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

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ldm616
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If you had to allocate a new chunk of money right now...

Post by ldm616 »

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

Post by Grt2bOutdoors »

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.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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Toons
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Re: If you had to allocate a new chunk of money right now...

Post by Toons »

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

https://personal.vanguard.com/us/funds/ ... IntExt=INT
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dbr
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Re: If you had to allocate a new chunk of money right now...

Post by dbr »

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

Post by z3r0c00l »

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

Post by Default User BR »

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.


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

Post by ruralavalon »

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

Post by ofcmetz »

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

Post by livesoft »

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

Post by roymeo »

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

Post by nedsaid »

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

Post by noyopacific »

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

Post by cheesepep »

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

Post by sometimesinvestor »

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

Post by z3r0c00l »

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

Post by livesoft »

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

Post by InvestorNewb »

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

Post by IlliniDave »

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

Post by Tom_T »

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

Post by Default User BR »

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.


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

Post by Call_Me_Op »

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

Post by G-Money »

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

Post by nedsaid »

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

Post by livesoft »

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.
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Grt2bOutdoors
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Re: If you had to allocate a new chunk of money right now...

Post by Grt2bOutdoors »

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

Post by livesoft »

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

Post by Dazed »

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

Post by livesoft »

For a bond fund, I think that was a significant dip and it's already recovered some.
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Re: If you had to allocate a new chunk of money right now...

Post by Grt2bOutdoors »

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.
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ldm616
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Re: If you had to allocate a new chunk of money right now...

Post by ldm616 »

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

Post by nedsaid »

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.
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