Author Topic: What to do with a large sum of money? Bad time to buy index funds?  (Read 2646 times)

vinnybagodonuts

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I know you cannot time the market, but with everything at all time highs, do you think it is a bad time to buy index funds?

I already have a total stock market index fund that I $ cost average into, but I was wondering what you would do if you had a large sum of cash right now? Invest some in an index and keep the rest as cash? What percentage would you put in, 10%, 50%, or wait until the market dips?

BlueHouse

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #1 on: January 24, 2020, 10:15:37 AM »
How much is a large sum? 
Every year around this time I have $30-40K that I need to do something with.  Every year it gnaws at me and I DCA until I get sick of it, then I just throw it all in.  This year I had too much going on to mess around so I just dumped it all into VTSAX. 

How much is it and what percent of your stash is it?  That might make a difference to me.  But in the end, the goal is to get it all invested, so why not just do it in 10% chunks, weekly, on Friday afternoons?

EvenSteven

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  • Posts: 405
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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #2 on: January 24, 2020, 10:16:11 AM »
Quote
I know I cannot time the market, but should I try to time the market?

My advice would be no, you should not try to time the market.

You should have an asset allocation you are comfortable with, that you chose because that is how you wanted your money invested. So do that.

Be confident that in your investing lifetime several market corrections or crashes will happen, that you will be invested according to your AA during those crashes, and everything will be OK.

vinnybagodonuts

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #3 on: January 24, 2020, 10:20:39 AM »
How much is a large sum? 
Every year around this time I have $30-40K that I need to do something with.  Every year it gnaws at me and I DCA until I get sick of it, then I just throw it all in.  This year I had too much going on to mess around so I just dumped it all into VTSAX. 

How much is it and what percent of your stash is it?  That might make a difference to me.  But in the end, the goal is to get it all invested, so why not just do it in 10% chunks, weekly, on Friday afternoons?

It is around the same as you said maybe 30-40k, primarily from old stocks that were bought over a decade ago and I think it is time to cash out on. I was thinking the 10% chunks idea, maybe I will do that. Thanks!

maizefolk

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #4 on: January 24, 2020, 10:34:13 AM »
Do keep in mind that the market spends an awful lot of its time at or near its all time high, and half the time when it's not at or near an all time high, it's because it's dropping rapidly (also an emotionally hard time to put a lot of money into the market).



If you're still worried, split your money into three buckets and dollar cost average by investing 1/3 of the money each month or each six months. Dollar cost averaging reduces your expected average return, but also reduces the dispersion of outcomes (it reduces how bad your worst case scenario is and it reduces how good your best case scenario is). Since people tend to be loss adverse (we care more about avoiding the risk of bad things than having a chance a good things) dollar cost averaging can be helpful for some folks.

What you absolutely want to avoid doing at all costs is decide you're going to wait until the market goes down to invest. @RWD should be here shortly with his list of posts from people saying the market was too high and they were going to wait until it goes down going back until at least 2014 when the S&P 500 was at 2,000 (it is at 3,300 now even before accounting for six years of lost dividends).

RWD

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #5 on: January 24, 2020, 11:34:28 AM »
I know you cannot time the market, but with everything at all time highs, do you think it is a bad time to buy index funds?
What you absolutely want to avoid doing at all costs is decide you're going to wait until the market goes down to invest. @RWD should be here shortly with his list of posts from people saying the market was too high and they were going to wait until it goes down going back until at least 2014 when the S&P 500 was at 2,000 (it is at 3,300 now even before accounting for six years of lost dividends).

Why wouldn't you want to invest in the market that is always setting new all time highs? I'd be much more worried about an investment that rarely set new records.


1/2013  [SP500 = 1462]
https://forum.mrmoneymustache.com/investor-alley/is-now-a-bad-time-to-invest-in-stock-index-funds/
5/2013  [1583]
https://forum.mrmoneymustache.com/investor-alley/starting-today!/
https://forum.mrmoneymustache.com/investor-alley/$80k-sitting-in-cash-bc-scared-of-high-flying-stock-mkt-punch-me/
10/2013  [1695]
https://forum.mrmoneymustache.com/investor-alley/stock-market-expensive-now-alternatives/
5/2014  [1884]
https://forum.mrmoneymustache.com/investor-alley/stock-market-is-high-am-i-too-late/
https://forum.mrmoneymustache.com/investor-alley/is-the-stock-market-too-expensive-to-get-back-in/
7/2014  [1973]
https://forum.mrmoneymustache.com/investor-alley/current-market-has-me-scared-to-invest/
9/2014  [2002]
https://forum.mrmoneymustache.com/investor-alley/is-it-a-good-time-to-invest-new-money/
10/2014  [1946]
https://forum.mrmoneymustache.com/ask-a-mustachian/stock-market-would-you-buy-now-or-wait/
1/2015  [2058]
https://forum.mrmoneymustache.com/investor-alley/stock-market-should-i-be-concerned/
3/2015  [2117]
https://forum.mrmoneymustache.com/investor-alley/talk-me-out-of-timing-the-australian-market/
12/2015  [2103]
https://forum.mrmoneymustache.com/ask-a-mustachian/where-to-put-a-large-windfall-with-stock-market-near-all-time-highs/
1/2016  [2013]
https://forum.mrmoneymustache.com/investor-alley/about-to-sell-everything-talk-me-off-the-ledge-(or-push-me-off)-please!/
4/2016 [2073]
https://forum.mrmoneymustache.com/investor-alley/here-it-comes-red-dow/
2/2017  [2280]
https://forum.mrmoneymustache.com/investor-alley/does-anyone-think-we-are-in-a-bubble/
4/2017  [2359]
https://forum.mrmoneymustache.com/investor-alley/top-is-in/
6/2017  [2430]
https://forum.mrmoneymustache.com/continue-the-blog-conversation/recession-coming/
8/2017  [2476]
https://forum.mrmoneymustache.com/investor-alley/getting-scared-of-stock-market/
1/2018  [2696]
https://forum.mrmoneymustache.com/investor-alley/nervous-about-the-market/
3/2018  [2678]
https://forum.mrmoneymustache.com/investor-alley/when-would-you-get-back-in/
5/2018  [2655]
https://forum.mrmoneymustache.com/investor-alley/investing-in-a-bull-market/
6/2018  [2735]
https://forum.mrmoneymustache.com/investor-alley/moving-to-cash-market-timing-can%27t-believe-it/
10/2018  [2925]
https://forum.mrmoneymustache.com/welcome-to-the-forum/sell-index-funds-now-for-down-payment-during-recession/
2/2019  [2707]
https://forum.mrmoneymustache.com/investor-alley/welp-i'm-going-to-take-a-stab-at-timing-the-market/
4/2019  [2867]
https://forum.mrmoneymustache.com/investor-alley/buy-vtsax-now-while-its-this-high-or-wait-till-a-drop/
https://forum.mrmoneymustache.com/investor-alley/how-concerned-are-you-about-the-everything-bubble/
5/2019  [2924]
https://forum.mrmoneymustache.com/ask-a-mustachian/scared-of-investing-in-the-stock-market-now/
6/2019  [2890]
https://forum.mrmoneymustache.com/uk-tax-discussion/global-index-tracker-is-so-high!-do-i-just-keep-putting-my-money-into-it-anyway/
7/2019 [3026]
https://forum.mrmoneymustache.com/investor-alley/would-you-106836/
8/2019 [2889]
https://forum.mrmoneymustache.com/investor-alley/vtsax-and-a-looming-recession/
9/2019 [2978]
https://forum.mrmoneymustache.com/investor-alley/recession-in-2-ish-years-scale-and-nature/
10/2019 [2986]
https://forum.mrmoneymustache.com/investor-alley/advice-needed-108726/
11/2019 [3110]
https://forum.mrmoneymustache.com/investor-alley/questions-from-37yr-old-that-very-recently-became-serious-about-fi/
https://forum.mrmoneymustache.com/investor-alley/where-to-invest-my-cash-now/
12/2019 [3169]
https://forum.mrmoneymustache.com/ask-a-mustachian/help!-i-dont-know-where-to-start/
https://forum.mrmoneymustache.com/investor-alley/the-old-excuses-for-down-swings-and-a-reality-yet-we-are-at-all-time-highs!/
1/2020 [3296]
https://forum.mrmoneymustache.com/investor-alley/what-to-do-with-a-large-sum-of-money-bad-time-to-buy-index-funds/

Miscellaneous
https://forum.mrmoneymustache.com/investor-alley/%27but-right-now-the-market-is-at-an-all-time-high-%27/
https://forum.mrmoneymustache.com/investor-alley/the-great-market-crash-of-2016!/
https://forum.mrmoneymustache.com/investor-alley/how-to-deal-with-losing-$117k-in-stock-market/
https://forum.mrmoneymustache.com/investor-alley/so-we're-basically-on-track-for-a-bear-market-by-tomorrow/
https://forum.mrmoneymustache.com/investor-alley/anyone-else-feeling-depressed-about-global-equities-10-year-outlook/
https://forum.mrmoneymustache.com/investor-alley/stocks-will-only-return-4-annually-for-next-decade-john-bogle/
« Last Edit: February 05, 2020, 08:34:34 AM by RWD »

Dicey

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #6 on: January 24, 2020, 11:55:05 AM »
How much is a large sum? 
Every year around this time I have $30-40K that I need to do something with.  Every year it gnaws at me and I DCA until I get sick of it, then I just throw it all in.  This year I had too much going on to mess around so I just dumped it all into VTSAX. 

How much is it and what percent of your stash is it?  That might make a difference to me.  But in the end, the goal is to get it all invested, so why not just do it in 10% chunks, weekly, on Friday afternoons?

It is around the same as you said maybe 30-40k, primarily from old stocks that were bought over a decade ago and I think it is time to cash out on. I was thinking the 10% chunks idea, maybe I will do that. Thanks!
What about the taxes you're going to owe by cashing in old stocks? I have some very old stock, too. I'm going to move it to my Donor Advised Fund and let it cover my charitable giving for a couple of years, thus avoiding taxes whilst paying for something that I'll be doing anyway. I know $30-40k seems like a lot, but you're allowed to stretch it out for your entire lifetime of giving and beyond.

Otherwise, if the stocks are solid, why sell them at all?

vinnybagodonuts

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #7 on: January 24, 2020, 02:41:59 PM »
How much is a large sum? 
Every year around this time I have $30-40K that I need to do something with.  Every year it gnaws at me and I DCA until I get sick of it, then I just throw it all in.  This year I had too much going on to mess around so I just dumped it all into VTSAX. 

How much is it and what percent of your stash is it?  That might make a difference to me.  But in the end, the goal is to get it all invested, so why not just do it in 10% chunks, weekly, on Friday afternoons?

It is around the same as you said maybe 30-40k, primarily from old stocks that were bought over a decade ago and I think it is time to cash out on. I was thinking the 10% chunks idea, maybe I will do that. Thanks!
What about the taxes you're going to owe by cashing in old stocks? I have some very old stock, too. I'm going to move it to my Donor Advised Fund and let it cover my charitable giving for a couple of years, thus avoiding taxes whilst paying for something that I'll be doing anyway. I know $30-40k seems like a lot, but you're allowed to stretch it out for your entire lifetime of giving and beyond.

Otherwise, if the stocks are solid, why sell them at all?

Some I sold just about broke even, so no crazy taxes to worry about (Kraft and ANF) figured they have limited upside. Wanted to trim down portfolio as well. I'm unfamiliar with the methods you are using to avoid taxes, can you explain them? How does a donor advised fund work and you're giving the money to charity so that you avoid taxes, do you end up paying less taxes because of this?

vinnybagodonuts

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #8 on: January 24, 2020, 02:44:36 PM »
Do keep in mind that the market spends an awful lot of its time at or near its all time high, and half the time when it's not at or near an all time high, it's because it's dropping rapidly (also an emotionally hard time to put a lot of money into the market).



If you're still worried, split your money into three buckets and dollar cost average by investing 1/3 of the money each month or each six months. Dollar cost averaging reduces your expected average return, but also reduces the dispersion of outcomes (it reduces how bad your worst case scenario is and it reduces how good your best case scenario is). Since people tend to be loss adverse (we care more about avoiding the risk of bad things than having a chance a good things) dollar cost averaging can be helpful for some folks.

What you absolutely want to avoid doing at all costs is decide you're going to wait until the market goes down to invest. @RWD should be here shortly with his list of posts from people saying the market was too high and they were going to wait until it goes down going back until at least 2014 when the S&P 500 was at 2,000 (it is at 3,300 now even before accounting for six years of lost dividends).


Wow thanks for the chart, seeing the visual really puts everything into better perspective.

vinnybagodonuts

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #9 on: January 24, 2020, 02:45:47 PM »
I know you cannot time the market, but with everything at all time highs, do you think it is a bad time to buy index funds?
What you absolutely want to avoid doing at all costs is decide you're going to wait until the market goes down to invest. @RWD should be here shortly with his list of posts from people saying the market was too high and they were going to wait until it goes down going back until at least 2014 when the S&P 500 was at 2,000 (it is at 3,300 now even before accounting for six years of lost dividends).

Why wouldn't you want to invest in the market that is always setting new all time highs? I'd be much more worried about an investment that rarely set new records.


1/2013  [SP500 = 1462]
https://forum.mrmoneymustache.com/investor-alley/is-now-a-bad-time-to-invest-in-stock-index-funds/
5/2013  [1583]
https://forum.mrmoneymustache.com/investor-alley/starting-today!/
https://forum.mrmoneymustache.com/investor-alley/$80k-sitting-in-cash-bc-scared-of-high-flying-stock-mkt-punch-me/
10/2013  [1695]
https://forum.mrmoneymustache.com/investor-alley/stock-market-expensive-now-alternatives/
5/2014  [1884]
https://forum.mrmoneymustache.com/investor-alley/stock-market-is-high-am-i-too-late/
https://forum.mrmoneymustache.com/investor-alley/is-the-stock-market-too-expensive-to-get-back-in/
7/2014  [1973]
https://forum.mrmoneymustache.com/investor-alley/current-market-has-me-scared-to-invest/
9/2014  [2002]
https://forum.mrmoneymustache.com/investor-alley/is-it-a-good-time-to-invest-new-money/
10/2014  [1946]
https://forum.mrmoneymustache.com/ask-a-mustachian/stock-market-would-you-buy-now-or-wait/
1/2015  [2058]
https://forum.mrmoneymustache.com/investor-alley/stock-market-should-i-be-concerned/
3/2015  [2117]
https://forum.mrmoneymustache.com/investor-alley/talk-me-out-of-timing-the-australian-market/
12/2015  [2103]
https://forum.mrmoneymustache.com/ask-a-mustachian/where-to-put-a-large-windfall-with-stock-market-near-all-time-highs/
1/2016  [2013]
https://forum.mrmoneymustache.com/investor-alley/about-to-sell-everything-talk-me-off-the-ledge-(or-push-me-off)-please!/
4/2016 [2073]
https://forum.mrmoneymustache.com/investor-alley/here-it-comes-red-dow/
2/2017  [2280]
https://forum.mrmoneymustache.com/investor-alley/does-anyone-think-we-are-in-a-bubble/
4/2017  [2359]
https://forum.mrmoneymustache.com/investor-alley/top-is-in/
6/2017  [2430]
https://forum.mrmoneymustache.com/continue-the-blog-conversation/recession-coming/
8/2017  [2476]
https://forum.mrmoneymustache.com/investor-alley/getting-scared-of-stock-market/
1/2018  [2696]
https://forum.mrmoneymustache.com/investor-alley/nervous-about-the-market/
3/2018  [2678]
https://forum.mrmoneymustache.com/investor-alley/when-would-you-get-back-in/
5/2018  [2655]
https://forum.mrmoneymustache.com/investor-alley/investing-in-a-bull-market/
6/2018  [2735]
https://forum.mrmoneymustache.com/investor-alley/moving-to-cash-market-timing-can%27t-believe-it/
10/2018  [2925]
https://forum.mrmoneymustache.com/welcome-to-the-forum/sell-index-funds-now-for-down-payment-during-recession/
2/2019  [2707]
https://forum.mrmoneymustache.com/investor-alley/welp-i'm-going-to-take-a-stab-at-timing-the-market/
4/2019  [2867]
https://forum.mrmoneymustache.com/investor-alley/buy-vtsax-now-while-its-this-high-or-wait-till-a-drop/
https://forum.mrmoneymustache.com/investor-alley/how-concerned-are-you-about-the-everything-bubble/
5/2019  [2924]
https://forum.mrmoneymustache.com/ask-a-mustachian/scared-of-investing-in-the-stock-market-now/
6/2019  [2890]
https://forum.mrmoneymustache.com/uk-tax-discussion/global-index-tracker-is-so-high!-do-i-just-keep-putting-my-money-into-it-anyway/
7/2019 [3026]
https://forum.mrmoneymustache.com/investor-alley/would-you-106836/
8/2019 [2889]
https://forum.mrmoneymustache.com/investor-alley/vtsax-and-a-looming-recession/
9/2019 [2978]
https://forum.mrmoneymustache.com/investor-alley/recession-in-2-ish-years-scale-and-nature/
10/2019 [2986]
https://forum.mrmoneymustache.com/investor-alley/advice-needed-108726/
11/2019 [3110]
https://forum.mrmoneymustache.com/investor-alley/questions-from-37yr-old-that-very-recently-became-serious-about-fi/
https://forum.mrmoneymustache.com/investor-alley/where-to-invest-my-cash-now/
12/2019 [3169]
https://forum.mrmoneymustache.com/ask-a-mustachian/help!-i-dont-know-where-to-start/
https://forum.mrmoneymustache.com/investor-alley/the-old-excuses-for-down-swings-and-a-reality-yet-we-are-at-all-time-highs!/
1/2020 [3296]
https://forum.mrmoneymustache.com/investor-alley/what-to-do-with-a-large-sum-of-money-bad-time-to-buy-index-funds/

Miscellaneous
https://forum.mrmoneymustache.com/investor-alley/%27but-right-now-the-market-is-at-an-all-time-high-%27/
https://forum.mrmoneymustache.com/investor-alley/the-great-market-crash-of-2016!/
https://forum.mrmoneymustache.com/investor-alley/how-to-deal-with-losing-$117k-in-stock-market/
https://forum.mrmoneymustache.com/investor-alley/anyone-else-feeling-depressed-about-global-equities-10-year-outlook/
https://forum.mrmoneymustache.com/investor-alley/stocks-will-only-return-4-annually-for-next-decade-john-bogle/


Touche RWD, I do not want to end up on this list lol. I suppose the ball is in my court...

EliteZags

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #10 on: January 24, 2020, 02:56:58 PM »
so far this month I've sporadically shifted around $50K total into stock indexes(VTSAX/VIGAX or similar) either from money market or target retirement funds(which are surprisingly no more than 50-60% US stock, just been doing it in chunks of a couple grand every few days just cause it's psychologically easier for me, and hopefully serves well long term

shinn497

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #11 on: January 24, 2020, 08:41:35 PM »
Its never a bad time and always a bad time. Accept this and go all in.

Lucky13

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #12 on: January 24, 2020, 08:56:50 PM »
What I've done in that situation (like after getting a big bonus at work) is just keep it in my checking account, thinking I'm going to find something creative to do with it or buy some fancy sports car... and then a few weeks/months later I finally decide, "I don't need a new car, and I don't need this money right now! I should  invest this!" and then I throw it into the stock market.

Dicey

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #13 on: January 24, 2020, 09:10:27 PM »
How much is a large sum? 
Every year around this time I have $30-40K that I need to do something with.  Every year it gnaws at me and I DCA until I get sick of it, then I just throw it all in.  This year I had too much going on to mess around so I just dumped it all into VTSAX. 

How much is it and what percent of your stash is it?  That might make a difference to me.  But in the end, the goal is to get it all invested, so why not just do it in 10% chunks, weekly, on Friday afternoons?

It is around the same as you said maybe 30-40k, primarily from old stocks that were bought over a decade ago and I think it is time to cash out on. I was thinking the 10% chunks idea, maybe I will do that. Thanks!
What about the taxes you're going to owe by cashing in old stocks? I have some very old stock, too. I'm going to move it to my Donor Advised Fund and let it cover my charitable giving for a couple of years, thus avoiding taxes whilst paying for something that I'll be doing anyway. I know $30-40k seems like a lot, but you're allowed to stretch it out for your entire lifetime of giving and beyond.

Otherwise, if the stocks are solid, why sell them at all?

Some I sold just about broke even, so no crazy taxes to worry about (Kraft and ANF) figured they have limited upside. Wanted to trim down portfolio as well. I'm unfamiliar with the methods you are using to avoid taxes, can you explain them? How does a donor advised fund work and you're giving the money to charity so that you avoid taxes, do you end up paying less taxes because of this?
Vinny, this thread was started by the late, great @sol. He got pissed off at us and took his marbles to play somewhere else. He is sorely missed... You should find lots of helpful stuff on this thread. FWIW, I went with Fidelity, because it was less clunky than Vanguard. Basically, you put the money into the DAF and you get an immediate write-off. Timing this can be an especially effective tax reducing, charity increasing tool.

https://forum.mrmoneymustache.com/welcome-to-the-forum/donor-advised-funds-and-private-foundations/

TomTX

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #14 on: January 25, 2020, 01:23:48 PM »
Vinny, this thread was started by the late, great @sol. He got pissed off at us and took his marbles to play somewhere else. He is sorely missed...

While he is missed, I'm pretty sure he's off enjoying being retired...

Villanelle

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #15 on: January 25, 2020, 01:35:24 PM »
I did have what most would consider to be a large sum of money a few months ago, and I did dump it into a taxable account (all retirement accounts being already maxed) without so much as a pause. 

It's what I do when I have money to invest.  As a non-market timer, I give zero thought to what the market is doing at that moment.  Zero.  Truly, absolutely none. 

It might help if you had a Personal Investment Statement, or whatever it is we are calling those.  Then, when things like this come up, you don't have to make a decision.  You've already made that decision for yourself when the stakes felt much lower.  Mine says that when I have extra cash (which for me is defined as a balance in the checking account over $X at the low point in the month), I invest it according to my pre-determined allocation.  Easy peasy.  No angst, no second guessing.  Have a plan, follow it, and don't even look at what the market is doing while you are executing it because you know and truly accept that you should not and can not [effectively] time the market. 

js82

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #16 on: January 26, 2020, 06:00:01 PM »
It might help if you had a Personal Investment Statement, or whatever it is we are calling those.  Then, when things like this come up, you don't have to make a decision.  You've already made that decision for yourself when the stakes felt much lower.  Mine says that when I have extra cash (which for me is defined as a balance in the checking account over $X at the low point in the month), I invest it according to my pre-determined allocation.  Easy peasy.  No angst, no second guessing.  Have a plan, follow it, and don't even look at what the market is doing while you are executing it because you know and truly accept that you should not and can not [effectively] time the market.

Probably the best advice in this thread.

Take a step back from the current state of the market.  Consider your goals.  Define the plan you want to follow to reach those goals - asset allocations, investment criteria, etc.  Write it down.
 
Now, act in accordance with that plan.  Don't overthink things.  Don't try to get cute with your investments and time the market.  I can say that from my own personal experience, overthinking things has usually resulted in lost returns relative to simply investing and staying invested in a sound asset allocation.


It's okay to revisit your plan periodically if your situation or your goals change substantially.  But try to step back and take the emotion of the the process before investing - write down your goals and your plan first, act second.  Let rationality rule.
« Last Edit: January 26, 2020, 06:02:10 PM by js82 »

PaulMaxime

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #17 on: January 27, 2020, 10:23:01 PM »
I sold my house in Baltimore in 2007. I immediately put the proceeds (about 130K) into the market in Sept 2007 at all time highs.

In hindsight it was the worst possible moment.

Here I am 13 years later and my portfolio is up tremendously since then. I kept that money in there and kept adding. At this point I'm 100% FI.

BTDretire

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #18 on: January 28, 2020, 07:35:12 AM »
How much is a large sum? 
Every year around this time I have $30-40K that I need to do something with.  Every year it gnaws at me and I DCA until I get sick of it, then I just throw it all in.  This year I had too much going on to mess around so I just dumped it all into VTSAX. 

How much is it and what percent of your stash is it?  That might make a difference to me.  But in the end, the goal is to get it all invested, so why not just do it in 10% chunks, weekly, on Friday afternoons?

It is around the same as you said maybe 30-40k, primarily from old stocks that were bought over a decade ago and I think it is time to cash out on. I was thinking the 10% chunks idea, maybe I will do that. Thanks!
What about the taxes you're going to owe by cashing in old stocks? I have some very old stock, too. I'm going to move it to my Donor Advised Fund and let it cover my charitable giving for a couple of years, thus avoiding taxes whilst paying for something that I'll be doing anyway. I know $30-40k seems like a lot, but you're allowed to stretch it out for your entire lifetime of giving and beyond.

Otherwise, if the stocks are solid, why sell them at all?
Dicey, I don't know your income, but when I hear old stocks I think large LTCGs, If your income is under $78,750 the LTCGs tax rate is 0%. I'd want to use those for my income.

Dicey

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #19 on: January 28, 2020, 07:44:20 AM »
How much is a large sum? 
Every year around this time I have $30-40K that I need to do something with.  Every year it gnaws at me and I DCA until I get sick of it, then I just throw it all in.  This year I had too much going on to mess around so I just dumped it all into VTSAX. 

How much is it and what percent of your stash is it?  That might make a difference to me.  But in the end, the goal is to get it all invested, so why not just do it in 10% chunks, weekly, on Friday afternoons?

It is around the same as you said maybe 30-40k, primarily from old stocks that were bought over a decade ago and I think it is time to cash out on. I was thinking the 10% chunks idea, maybe I will do that. Thanks!
What about the taxes you're going to owe by cashing in old stocks? I have some very old stock, too. I'm going to move it to my Donor Advised Fund and let it cover my charitable giving for a couple of years, thus avoiding taxes whilst paying for something that I'll be doing anyway. I know $30-40k seems like a lot, but you're allowed to stretch it out for your entire lifetime of giving and beyond.

Otherwise, if the stocks are solid, why sell them at all?
Dicey, I don't know your income, but when I hear old stocks I think large LTCGs, If your income is under $78,750 the LTCGs tax rate is 0%. I'd want to use those for my income.
We flipped a house last year for fun and profit. It took us long enough that it will be taxed as an LTCG, but DH also hit six figures at his regular job this year for the first time. (MPP, I know.) We shoveled as much as we legally could into tax-deferred accounts, but we're still going to pay a shitload of taxes.

The stock is on a DRIP and could stay that way forever, but the fees eat up a huge chunk of the dividends and I think I'd rather be rid of them. Another MPP, to be sure.

ColoAndy

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #20 on: January 31, 2020, 08:37:16 AM »
OP do you have any debt that needs to be paid off?  A mortgage?  When I get chunks of money, I usually split it 50-50 between investments and mortgage principal.

Buffaloski Boris

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Re: What to do with a large sum of money? Bad time to buy index funds?
« Reply #21 on: January 31, 2020, 06:08:54 PM »
We need to be more specific as to what is meant by “index funds.” If what we’re talking about is a cap weighted US index fund then my answer to the OPs question is that it’s a lousy time to put anything into it. They’re very expensive.

If what we’re talking about in a non cap weighted fund, then I’m a little more positive. If we’re talking an international index fund, then depending on the country it might be a great deal.