Author Topic: Where To Put An Extra $15K Right Now?  (Read 3061 times)

njmoney

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Where To Put An Extra $15K Right Now?
« on: March 25, 2017, 11:37:11 AM »
Between year end bonuses, tax returns, etc.  I have an extra $15K to invest.  I'm not thrilled about dropping it all in an index fund right now because I think the market will likely drop soon.  I know the market is something you can't time but I also have a fair amount already invested (~300k) so I'm looking for something that may be a little less risky but better than 1% CD.  Have an emergency fund, did our IRAs for the year, house is paid off.  Am 40 years old, debt free, married with one small child and have already set some bonus money aside for our child's college fund for this year.   Also, whatever I do I want to keep it simple. Thoughts? 

Heckler

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Re: Where To Put An Extra $15K Right Now?
« Reply #1 on: March 25, 2017, 11:43:40 AM »
What does your investment policy statement say to do?

https://www.bogleheads.org/wiki/Investment_policy_statement
« Last Edit: March 25, 2017, 11:45:53 AM by Heckler »

Cwadda

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Re: Where To Put An Extra $15K Right Now?
« Reply #2 on: March 25, 2017, 01:27:36 PM »
Warning: devil's advocate post coming!

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Between year end bonuses, tax returns, etc
In getting any sort of a refund you've loaned the government your money for free without interest.

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I'm not thrilled about dropping it all in an index fund right now because I think the market will likely drop soon.
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but I also have a fair amount already invested (~300k)
These statements are at odds with one another. If you've worried the market will fall but have $300k invested in it, what's the logic in holding on to $15k? There's nothing saying you can't buy a bunch of bonds to "bet" on the market crashing.

HSA comes to mind, if you haven't covered that tax-shelter vehicle already.

TheBuddha

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Re: Where To Put An Extra $15K Right Now?
« Reply #3 on: March 26, 2017, 02:44:01 PM »
Series I savings bonds are paying 2.76% right now. There's a $10k purchase limit, and you won't be able to access the money for a year.

I found that last part out the hard way. I just recently (on Friday, posting this on Sunday) saw that Ibonds were paying good interest so I put most of my emergency fund in there (bought the maximum $10k). I didn't realize that they can't be redeemed for the first year. So my $10k is inaccessible for the next 12 months, which I hadn't planned on. Luckily I've still got enough cash to let me sleep at night. But I'm gonna build that e-fund back up again as fast as possible!

PAstash

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Re: Where To Put An Extra $15K Right Now?
« Reply #4 on: March 26, 2017, 09:52:59 PM »
What does your investment policy statement say to do?

https://www.bogleheads.org/wiki/Investment_policy_statement

Going to go against myself and most of the sub. 9 out of 10 I'd say dump it in the market. Hell 9.9 out of 10 I'd say do that.

so you are only 40. If your health is good 300k banked house is paid off collect is paid for. Assuming house is in good condition. Plenty of time to make more money... have you considered taking your family on a amazing once and a life time vacation? I don't mean to say just spend it! Certainly not even all of it. Just maybe consider while you are still relatively young and capable of summoning up some serious energy to go on a whirl wind trip to Paris with your wife? just a thought.

Ignore everything I wrote just buy the index.

MustacheAndaHalf

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Re: Where To Put An Extra $15K Right Now?
« Reply #5 on: March 27, 2017, 02:28:05 AM »
Married/filing jointly has a 15% tax bracket all the way up to $75k, with another $20k in std deduction/exemptions.  But if you and your wife earn more than $95k/year, and are in the 25% tax bracket, then tax-exempt bonds could make sense.

Vanguard Target Retirement 2040 holds ~13% bonds right now.  If at age 40 you're planning to retire at age 65, do you already have 13% in bonds?  The closer you get to retirement, the closer you want your bond allocation to look like a retiree's.

But where Vanguard Total Bond yields 2.5% (or 1.9% after tax, in the 25% tax bracket), you can get 2.1% after tax from a tax-exempt bond fund.  It's also helpful if you start saving outside your retirement accounts.  So if your bond allocation is below target, maybe you can use some or all of the $15,000 to buy a tax-exempt bond fund.

I see Vanguard has a "Vanguard New Jersey Long-Term Tax-Exempt Fund Investor Shares" with a yield of 3.2% and a duration of ~7 years.  I'd consider that an "intermediate", not long-term bond fund.  But if you buy into that fund, the interest is exempt from both Federal and State tax.

Mighty-Dollar

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Re: Where To Put An Extra $15K Right Now?
« Reply #6 on: March 28, 2017, 03:38:44 AM »
I'm looking for something that may be a little less risky but better than 1% CD.
Vanguard LifeStrategy Cnsrv Gr Inv (VSCGX)
60% bonds / 40% stocks
https://finance.yahoo.com/quote/VSCGX/profile?p=VSCGX

Scandium

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Re: Where To Put An Extra $15K Right Now?
« Reply #7 on: March 28, 2017, 12:39:20 PM »
"I'm not a market timer, but......"

"This time it's different!"

moof

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Re: Where To Put An Extra $15K Right Now?
« Reply #8 on: March 28, 2017, 02:59:47 PM »
If you are so sure that the market will drop shortly that you won't risk putting 5% of your investments from cash into stocks, you should use the same logic for all the money you ALREADY have in stocks and GTFO.

Money is interchangeable, why would this 15k sitting in cash be a big deal, but the $300k be different? 

Over and over when this comes up the best strategy is to invest early  as lump sum and not dollar cost average or market timing so as to maximize the time your money has spent in the market.  So either admit you are a market timer and go be a day trader because you know how to beat the market, or revisit your chosen allocation strategy and invest accordingly.

Our tax return went straight into my wife's IRA in stocks with no hesitation.  Our plan was to get her account up to where it could be converted to admiral shares, so as soon as money cleared the bank that is what we did.  We have a plan, and we stick to it.

Livewell

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Re: Where To Put An Extra $15K Right Now?
« Reply #9 on: March 28, 2017, 03:18:26 PM »
OP - sounds like you have things covered and this is some additional upside for you.   Good work!

Why not have some fun (vacation anyone?) or do a house project (a backyard upgrade you can enjoy with your kids?) with $5K of it?   Then just buy more index funds with the rest.   

As far as the market goes, just keep reminding yourself (an investment plan is also a great place to write it down to refer to) that you won't need the other $10K until a number of years from now, and regardless of some short term move you're confident the market will be much higher that far out.


RangerOne

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Re: Where To Put An Extra $15K Right Now?
« Reply #10 on: March 29, 2017, 12:53:17 PM »
I am still getting into the whole investment deal with almost all money either allocated simply for retirement or saving for a home down payment. So I haven't worked out every aspect of managing my investment behavior, but I like the sound of a personal IPS.

If you have absolutely zero short term need for that money and you have no projects are short term funds that need more cash, then it should like go with all your other long term money.

Since you aren't timing the market you will never sit on long term cash in the hopes that you can invest it all during a crash. We could be on the cusp of an unprecedented Bull market for the next 20 years or the biggest crash we have seen could be around the corner.