Getting off the sidelines

[gosmund]

I have a few individual stocks and a bunch of cash. Instead of jumping in with two feet at an all time high are there any suggestions on how to get into a well-planned, diversified, index fund portfolio?
My allocation is well research but I do not know if I should dollar cost average over several months or what?

[The Wizard]

How much $$ are we talking about? Less than a year's income, I'll guess.
And you'll be doing monthly contribs from here on also?
I'd just pick my selection of funds from Vanguard and expeditiously move into it.
Main issue is what your AA will be; so what is it?

[Padlin]

How old are you? If just starting then it won't make much difference.

[dickenjb]

How did you end up with a bunch of cash? What does your investment policy statement stipulate for the cash portion of your asset allocation? Did you panic and sell in 2008-2009 and now you are frozen like a deer in the headlights?

My IPS calls for 60% equities and 40% fixed income and zero cash.

Therefore I do not have this problem as I never find myself with a large cash position.

When I exercise employee stock options, I reinvest in TSM to maintain my 60/40 position - so I sell stock to buy stock.

[gosmund]

Let me fill in the gaps I created. I had a paid advisor put me in a undiversified position. 2008 hit me worse than most. My business(7 partners) needed capital so I stepped in as the bank and received 5% over 5 years. The loan is repaid and I have been sitting on the cash.

So I have the stock purchased by the advisor which has gained but still down overall and 300K in cash. The shark attack I suffered got me away from the fundamentals and I want to return. I am mid 40's and still make a good salary.

Thanks for the ideas.

[TroutMD]

I jumped all in over the past few weeks.

I agree, it was difficult because 'its a high'... but there is ALWAYS another high.

Bite the bullet and do it and forget it!

[LFKB]

Don't worry about the market being at a high. The market is trading at about the average P/E over its history so the price of the market is justified based on its earnings. I would pick an AA and lump sum.

[Johm221122]

Do you have 401 plan? Ira? Is this taxable?
viewtopic.php?t=6212
John

[Bustoff]

I am mid 40's and still make a good salary.

What's the rush. Why not DCA over a year ?

Or you can "value average" into your position. Similar to DCA except you make regular contributions only during periods where the fund is below a particular moving average. Whether you use its 50 or 100 day moving average doesn't matter. It's whatever psychological trick works for you.

[Taylor Larimore]

I have a few individual stocks and a bunch of cash. Instead of jumping in with two feet at an all time high are there any suggestions on how to get into a well-planned, diversified, index fund portfolio?
My allocation is well research but I do not know if I should dollar cost average over several months or what?

Gosmund:

Welcome to the Bogleheads forum!

Your most important decision is to decide on your overall stock/bond/cash decision. Vanguard has this tool to help you:

https://personal.vanguard.com/us/funds/tools/recommendation

Once you've made your decision, consider the Three-Fund Portfolio:

viewtopic.php?f=10&t=88005

With a suitable stock/bond allocation, I prefer to invest all at once to the desired portfolio. However, if a subsequent and immediate market decline would discourage you from staying-the-course, it is better to invest over a period of time.

If your individual stocks are down; sell and get the tax benefit (and use diversified mutual funds).

Best wishes.
Taylor

[jimkinny]

Pay a lot of attention to Taylor's post.

Read the Boglehead Wiki link provided here re dollar cost vs lump sum:

http://www.bogleheads.org/wiki/Dollar_cost_averaging

If you have not been through a equity market in which equities went down 10-20% and lost substantial money, error on the conservative side of taking risk. Read this short article by Rick Ferri as well as using the Vanguard tool linked by others before deciding on risk level.

http://www.rickferri.com/blog/strategy/the-flight-path-approach-to-age-based-asset-allocation/

jim

[tuckeverlasting]

I jumped all in over the past few weeks.

I agree, it was difficult because 'its a high'... but there is ALWAYS another high.

Bite the bullet and do it and forget it!

I just did the same. No regrets. In for the long haul!

[gosmund]

Thanks so much. Some great advice. Going the way of the 3 Funds and will DCA.

[surlygent]

I had about the same amount of cash sitting sideline as well.

Decided to jump in with half last week and the other half over the rest of the year.

Simple three fund portfolio, with an added small cap tilt was the AA I decided on.