds are from Vanguard. I am still
trying to get my head around Tax loss harvesting and the tax implications.
Vanguard is simply the place to invest with the absolute lowest fees. Betterment and Wealthfront add on services to automate some portfolio maintenance tasks, but add fees to pay for this. Most here prefer to DIY and save some money - on average this is the best strategy for long-term investors.

zephyr911

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #93 on: October 03, 2016, 10:35:20 AM »
I'd drop at least a couple hundred of that into multi-family properties in LCOL areas with decent job markets. Just my $.02.

Most of my current assets are in IRAs with nearly a 100% stock allocation, but my FIRE income will be a combination of rents and PT work, and most of my new investing is going into rentals.

dougules

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #94 on: October 03, 2016, 11:25:45 AM »
You didn't lose the game, you just decided not to play for the past several years. However you still probably have a few decades of life ahead of you. The new game starts today. How you play is up to you. Educate yourself about how a bear market is not the end of the world when you're playing the long game and you might be more confident. However I stand by what I said earlier: you need to pick an asset allocation that you're comfortable sticking with through a bear market. Maybe 80/20 is not that allocation for you. The fact that you are concerned about investing a lump sum says that this might be the case.

I am not concerned about investing the lump sum. My main concern is entering the market with basically most of the net worth at the possible peak. I know you cannot time the market, but given all the hype about a major correction the media now - it is not the most comfortable time for me to enter. On the other hand, usually when most people expect a significant collapse, it does not happen.

When you're already in the market, each day you don't sell you're making an implicit decision that things are likely to go up from here. What if you had invested a year ago? Would the doomsday articles cause you enough concern to pull your money out today?

No, if I am already in, I wouldn't sell. It was my mistake not to enter due to my ignorance and lack of understanding... However, almost everyone is now screaming that the market is about to collapse - everything is overvalued, economy is not doing great, major correction is coming, etc.. It is mentally tough to enter the market, especially after missing on such an amazing bull run.

There are lots of people screaming about a crash, but they apparently aren't putting their money where their mouth is.  The market is this high because when people think it's worth it when they actually go to pull out their wallet.  That doesn't mean we're not in a bubble, but ask yourself if you think you're smarter than millions of talented people put together. 

I personally think the market is way high but there are several reasons that it doesn't matter:

a) I could be completely wrong. 

b) Most other things you can invest in right now are doing pretty pitifully.  You're getting almost no interest on your cash for instance. 

c) There are scenarios in which the market could correct itself without a crash. 

d) Major companies are nervously sitting on huge piles of cash right now just like you.  That cash is part of a company's value as much as their earnings.  Also, when they overcome their fears and invest, the market might very well take off. 

e) If you're in it for the long term, today's valuations aren't really that important. 

f) Don't forget the basic idea that you're buying pieces of companies.  Those companies are churning out profits every day, and every day you wait is a day you're missing out on that. 


ooeei

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #95 on: October 03, 2016, 01:50:40 PM »
And the problem with the "world's worst market timer" article is that guy invested every year at the worst time over a long time frame.  This is far different than investing everything at once, where you could be down significantly.  Someone who invested at the peak in 2000 didn't see any positive return on their initial investment until around 2013.  That's a long time for a fearful investor to "stick it out."

How did you calculate this? Are you just using the price index? If so you aren't accounting for the dividends paid over the years. If you include those, I believe you would see a gain starting around 2006, then back down during the financial crisis, and you'd see gains again starting at the end of 2010. By 2013 you're up about 25-30%. Either way it's a long time to stick it out, but not quite as bad as you might initially think.

I'm looking at: https://www.portfoliovisualizer.com/backtest-portfolio?s=y&timePeriod=2&startYear=2000&firstMonth=8&endYear=2013&lastMonth=1&endDate=09%2F26%2F2016&initialAmount=10000&annualOperation=0&annualAdjustment=0&inflationAdjusted=true&annualPercentage=0.0&frequency=4&rebalanceType=0&showYield=false&reinvestDividends=true&symbol1=VFINX&allocation1_1=100

That's a good point, I forgot about dividends. I always forget the dividends...

I still maintain that 6 years is a long time for someone who's as fearful as OP to not sell.  Choosing a more conservative AA or DCA into the market seem like good ideas, if only for psychological reasons.

MVal

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #96 on: October 03, 2016, 03:12:53 PM »
For the record, six figures is well beyond an "ordinary income," at least in my world! Good Lord, that's a wad of cash. Then again, maybe I'm easily impressed as my FIRE number is a little over half of what you've got now.

Ramparts

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #97 on: October 04, 2016, 08:34:53 AM »
I still maintain that 6 years is a long time for someone who's as fearful as OP to not sell.  Choosing a more conservative AA or DCA into the market seem like good ideas, if only for psychological reasons.

Agreed on all points!

illiterate

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #98 on: October 04, 2016, 04:33:37 PM »
Very good thread. Thank you.

All the replies suggest using Vanguard for your investments. I haven't seen any comments regarding
Betterment or Wealthfront. Could you comment on that or point us to a relevant thread? From what
I have read I don't see major differences as the underlying index funds are from Vanguard. I am still
trying to get my head around Tax loss harvesting and the tax implications.

Congratulations on all those savings. Pretty impressive.

I am in a similar, but a much modest situation. I have 200k I want to invest. I am considering creating
two targets at betterment. One 80/20 and a 50/50. Then invest 75% in my the first and 25% in the other.

Looking forward to seeing what you think about the Betterment/Wealthfront option.

I am not very familiar with Betterment/Wealthfront, but am looking at them now. I wish I had some knowledge on the index funds/Vanguard 5-6 yrs ago and found these forums much earlier. I have not entered the markets after the financial crisis due to losing some money and being very scared of the individual stocks. Had I known about the Vanguard funds, I would have definitely entered and benefited greatly as 2009-2011 was probably once in a lifetime opportunity. Now I am even scared to enter even with the index as I really believe that the market is well overvalued and it might take ages for the market just to get back to current levels if a major crash occurs. There are just too many factors why this is happening - low interest rates, trillions of printed money granted to the banks, record levels of share buybacks by the corporates, everyone is forced to buy equity to keep with the inflation. The situation is absurd - the savers are really the ones who have taken a major hit. In the past, you could put money in the bank and keep up with inflation. Now they force you to buy stocks.

illiterate

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Re: USD 750,000 of cash, not invested, need advice.
« Reply #99 on: October 04, 2016, 04:36:15 PM »
With dividends fairly low and inflation fairly low, it is not like you are losing very much by a modest DCA over lump sum.   


I disagree that the inflation is low. Look at the prices. Perhaps the gas is cheaper due to the oil prices and the food prices have not increased much, but everything else - rents, healthcare, education, services? This is not 2% inflation.