If you had to allocate a new chunk of money right now...

Have a question about your personal investments? No matter how simple or complex, you can ask it here.

If you had to allocate a new chunk of money right now...

Postby ldm616 » Fri Jun 28, 2013 1:33 pm

What would your allocation be? I am 47 and don't expect to need any of my money for at least 8 years. I am reasonably risk tolerant. I like the idea of investing across all asset classes, but keep hearing poor outlooks for emerging markets, real estate (REITs), commodities, and bonds (specially bond funds).

Should I just go ahead and invest in all asset classes regardless and stop trying to time the market?
ldm616
 
Posts: 9
Joined: Mon Jun 03, 2013 1:59 pm

Re: If you had to allocate a new chunk of money right now...

Postby Grt2bOutdoors » Fri Jun 28, 2013 1:39 pm

ldm616 wrote:What would your allocation be? I am 47 and don't expect to need any of my money for at least 8 years. I am reasonably risk tolerant. I like the idea of investing across all asset classes, but keep hearing poor outlooks for emerging markets, real estate (REITs), commodities, and bonds (specially bond funds).

Should I just go ahead and invest in all asset classes regardless and stop trying to time the market?


No! You should invest as your Investment Policy Statement says to. Do you have an IPS? My asset allocation plan will be different than yours as we each have different needs. You should ignore the noise, stop trying to time the market (it is futile!) and invest as dictated by your asset allocation plan, your need, willingness and ability to take risk.
"Luck is not a strategy" Asking Portfolio Questions
Grt2bOutdoors
 
Posts: 9930
Joined: Thu Apr 05, 2007 9:20 pm
Location: New York

Re: If you had to allocate a new chunk of money right now...

Postby Toons » Fri Jun 28, 2013 1:42 pm

Vanguard Balanced Index Fund Investor Shares Vanguard Balanced Index Fund Investor Shares Or Admiral :happy

https://personal.vanguard.com/us/funds/ ... IntExt=INT
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
User avatar
Toons
 
Posts: 4038
Joined: Fri Nov 21, 2008 11:20 am
Location: Hills of Tennessee

Re: If you had to allocate a new chunk of money right now...

Postby dbr » Fri Jun 28, 2013 2:02 pm

If I had a new chunk of money right now I would invest it in the same asset allocation I already have except that there might have to be some finagling with asset location and tax management issues if it were a large amount and all had to go into taxable. If the amount were really big compared to existing assets it is not impossible that risk assessment hence asset allocation of the whole could be modified.
dbr
 
Posts: 14022
Joined: Sun Mar 04, 2007 10:50 am

Re: If you had to allocate a new chunk of money right now...

Postby z3r0c00l » Fri Jun 28, 2013 3:02 pm

My investment today is the same it has been since 2007 - 80/20 stocks and bonds, with 50/50 international and American, and two years of emergency fund money.

Not knowing your personal taste for risk, I would suggest you do 60/40 stocks and bonds, with 50/50 international and American, and 12 months in an emergency fund.

Remember, however, that several things are more important than how you invest money. They are:

1.) Earn as much money as you can.
2.) Save as much money as you can by limiting how much you spend.
3.) Achieve tax efficiency by maxing out any tax advantaged investments that you can, 401K most of all.

Then I would put investing properly as a 4th issue. It is possible that investing choices matter more than tax efficiency if you make particularly good choices, or earn a smaller amount of money.
z3r0c00l
 
Posts: 549
Joined: Fri Jul 06, 2012 12:43 pm
Location: NYC

Re: If you had to allocate a new chunk of money right now...

Postby Default User BR » Fri Jun 28, 2013 3:07 pm

It would depend on the size of the chunk. If it would increase the size of the portfolio significantly, then a reallocation might be in order. If not, then just to the current plan.


Brian
Default User BR
 
Posts: 7503
Joined: Mon Dec 17, 2007 8:32 pm

Re: If you had to allocate a new chunk of money right now...

Postby ruralavalon » Fri Jun 28, 2013 3:35 pm

Age 67, retired, 50/50 asset allocation. Unless it was a "life changing" sized chunk I would invest in my already established asset allocation, adjusting fund placements because it would all have to go in a taxable account.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started
User avatar
ruralavalon
 
Posts: 4675
Joined: Sat Feb 02, 2008 11:29 am
Location: Illinois

Re: If you had to allocate a new chunk of money right now...

Postby ofcmetz » Fri Jun 28, 2013 3:42 pm

ldm616 wrote:Should I just go ahead and invest in all asset classes regardless and stop trying to time the market?



Yes, timing things is a losing game! I would have a plan and then stick with it.

Right now my international equity and bonds are a little low so new money goes towards those. That is what my plan calls for.
Showing up at the donut shop at 5 am to get them hot out of the oil is an example of successful market timing.
User avatar
ofcmetz
 
Posts: 1737
Joined: Tue Feb 08, 2011 9:09 pm
Location: Louisiana

Re: If you had to allocate a new chunk of money right now...

Postby livesoft » Fri Jun 28, 2013 3:44 pm

Practically everything is up 3% to 6% just this week! How can anyone write that about poor outlooks? That just doesn't pass the smell test.

As for what my allocation would be, it would be the same as always: Some equities and some bonds, say 60% to 70% equities and 40% to 30% bonds. The equities would be split up 25% US Total market index, 25% Int'l Total Market Index, 25% US small-cap value index, 25% int'l small cap index. Bonds could be split up 50% intermediate bond index and 50% short-term corporate bond index.

If one wanted to add REITs, then no problem, just carve out some percentage of equities and buy a REIT index fund.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
livesoft
 
Posts: 33009
Joined: Thu Mar 01, 2007 9:00 pm

Re: If you had to allocate a new chunk of money right now...

Postby roymeo » Fri Jun 28, 2013 4:30 pm

Plastics!
The sewer system is a form of welfare state. | -- "Libra", Don DeLillo
User avatar
roymeo
 
Posts: 975
Joined: Sat Apr 28, 2007 8:19 pm
Location: SF, CA

Re: If you had to allocate a new chunk of money right now...

Postby nedsaid » Fri Jun 28, 2013 11:18 pm

Are you out of the market? Are you sitting in cash now?

It is hard to give advice because we know very little about you. It concerns me that it sounds like you have not been invested. I am concerned that you might have problems following a consistent strategy. If you are reasonably risk tolerant, then why aren't you invested now?

A 60% stock/40% fixed income portfolio is good for most people. Of your stock portion, 20% to 50% of that should be invested internationally. The fixed income should be invested in intermediate and short term bond funds. A lot of people here like the three fund portfolio.

Your biggest need is to settle on a good plan and write it down. There is a nice worksheet for an Investment Policy Statement on the Morningstar Website. Know yourself as an investor. Get a plan Stan.
A fool and his money are good for business.
User avatar
nedsaid
 
Posts: 2371
Joined: Fri Nov 23, 2012 1:33 pm

Re: If you had to allocate a new chunk of money right now...

Postby noyopacific » Sat Jun 29, 2013 3:12 am

My wife got some money from the sale of her mothers house (split between 3 siblings) a little less than two years ago. It sat in money market for a month while I waited for my wife's consent to deploy it in accordance with the rest of the portfolio (75% stock funds/25% bonds.) I knew that history suggests lump sum usually works out better than dollar cost averaging but my wife is a bit more cautious so she agreed to 1/2 then and the rest 6 months later. The stock market was advancing steadily and continued its advance so it was painless. We'd have done better to deploy the whole chunk right away but we didn't worry over it.
I tend to be fatalistic about these sorts of things. I was prepared for the market to drop immediately after moving money in so there wasn't much risk of being disappointed. If I were to happen again tomorrow, I'd do it just the same. We haven't asked what the siblings did with their share, I imagine they invested it but I'd be surprised if they have done as well as we have.
The information contained herein, while not guaranteed by us, has been obtained from from sources which have not in the past proved particularly reliable.
User avatar
noyopacific
 
Posts: 192
Joined: Wed Jan 28, 2009 7:06 pm
Location: Mendocino

Re: If you had to allocate a new chunk of money right now...

Postby cheesepep » Sat Jun 29, 2013 5:09 am

IBM stock
cheesepep
 
Posts: 353
Joined: Wed Feb 17, 2010 11:58 pm

Re: If you had to allocate a new chunk of money right now...

Postby sometimesinvestor » Sat Jun 29, 2013 7:46 am

The following is not profound because your concerns indicate you know this but:
bonds are by consensus not a good investment at this time
stocks might perform better or worse than bonds so if bonds are down 2% stocks could be down more (or less)
cash is not paying much
gold is less expensive than it was but has been ina downward trend and it is not clear if it will go lower still.

So what to do. ?In my opinion if you have access to a good stable value fund in a 401k you might increase that allocation taking it away from bonds (and perhaps stocks)
If this new money is going into a taxable account you could then slightly overweight the asset class you moved out of if you were thinking of investing (as suggested by many in accordance with your asset allocation
This could be a reasonable time to buy I bonds(low risk slight reward) and perhaps a few ozs of physical gold(some risk and possible reward) or silver as protection against possible events and as a further diversifier
Because of your name it might be fun (investing should have an element of fun usually labelled as mad money at this site) considering small investments in IBM (already suggested though it was possibly tongue in cheek as IBM had a bad day) and
IBN , a large bank in India(the icici bank) http://en.wikipedia.org/wiki/ICICI_Bank that is listed on the NYSE.full disclosure I have given someone a small gift of stock in the Meredith Corporation , you can probably guess that persons name.
User avatar
sometimesinvestor
 
Posts: 872
Joined: Wed May 13, 2009 7:54 am

Re: If you had to allocate a new chunk of money right now...

Postby z3r0c00l » Sat Jun 29, 2013 8:30 am

sometimesinvestor wrote:bonds are by consensus not a good investment at this time


I wouldn't go that far... and even if they are not great right now, can you predict when they will be? I think a 47 year old should hold bonds.
z3r0c00l
 
Posts: 549
Joined: Fri Jul 06, 2012 12:43 pm
Location: NYC

Re: If you had to allocate a new chunk of money right now...

Postby livesoft » Sat Jun 29, 2013 8:32 am

I would go further. Bonds are a great investment at this time. Don't you want to buy something on sale?

Doesn't anybody buy on dips anymore? Where did all the confident folks go?
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
livesoft
 
Posts: 33009
Joined: Thu Mar 01, 2007 9:00 pm

Re: If you had to allocate a new chunk of money right now...

Postby InvestorNewb » Sat Jun 29, 2013 8:42 am

livesoft wrote:I would go further. Bonds are a great investment at this time. Don't you want to buy something on sale?

Doesn't anybody buy on dips anymore? Where did all the confident folks go?


They just aren't down enough to be considered a "sale". :?
Current Holdings: VTI, VXUS, VNQ, VCE (largest to smallest)
User avatar
InvestorNewb
 
Posts: 933
Joined: Mon Sep 03, 2012 12:27 pm

Re: If you had to allocate a new chunk of money right now...

Postby IlliniDave » Sat Jun 29, 2013 9:06 am

ldm616 wrote:What would your allocation be? I am 47 and don't expect to need any of my money for at least 8 years. I am reasonably risk tolerant. I like the idea of investing across all asset classes, but keep hearing poor outlooks for emerging markets, real estate (REITs), commodities, and bonds (specially bond funds).

Should I just go ahead and invest in all asset classes regardless and stop trying to time the market?


What I would do would depend on how much I currently had invested, how I had it invested, and how big the chunk of new money is, and what the potential need for it in 8 years would be, and what my overall investing goals are. I would proceed in a way that furthered my plan. I don't mean that to sound snooty, it's just the way I do it--very methodically.

If you really want specific advice you would need to provide much more information about your situation. But on the surface 8 years isn't a real long investing horizon, so if the potential need is something important that is not otherwise covered, I'd play it pretty close to the vest in case it's needed sooner rather than later.
Don't do something. Just stand there!
IlliniDave
 
Posts: 1297
Joined: Fri May 17, 2013 8:09 am

Re: If you had to allocate a new chunk of money right now...

Postby Tom_T » Sat Jun 29, 2013 9:21 am

Toons wrote:Vanguard Balanced Index Fund Investor Shares Vanguard Balanced Index Fund Investor Shares Or Admiral

That wouldn't be my first choice. It's an actively-managed fund. I can just as well use a LifeStrategy or Target Retirement fund and get a mix of TSM and TBM index funds.
Tom_T
 
Posts: 1356
Joined: Wed Aug 29, 2007 3:33 pm

Re: If you had to allocate a new chunk of money right now...

Postby Default User BR » Sat Jun 29, 2013 10:58 am

Tom_T wrote:
Toons wrote:Vanguard Balanced Index Fund Investor Shares Vanguard Balanced Index Fund Investor Shares Or Admiral

That wouldn't be my first choice. It's an actively-managed fund.

What do you mean? It's a 60/40 mix of TSM and TBM.


Brian
Default User BR
 
Posts: 7503
Joined: Mon Dec 17, 2007 8:32 pm

Re: If you had to allocate a new chunk of money right now...

Postby Call_Me_Op » Sat Jun 29, 2013 11:00 am

Two points.

1.) I would never feel that I "have to allocate money right now."

2.) Now may be as good a time as any. We don't know.
Best regards, -Op | | "In the middle of difficulty lies opportunity." Einstein
Call_Me_Op
 
Posts: 4619
Joined: Mon Sep 07, 2009 3:57 pm
Location: Milky Way

Re: If you had to allocate a new chunk of money right now...

Postby G-Money » Sat Jun 29, 2013 11:14 am

Default User BR wrote:
Tom_T wrote:
Toons wrote:Vanguard Balanced Index Fund Investor Shares Vanguard Balanced Index Fund Investor Shares Or Admiral

That wouldn't be my first choice. It's an actively-managed fund.

What do you mean? It's a 60/40 mix of TSM and TBM.


Brian

It even has the word "index" in its name!
Don't assume I know what I'm talking about.
User avatar
G-Money
 
Posts: 2816
Joined: Sun Dec 09, 2007 8:12 am

Re: If you had to allocate a new chunk of money right now...

Postby nedsaid » Sat Jun 29, 2013 11:54 am

I am interested in Livesoft's comments on bonds.

Currently, I am buying them with at least 40% of my new money for investment. I am buying them because they are a lower volatility asset than stocks and I need to keep my asset allocation from getting out of whack. I am not buying them because I think they are a screaming bargain.

My opinion is that bonds are still pretty expensive but a bit less so.

It would be interesting to hear Livesoft's comments. Perhaps they would be reassuring to me. I am buying bonds with a bit of apprehension but doing it anyway. I view it as eating my spinach, doing it because it is good for me and not because I necessarily like it.
A fool and his money are good for business.
User avatar
nedsaid
 
Posts: 2371
Joined: Fri Nov 23, 2012 1:33 pm

Re: If you had to allocate a new chunk of money right now...

Postby livesoft » Sat Jun 29, 2013 12:06 pm

There is an emotional side to investing which is even more apparent nowadays when everyone is walking around with earbuds and a smartphone in their hand reading or listening to to whatever. The 365/24/7 news cycle and channels devoted to investing cause many people to react against their own best interest because a buy or sell is just a click away.

That means that the asset class du jour will get overbought or oversold pretty much instantly. Sure, we all like to talk about fundamentals, interest rates, profits, and what not, but even those things don't matter in the short term.

What matters in the short term is human emotions which are often not rational and make no sense. We see time and time again one-day, two-day, or one-week drops that are excessive which is much like a bubble bursting. While I would never buy during a one-day or two-day pop out of nowhere(*), I will gladly purchase things suffering from an emotional one-day, two-day, one-week dip.

Let me ask folks this: When was the last time a muni bond index fund dropped 10% in less than month? And what happened afterwords?
What happened in the fall of 2010 with bond funds? Were you buying bond funds then? What did you do when your bond funds then lost 5% of their value over a few months? What did you do? Did you rebalance? Do you even remember anything about your losses?

(*) I will sell if there is a one-day or two-day pop out of nowhere because it doesn't make sense to me and I believe there will be a reversion to the mean.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
livesoft
 
Posts: 33009
Joined: Thu Mar 01, 2007 9:00 pm

Re: If you had to allocate a new chunk of money right now...

Postby Grt2bOutdoors » Sat Jun 29, 2013 2:51 pm

livesoft wrote:Practically everything is up 3% to 6% just this week! How can anyone write that about poor outlooks? That just doesn't pass the smell test.

As for what my allocation would be, it would be the same as always: Some equities and some bonds, say 60% to 70% equities and 40% to 30% bonds. The equities would be split up 25% US Total market index, 25% Int'l Total Market Index, 25% US small-cap value index, 25% int'l small cap index. Bonds could be split up 50% intermediate bond index and 50% short-term corporate bond index.

If one wanted to add REITs, then no problem, just carve out some percentage of equities and buy a REIT index fund.


That doesn't jive with your other post about buying VWO on last Wednesday, and thinking about flipping it after a potential 5% move upwards. :confused
"Luck is not a strategy" Asking Portfolio Questions
Grt2bOutdoors
 
Posts: 9930
Joined: Thu Apr 05, 2007 9:20 pm
Location: New York

Re: If you had to allocate a new chunk of money right now...

Postby livesoft » Sat Jun 29, 2013 4:05 pm

^Years ago when I bought VEU, Total Int'l Index Fund didn't exist in its current incarnation, so I had to buy VWO to round-out VEU. VSS didn't exist either, so I had to get small-cap int'l elsewhere, too.

Also note that I didn't name any actual funds in your quote of my post. I just listed an asset allocation.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
livesoft
 
Posts: 33009
Joined: Thu Mar 01, 2007 9:00 pm

Re: If you had to allocate a new chunk of money right now...

Postby Dazed » Sat Jun 29, 2013 4:16 pm

livesoft wrote:I would go further. Bonds are a great investment at this time. Don't you want to buy something on sale?

Doesn't anybody buy on dips anymore? Where did all the confident folks go?


I want to buy something on sale! :P Would Vanguard California Intermediate-term TE Bond Fund (VCADX) fit that bill?
And are we talking substantial sale or current dip is hardly noteworthy...

Anyone care to comment?
Dazed
 
Posts: 30
Joined: Tue Apr 17, 2012 4:21 pm

Re: If you had to allocate a new chunk of money right now...

Postby livesoft » Sat Jun 29, 2013 4:22 pm

For a bond fund, I think that was a significant dip and it's already recovered some.
It's all about short-term opportunistic rebalancing due to a short-term change in one's asset allocation, uh, I mean opportunistic rebalancing, uh I mean rebalancing, uh I mean market timing.
livesoft
 
Posts: 33009
Joined: Thu Mar 01, 2007 9:00 pm

Re: If you had to allocate a new chunk of money right now...

Postby Grt2bOutdoors » Sat Jun 29, 2013 5:56 pm

Dazed wrote:
livesoft wrote:I would go further. Bonds are a great investment at this time. Don't you want to buy something on sale?

Doesn't anybody buy on dips anymore? Where did all the confident folks go?


I want to buy something on sale! :P Would Vanguard California Intermediate-term TE Bond Fund (VCADX) fit that bill?
And are we talking substantial sale or current dip is hardly noteworthy...

Anyone care to comment?


Munis and international are on sale.
"Luck is not a strategy" Asking Portfolio Questions
Grt2bOutdoors
 
Posts: 9930
Joined: Thu Apr 05, 2007 9:20 pm
Location: New York

Re: If you had to allocate a new chunk of money right now...

Postby ldm616 » Sat Jun 29, 2013 6:27 pm

Appreciate all the replies. A bit more data. I have an account that was actively managed with healthy doses of stock picking, market timing and performance chasing. Needless to say, I could have done better with VBINX. I have liquidated that account and am now ready to redeploy it in ETFs or index funds. My default option is VBINX - though the account is a taxable account so I understand that might be something to think about wrt VBINX. When I say 8 years, I don't need to empty the account in 8 years. Instead, I expect I will need to tap into to fund my kids' college educations since my 529s were funded in early 2008 and are barely better than flat.
ldm616
 
Posts: 9
Joined: Mon Jun 03, 2013 1:59 pm

Re: If you had to allocate a new chunk of money right now...

Postby nedsaid » Sat Jun 29, 2013 8:55 pm

For what it is worth, my take on the current bond market.

I think the recent drop in bonds were a huge overreaction to the hint that the Federal Reserve Bank might taper down its purchase of bonds if conditions warranted. So it was a good trading opportunity for the short term traders, but to the long term investor didn't mean too much. Being down 3% year to date after a 30 year bond bull market doesn't translate to me a huge buying opportunity. Yields are still awfully low.

The expensive got a bit less so. TIPs were hit harder, and are down about 7%. There might be a little opportunity there. But these were bid up an awful lot too.

So I think this was a good rebalancing opportunity for those who think they need more bonds. I did not. I just buy with new funds.
A fool and his money are good for business.
User avatar
nedsaid
 
Posts: 2371
Joined: Fri Nov 23, 2012 1:33 pm


Return to Investing - Help with Personal Investments

Who is online

Users browsing this forum: Google [Bot], MSNbot Media, Yahoo [Bot] and 33 guests