Invest lump sum now or wait for market pullback? Opinions
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Invest lump sum now or wait for market pullback? Opinions
I have $100,000 to invest in Vanguard index ETFs. Since the market has really jumped since Feb, would I be wise to wait for a pullback before investing it? I would hate to invest such a large amount now and possibly have to suffer through a nasty correction. Maybe I could invest half now and half in 6 months? Thanks for any opinions.
Dollar cost average
Hi Monica and welcome to the forum,
I would invest 1/12 each month over the course of the next year.
Cheers,
I would invest 1/12 each month over the course of the next year.
Cheers,
RIP Mr. Bogle.
Re: Invest lump sum now or wait for market pullback? Opinio
Monica,monicafaye wrote:Maybe I could invest half now and half in 6 months? Thanks for any opinions.
You are on the right track. Invest 50/50 Now/Over-time and there are no big regrets (or only some).
- The market tanks, and 50% is there to accumulate more shares.
- The market takes off, and 50% is there (invested) ready to benefit.
Question: are you investing 100% Equities?
Landy |
Be yourself, everyone else is already taken -- Oscar Wilde
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Invest lump sum now or wait for market pullback? Opinions
My AA is:
39% Domestic
3% REIT
12% Foreign
6% Emerging Markets
40% BND
What do you think?
39% Domestic
3% REIT
12% Foreign
6% Emerging Markets
40% BND
What do you think?
Re: Invest lump sum now or wait for market pullback? Opinio
Hello and welcome.monicafaye wrote:My AA is:
39% Domestic
3% REIT
12% Foreign
6% Emerging Markets
40% BND
What do you think?
You will get a better response if you follow this format. People will be able to offer advice better.
http://www.bogleheads.org/forum/viewtopic.php?t=6212
We are all worms. But I believe that I am a glow-worm.
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Invest lump sum now or wait for market pullback? Opinions
9% US Large- Vang Total Stock Market-VTI
9% US Large Value-Vang Large Cap-VV
9% US Sm Market-Vang Small Cap-VB
9% US Sm Cap Value-Vang Sm Cap Value-VBR
3% Commodities-Vang Energy-VDE
3% REIT-Vang REIT-VNQ
12% Foreign-Vang FTSE All-World ex-US-VEU
6% Emerging Markets-Vang Emerging Markets-VWO
40% Bonds-Vang Total Bond Market-BND
All of this will be in a taxable account. I don't have a tax deferred account for the BND.
9% US Large Value-Vang Large Cap-VV
9% US Sm Market-Vang Small Cap-VB
9% US Sm Cap Value-Vang Sm Cap Value-VBR
3% Commodities-Vang Energy-VDE
3% REIT-Vang REIT-VNQ
12% Foreign-Vang FTSE All-World ex-US-VEU
6% Emerging Markets-Vang Emerging Markets-VWO
40% Bonds-Vang Total Bond Market-BND
All of this will be in a taxable account. I don't have a tax deferred account for the BND.
- nisiprius
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Don't try to "wait for a pullback." You might wait forever while the market rises... or you might see a "pullback" but still be afraid to jump in for fear it will still go lower.
My own rule of thumb is no big moves ever. Half now and half in six months is one option.
I don't know if you've noticed how easy it is to set up automatic investments, exchanges, etc. with Vanguard mutual funds, but it is--and doubtless at other financial companies as well--so you could put it into some reasonable fund now and set it up to make automatic exchanges once a month over whatever period of time seems reasonable to you.
If you don't want the cash sitting in a money market account for that period of time, and don't want to use a short-term bond fund, I'm 99% sure you can also set things up to make automatic monthly transfers from a bank account into your Vanguard account!
My own rule of thumb is no big moves ever. Half now and half in six months is one option.
I don't know if you've noticed how easy it is to set up automatic investments, exchanges, etc. with Vanguard mutual funds, but it is--and doubtless at other financial companies as well--so you could put it into some reasonable fund now and set it up to make automatic exchanges once a month over whatever period of time seems reasonable to you.
If you don't want the cash sitting in a money market account for that period of time, and don't want to use a short-term bond fund, I'm 99% sure you can also set things up to make automatic monthly transfers from a bank account into your Vanguard account!
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Re: Invest lump sum now or wait for market pullback? Opinio
which of these do you think will pull back?monicafaye wrote:My AA is:
39% Domestic
3% REIT
12% Foreign
6% Emerging Markets
40% BND
What do you think?
chances are if you have a diversified portfolio the components will not always move in unison. IMO you should be 100% confident in your current portfolio allocation, not 50% confident now and maybe 50% later. work on being 100% confident about your current allocation and don't try and time the market. if you don't feel like committing 100% of new money to the above portfolio, consider what this is saying about its appropriateness for you.
30/30/20/20 |
US/International/Bonds/TIPS |
Average Age=37
Monica,
Time is your ally when investing not Timing,Hopefully 20years or more from now It won't matter whether you Dollar Cost Averaged or Lumped Sum....I would lump sum
Time is your ally when investing not Timing,Hopefully 20years or more from now It won't matter whether you Dollar Cost Averaged or Lumped Sum....I would lump sum
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
Time matters. But since the Op gives us no clue. People are guessing.Toons wrote:Monica,
Time is your ally when investing not Timing,Hopefully 20years or more from now It won't matter whether you Dollar Cost Averaged or Lumped Sum....I would lump sum
We are all worms. But I believe that I am a glow-worm.
I disagree with this. It's likely that DCA vs. lump sum will have dramatically different results over 20 years. We just don't know which will work out better.Time is your ally when investing not Timing,Hopefully 20years or more from now It won't matter whether you Dollar Cost Averaged or Lumped Sum....I would lump sum
Still, I would DCA, because while it lowers the average expected return, it also minimizes the chances of a disaster.
Paul
I agree- automatic monthly transfers on the same (say 17th) day each month are the way to go. set and forget. I would avoid the first and last day of the month since sometimes weird things happen on these days.... (lots of inflows and outflows for example...)nisiprius wrote:Don't try to "wait for a pullback." You might wait forever while the market rises... or you might see a "pullback" but still be afraid to jump in for fear it will still go lower.
My own rule of thumb is no big moves ever. Half now and half in six months is one option.
I don't know if you've noticed how easy it is to set up automatic investments, exchanges, etc. with Vanguard mutual funds, but it is--and doubtless at other financial companies as well--so you could put it into some reasonable fund now and set it up to make automatic exchanges once a month over whatever period of time seems reasonable to you.
If you don't want the cash sitting in a money market account for that period of time, and don't want to use a short-term bond fund, I'm 99% sure you can also set things up to make automatic monthly transfers from a bank account into your Vanguard account!
If you try to do anything else (try to catch the low point each month for example) you will end up shooting yourself in the foot...
cheers,
RIP Mr. Bogle.
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Invest lump sum now or wait for market pullback? Opinions
Thanks for your replies. My time horizon is 20 years and after I'm gone, I hope to leave most of it to my disabled son. So I hope my allocation is not too conservative.
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I see you have picked a complicated slice-and-dice portfolio. I love slice-and-dice, but like TrevH and others, I believe now that a multi-fund portfolio can be simplified to just 4 funds for equities: VTI, VBR, VEU, and VSS (I own them all). I would not worry about REITs (VNQ) nor VDE, especially if you cannot decide to invest at all. Then add another fund for the bonds.
So what are the YTD returns of VTI, VBR, VEU and VSS? Oh, look! VEU is up about 0% YTD. You might as well invest in it now. VSS, maybe 3%? And the bond money?
But if you already had the money in the first week of February, why didn't you invest then?
So buy VEU, VSS and BND now. That get's the bulk of the $100K into the market. You can DCA into VTI and VBR if you like. Watch out though, all these funds may be handing out distributions soon, if they did not already do so. Do not buy the dividend.
As you are DCAing, be sure to add more whenever the market drops. I will post a "worst day" signal as I did here: http://www.bogleheads.org/forum/viewtopic.php?t=41939 if I am near a computer on such a day.
So what are the YTD returns of VTI, VBR, VEU and VSS? Oh, look! VEU is up about 0% YTD. You might as well invest in it now. VSS, maybe 3%? And the bond money?
But if you already had the money in the first week of February, why didn't you invest then?
So buy VEU, VSS and BND now. That get's the bulk of the $100K into the market. You can DCA into VTI and VBR if you like. Watch out though, all these funds may be handing out distributions soon, if they did not already do so. Do not buy the dividend.
As you are DCAing, be sure to add more whenever the market drops. I will post a "worst day" signal as I did here: http://www.bogleheads.org/forum/viewtopic.php?t=41939 if I am near a computer on such a day.
Re: Invest lump sum now or wait for market pullback? Opinio
You have plenty of time, but you want to read up on funding a special needs trust so that your son won't lose access to public entitlements because you leave the money to him outright.monicafaye wrote:Thanks for your replies. My time horizon is 20 years and after I'm gone, I hope to leave most of it to my disabled son. So I hope my allocation is not too conservative.
Just Googling the term will start you off.
Best,
Best, Tom
It's only a disaster if she needs to sell soon. Avg returns will be higher over a long time period on a lump sum investment. If her time horizon is 20 yrs - stocks have never gone down over such a long time horizon (i believe). So - lump sum.tibbitts wrote:I disagree with this. It's likely that DCA vs. lump sum will have dramatically different results over 20 years. We just don't know which will work out better.Time is your ally when investing not Timing,Hopefully 20years or more from now It won't matter whether you Dollar Cost Averaged or Lumped Sum....I would lump sum
Still, I would DCA, because while it lowers the average expected return, it also minimizes the chances of a disaster.
Paul
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