Help me get back into the market

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67vwbug
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Help me get back into the market

Post by 67vwbug » Wed Dec 21, 2016 11:24 am

Long story short, I transferred a sizable 401k (about 62% of total retirement account) from a previous employer to a Vanguard Rollover IRA and as luck would have it the transfer executed right in the middle of the Brexit dip. By the time the funds were available to invest the market had recovered. I've been sitting on the money ever since and now the market seems to be in a rally and I've been psychologically unable to put the money back into the market as it seems I'm buying in at a premium from where it sold at. I know this is a mistake and I'm embarrassed to admit there is so much emotion wrapped up in reinvesting this money.

Any recommendations on the best way to remove the emotion from this decision and the best way to put this money back to work (lump sum investment, X amount at X frequency, etc.)? Thanks in advance.

livesoft
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Re: Help me get back into the market

Post by livesoft » Wed Dec 21, 2016 11:26 am

There was an article about getting back into the market a while ago:
http://ritholtz.com/2013/06/missed-the- ... to-do-now/

It might be helpful to read it.
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BolderBoy
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Re: Help me get back into the market

Post by BolderBoy » Wed Dec 21, 2016 12:53 pm

The decision between DCA (dollar cost averaging) and lump sum investing. The BH wiki has some thoughts on this.
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bligh
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Re: Help me get back into the market

Post by bligh » Wed Dec 21, 2016 1:10 pm

It looks like you know your asset allocation and strategy and all that stuff already. What you are looking for help on, is the mindset to help you decide when and how to take the plunge to deploy your money again.

I recommend you buy in to the market in conformance with your asset allocation right away.

I struggled with that all the time too when adding new money into the market. I don't any more. It is simple, the past is irrelevant. The way people seem to work, and indeed the way I used to work (I guess I might still do) is to treat $50K that has appreciated to $100K differently than $100K that I earned. They are one and the same.

For example, Bob put in $50K into the market a few years ago and has had it appreciate to $100K... Mary comes along and puts in $100K into the market yesterday. They are in exactly the same place today. If the market drops 20% they will both lose the same $20K. You may feel that Bob just lost easy money (i.e. some of his profit), and Mary lost hard earned money (earned salary), but how hard you worked for the money is not relevant here. There are some nuances with taxation and such, but in the end the $1 is $1.

Every single person, organization or entity holding any kind of stock or bond fund today is in essence buying in today at today's prices. Let that sink in. Every morning when I wake up, I can make the choice of selling everything and moving to cash but no, I am staying invested. This is in effect me voting with my money "At today's prices, I would like to keep my money invested in the world's stock and bond market"

Could the market be in for a correction tomorrow? Sure. You don't know and I sure as hell don't either. But if you shift your mindset from "I bought in at $X and it went up or down to $Y" to "My portfolio is currently $X with average returns of Y%" you will be a lot less likely to hesitate when deploying your money.

Market timing sucks. I've been in your shoes. I held about a third of one of my rollover IRAs in cash all through a big chunk of 2014 because I thought a correction was 'due'. Hope this helps. If you do decide to not jump in, I hope there is a big correction soon. I would love to buy in at the cheaper prices too. :sharebeer

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Re: Help me get back into the market

Post by Jack FFR1846 » Wed Dec 21, 2016 1:13 pm

I would say "you're going to invest it.....or you're not". Either dump it all into the appropriate funds to hit your allocation or put it into a money market fund and stay there forever. Either way, do one or the other today. This dribbling in with DCA is too wishy washy for me to stand.
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Ari
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Re: Help me get back into the market

Post by Ari » Wed Dec 21, 2016 1:19 pm

Remember that no matter the valuations, expected returns are always positive, or nobody would own stocks.You're not smarter than the market.
All in, all the time.

rollsound
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Re: Help me get back into the market

Post by rollsound » Wed Dec 21, 2016 1:20 pm

bligh wrote:It looks like you know your asset allocation and strategy and all that stuff already. What you are looking for help on, is the mindset to help you decide when and how to take the plunge to deploy your money again.

I recommend you buy in to the market in conformance with your asset allocation right away.

I struggled with that all the time too when adding new money into the market. I don't any more. It is simple, the past is irrelevant. The way people seem to work, and indeed the way I used to work (I guess I might still do) is to treat $50K that has appreciated to $100K differently than $100K that I earned. They are one and the same.

For example, Bob put in $50K into the market a few years ago and has had it appreciate to $100K... Mary comes along and puts in $100K into the market yesterday. They are in exactly the same place today. If the market drops 20% they will both lose the same $20K. You may feel that Bob just lost easy money (i.e. some of his profit), and Mary lost hard earned money (earned salary), but how hard you worked for the money is not relevant here. There are some nuances with taxation and such, but in the end the $1 is $1.

Every single person, organization or entity holding any kind of stock or bond fund today is in essence buying in today at today's prices. Let that sink in. Every morning when I wake up, I can make the choice of selling everything and moving to cash but no, I am staying invested. This is in effect me voting with my money "At today's prices, I would like to keep my money invested in the world's stock and bond market"

Could the market be in for a correction tomorrow? Sure. You don't know and I sure as hell don't either. But if you shift your mindset from "I bought in at $X and it went up or down to $Y" to "My portfolio is currently $X with average returns of Y%" you will be a lot less likely to hesitate when deploying your money.

Market timing sucks. I've been in your shoes. I held about a third of one of my rollover IRAs in cash all through a big chunk of 2014 because I thought a correction was 'due'. Hope this helps. If you do decide to not jump in, I hope there is a big correction soon. I would love to buy in at the cheaper prices too. :sharebeer
great post and a great perspective. i've decided to just invest into my AA when money is available and leave it at that.

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Re: Help me get back into the market

Post by pkcrafter » Wed Dec 21, 2016 1:59 pm

vw, In order to provide a good answer to your question, it would be helpful if you list the portfolio you want to hold and approx amount of $$.

Paul
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goingup
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Re: Help me get back into the market

Post by goingup » Wed Dec 21, 2016 2:15 pm

You just need a plan you can stick to. Only you know what will work. It sounds as though you're too skittish to lump sum. You've basically have had since March to get back into the Market.

We don't know what the rest of your portfolio looks like, but if you've chosen to invest in a Target fund or Life Strategy fund, put in something between 20-50% by Jan 2nd. Then put the remaining amount in equal chunks over the next 6 months.

I do like what Rick Ferri had to say about investing a lump sum. His advice was to get right back in to the allocation you had before you rolled over. https://portfoliosolutions.com/latest-l ... g-lump-sum (This article no longer has his by-line but I remember when he wrote it!)

MittensMoney
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Re: Help me get back into the market

Post by MittensMoney » Wed Dec 21, 2016 2:36 pm

It's a psychological block. Invest 8% of the total amount into the market every month for the next year, and if there happens to be a market correction between then and now go ahead and invest the entire remaining amount.

MSDOGS1976
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Re: Help me get back into the market

Post by MSDOGS1976 » Wed Dec 21, 2016 3:40 pm

MittensMoney wrote:It's a psychological block. Invest 8% of the total amount into the market every month for the next year, and if there happens to be a market correction between then and now go ahead and invest the entire remaining amount.
Agree on all. No way I would dump it all back in right now.

Tamalak
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Re: Help me get back into the market

Post by Tamalak » Wed Dec 21, 2016 3:45 pm

People arguing that they "wouldn't dump it in right now" are also arguing to pull out of the market right now.

We buy our portfolios every day by deciding not to withdraw it.

If OP puts the money in and the market dips 10% tomorrow, he'll lose 10%. And we'll all lose 10%. So how is it riskier to lump sum than to just hold what you've had?

Riley15
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Re: Help me get back into the market

Post by Riley15 » Fri Dec 23, 2016 3:35 pm

rollsound wrote:
bligh wrote:
For example, Bob put in $50K into the market a few years ago and has had it appreciate to $100K... Mary comes along and puts in $100K into the market yesterday. They are in exactly the same place today. If the market drops 20% they will both lose the same $20K. You may feel that Bob just lost easy money (i.e. some of his profit), and Mary lost hard earned money (earned salary), but how hard you worked for the money is not relevant here. There are some nuances with taxation and such, but in the end the $1 is $1.

:sharebeer
great post and a great perspective. i've decided to just invest into my AA when money is available and leave it at that.

I have been in a similar situation but have to say this perspective is totally removed from reality and delusional.

In your example no Bob and Mary are not exactly at the same place but very far apart. Bob whose 50k has grown to 100k has had a a100% Return on his investment while Mary starting at 100k has had 0%. If they both lose 20k, Bob still has 60% Return while Mary is -20%.

We are really deluding ourselves in saying that returns don't matter and if they don't what's the point of investing in the first place.

ved
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Re: Help me get back into the market

Post by ved » Fri Dec 23, 2016 5:29 pm

rahulk30 wrote:
rollsound wrote:
bligh wrote:
For example, Bob put in $50K into the market a few years ago and has had it appreciate to $100K... Mary comes along and puts in $100K into the market yesterday. They are in exactly the same place today. If the market drops 20% they will both lose the same $20K. You may feel that Bob just lost easy money (i.e. some of his profit), and Mary lost hard earned money (earned salary), but how hard you worked for the money is not relevant here. There are some nuances with taxation and such, but in the end the $1 is $1.

:sharebeer
great post and a great perspective. i've decided to just invest into my AA when money is available and leave it at that.

I have been in a similar situation but have to say this perspective is totally removed from reality and delusional.

In your example no Bob and Mary are not exactly at the same place but very far apart. Bob whose 50k has grown to 100k has had a a100% Return on his investment while Mary starting at 100k has had 0%. If they both lose 20k, Bob still has 60% Return while Mary is -20%.

We are really deluding ourselves in saying that returns don't matter and if they don't what's the point of investing in the first place.
What bligh is saying is that past returns/ performance don't matter. It's about future growth. And the value of the portfolio is the same - whether it was thru past market returns, hard earned salary, inheritance from a long-lost uncle. The future performance will be the same regardless of how your portfolio came out to be.

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iceport
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Re: Help me get back into the market

Post by iceport » Fri Dec 23, 2016 6:24 pm

67vwbug wrote:Any recommendations on the best way to remove the emotion from this decision and the best way to put this money back to work (lump sum investment, X amount at X frequency, etc.)? Thanks in advance.
67vwbug,

I truly sympathize with your plight. And I don't think I would just deploy 62% of a portfolio that's been sitting in cash for a few months in one big lump sum. The relative size of the portion of the portfolio subject to risk matters. The risk is that soon after you deploy, say within a year, the portfolio declines sharply. If the loss is deep and long enough, it could significantly affect your long term returns going forward. (And I don't agree with those who say to disregard the risk completely. It is real, and to deny that is, well, denial.) That might not be the expected outcome, but it is possible.

Yes, I know the argument: not deploying in one big lump now is the same as being invested and actually selling in one big lump. Well, that thought experiment strikes me as somewhat silly and irrelevant. On one level, it's logical. But from the perspective of being averse to the risk of short term loss *due solely to having unlucky timing over a very short period*, well, it misses the mark. (If someone wants to hedge against unlucky timing, why on earth would they want more transactions subject to the same risk of unlucky timing? At least with a portfolio that already been deployed for a decade or two, the risk of unlucky timing was encountered long ago.) Label this a behavioral crutch if you must, but most people hold fixed income during the accumulation phase for behavioral reasons also.

Anyway, if I were you, 67vwbug, I'd DCA over about a year. There's no way of knowing if that will work in your favor or not. Or you could split the difference, as I've seen livesoft mention before: deploy half now, and DCA the rest.

You might be interested in a fascinating analysis of DCA results using historical data. If nothing else, it describes more vividly (and objectively) the ramifications of the choices you face. The analysis was performed by a math professor, and it's hosted on Bill Bernstein's Efficient Frontier website: Do Not Dollar-Cost-Average for More than Twelve Months. Any way you proceed, there is risk. :|

Good luck with your decision.

(PS: a '67 Bug was my first car.)
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hollowcave2
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Re: Help me get back into the market

Post by hollowcave2 » Sat Dec 24, 2016 2:53 pm

Dollar cost averaging is designed for this very question. That's why I like DCA. Nothing to do with returns. Just acting to get back into the market regardless of market conditions.

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aj76er
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Re: Help me get back into the market

Post by aj76er » Sat Dec 24, 2016 11:59 pm

I would follow what Bernstein and others have recommended: half as a lump sum immediately, and the other half DCA over 6months to a year.
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fundseeker
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Re: Help me get back into the market

Post by fundseeker » Sun Dec 25, 2016 7:45 am

Tamalak wrote:People arguing that they "wouldn't dump it in right now" are also arguing to pull out of the market right now.

We buy our portfolios every day by deciding not to withdraw it.

If OP puts the money in and the market dips 10% tomorrow, he'll lose 10%. And we'll all lose 10%. So how is it riskier to lump sum than to just hold what you've had?
I would not "...dump it in right now" and I would not be "arguing to pull out of the market right now." The market seems high and due for some correction, which I can stomach with money already in the market, and which likely came through growth. The amount that is already invested and may never even drop to my initial invested amount, and dips just don't hurt as bad and aren't as obvious as say watching $100k quickly turn into $90k and hating myself for my decision to lump sum. And it is times like these that people talk about getting back in, which is probably to their detriment, so they should tread cautiously and DCA, IMO.

To me, a lump sum now just seems like a huge gamble. I can accept the dips that happen to my invested money, which was DCA'd into the market over many years. That just seems like part of the investing ride, versus a big possibly bad decision I made one day. In practicing what I believe, I recently rebalanced (reducing my stock exposure) and I also changed the contributions in my TSP to buy only the G Fund for a while.

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Re: Help me get back into the market

Post by Novine » Sun Dec 25, 2016 11:35 am

Please explain the math behind this logic. How would it work out any diffently than if you had just left the money invested?

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iceport
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Re: Help me get back into the market

Post by iceport » Mon Dec 26, 2016 9:27 am

Novine,

I'm not sure to whom that question was addressed, but the premise of the thread is that, through no fault of their own, about 62% of the OP's retirement savings were transferred out of the market (during a rollover) at a very unlucky time. The market had recovered by the time the funds were available to invest. Is two weeks typical wait? The "sell low, buy high" scenario could have locked in a loss of somewhere in the 7% - 9% range. That's how it was different than just staying invested.

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SeeMoe
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Re: Help me get back into the market

Post by SeeMoe » Tue Dec 27, 2016 8:24 pm

4 years ago I had about $400k to invest in the booming Bull, so I started out with $10k a month, then $20k as NAV continued to rise, then, finally, all of it! This olde Bull can go either way, and the next 6 months should tell the story,..if I were doing it again, maybe I would do it at, say, $10k a month. Or just invest it all at once and forgetaboutiT!...

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sometimesinvestor
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Re: Help me get back into the market

Post by sometimesinvestor » Tue Dec 27, 2016 8:41 pm

As pointed out by some of the posts immediate investment might be best but for you I suggest Value cost averaging/ IT should work out fairly well and perhaps more important give you confidence you are doing the right thing
I actually think the investopedia link is clearer than the Boglehead wiki link but I don't want to insult anyone

http://www.investopedia.com/terms/v/value_averaging.asp



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

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sperry8
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Re: Help me get back into the market

Post by sperry8 » Tue Dec 27, 2016 8:43 pm

rahulk30 wrote:
rollsound wrote:
bligh wrote:
For example, Bob put in $50K into the market a few years ago and has had it appreciate to $100K... Mary comes along and puts in $100K into the market yesterday. They are in exactly the same place today. If the market drops 20% they will both lose the same $20K. You may feel that Bob just lost easy money (i.e. some of his profit), and Mary lost hard earned money (earned salary), but how hard you worked for the money is not relevant here. There are some nuances with taxation and such, but in the end the $1 is $1.

:sharebeer
great post and a great perspective. i've decided to just invest into my AA when money is available and leave it at that.

I have been in a similar situation but have to say this perspective is totally removed from reality and delusional.

In your example no Bob and Mary are not exactly at the same place but very far apart. Bob whose 50k has grown to 100k has had a a100% Return on his investment while Mary starting at 100k has had 0%. If they both lose 20k, Bob still has 60% Return while Mary is -20%.

We are really deluding ourselves in saying that returns don't matter and if they don't what's the point of investing in the first place.
Actually Mary would be in a better place. She could Tax Loss Harvest and then reduce future taxable gains while Bob is going to have to pay taxes on those gains eventually.
Humbling BH contest results: 2017: #516 of 647 | 2016: #121 of 610 | 2015: #18 of 552 | 2014: #225 of 503 | 2013: #383 of 433 | 2012: #366 of 410 | 2011: #113 of 369 | 2010: #53 of 282

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Re: Help me get back into the market

Post by Fundhunter » Tue Dec 27, 2016 10:27 pm

It sounds like to me that you have suffered a little bit from the "market timing" disease. This forum is a good vaccine against that disease, as almost everybody on this forum that I have read preaches against doing that. The real cure is to get a written assert allocation plan with % of equities vs. fixed income, foreign vs. US equities and the like, and invest the entire amount into it NOW according to that plan. Then rebalance it every year to your target % on a set date (like your birthday) and have a plan to slide towards more fixed income gradually as you near retirement (or use one of those Target Retirement funds to do that for you). Then it becomes math once a year, as long as you stick to the strategy, even when the markets soar and crash (which they will).

Dollar cost averaging over a year is just prolonging the disease. That is good strategy for new investment contributions though IMO. You need to completely wipe out all remnants of the disease now and just jump in. If you had the same amount of value from a portfolio that had been invested for several years, would you cash out now?? That is exactly the same as not buying in now, as others have pointed out.

Good luck.

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Re: Help me get back into the market

Post by Buddtholomew » Wed Dec 28, 2016 7:15 pm

Difficult to do, but I recommend investing 80% now and the remaining 20% DCA.
Accomplishes investing in the market now (time in market vs. timing market) with the remaining 20% on a schedule you choose (either fast or slow).

50%/50% is the starting point increasing to whatever you are comfortable with.
"The first principle is that you must not fool yourself and you are the easiest person to fool" --Feynman.

67vwbug
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Re: Help me get back into the market

Post by 67vwbug » Thu Nov 02, 2017 9:35 am

Just wanted to close the loop and thank everybody for the helpful advice. I also wanted to share a link to an article by Larry Swedroe a couple of weeks back that may help anybody else who refers to this thread in the future.

http://www.etf.com/sections/index-inves ... correction

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goingup
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Re: Help me get back into the market

Post by goingup » Thu Nov 02, 2017 10:43 am

67vwbug wrote:
Thu Nov 02, 2017 9:35 am
Just wanted to close the loop and thank everybody for the helpful advice. I also wanted to share a link to an article by Larry Swedroe a couple of weeks back that may help anybody else who refers to this thread in the future.

http://www.etf.com/sections/index-inves ... correction
Tell us how you got back into the market. Lump sum? Dollar cost averaging? Have you been happy with your plan and execution?

WhiteMaxima
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Re: Help me get back into the market

Post by WhiteMaxima » Thu Nov 02, 2017 11:15 am

I read in this blog about one guy transfer chuck of his 401k into IRA from previous employer in July 2008. By mistake all the fund were moved into cash sitting sideline. Guess what' s happends during the following months. This guy starting DCA starting March 2009. There rest is we all knew about.

metrunt
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Re: Help me get back into the market

Post by metrunt » Thu Nov 02, 2017 10:47 pm

My understanding is that someone who lump summed into S&P 500 in Nov 2016 would have earned 12.8%. Someone who DCA'd, putting in 1/12 each month would have earned 1/2 that.

Riley15
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Re: Help me get back into the market

Post by Riley15 » Sat Nov 04, 2017 2:10 pm

67vwbug wrote:
Thu Nov 02, 2017 9:35 am
Just wanted to close the loop and thank everybody for the helpful advice. I also wanted to share a link to an article by Larry Swedroe a couple of weeks back that may help anybody else who refers to this thread in the future.

http://www.etf.com/sections/index-inves ... correction
Please let us know what how you proceeded to get back into the market and in hindsight was it the best decision for you? There are countless threads about this and I have been in the same exact situation as you.

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Re: Help me get back into the market

Post by Dandy » Sat Nov 04, 2017 3:23 pm

I like a combination of some lump sum -- say 25% and then automatic monthly DCA investing for a year or so for the rest. Also, when the market drops a decent amount double up the DCA that month.

1. gets you off the sidelines
2. automates most or all of your future investments
3. when you double up it teaches you how to buy when the market is down

Not based on any science just an idea to get going when fear is high.

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BenfromToronto
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Re: Help me get back into the market

Post by BenfromToronto » Sat Nov 04, 2017 4:07 pm

:happy
sometimesinvestor wrote:
Tue Dec 27, 2016 8:41 pm
As pointed out by some of the posts immediate investment might be best but for you I suggest Value cost averaging/ IT should work out fairly well and perhaps more important give you confidence you are doing the right thing
I actually think the investopedia link is clearer than the Boglehead wiki link but I don't want to insult anyone

http://www.investopedia.com/terms/v/value_averaging.asp

https://www.bogleheads.org/wiki/Value_averaging
I agree that a dollar value averaging (DVA) approach is more satisfying intellectually than the three other approaches that recommended by most of the posters: invest all now; use dollar cost averaging (DCA) over one year; do a little bit of both (e.g., half as a lump sum, and the rest as DCA over one year, with the opportunity to accelerate if the market crashes).
I also expect that DVA will be more lucrative during the next 12-24 month. Unless the market continuously goes up (i.e., if there is some volatility), a DVA approach should beat both a lump-sum and a DCA approaches.

Concretely, I would combine a lump-sum (e.g., 50% of the available cash) and a DVA approach. I would pick the value path for the DVA approach based on historical data. For example, if I wanted to invest in the US large cap market (which I believe is overvalued), I would design my value path based on the lump sum growing by 10%/12 per month each month + a proportion of the cash to be invested (e.g., the cash not invested divided by 12 months or 24 months depending on how long I wanted to give myself to get back in the market and to take advantage of/protect myself psychologically against the expected volatility).
Becoming rich slowly is simple --earn, save, invest following a Bogleheads philosophy-- but it is not easy.

67vwbug
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Re: Help me get back into the market

Post by 67vwbug » Tue Jan 23, 2018 2:43 pm

Apologies for the late reply. I'm not on here as often as I used to be and didn't see the questions asking what I did and if I was happy with the plan/execution.

I ended up deciding to DCA over the course of a year (1/12th of total sum per month). Tried to use the same day per month to further take emotion out of the decision of when to invest per given month. It went well, but a bit sporadic. I would miss a month here and there just due to life. Probably had about half reinvested by the time I read Larry's article and decided to just reinvest the rest with a lump sum after reading the article.

All in all I was pretty happy with the plan. DCA over the course of a year might not have been the most optimal course of action mathematically speaking, but it got me over the emotion and consequent indecision stalemate of lumping it in all at once. I'm just glad to have it all reinvested now and working for me. :happy

RRAAYY3
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Re: Help me get back into the market

Post by RRAAYY3 » Tue Jan 23, 2018 2:46 pm

the lump sum + DCA strategy has worked well for me ...

lump summed what i could at the time for admiral shares [at a market "peak"] and then continued feeding it with monthly or bimonthly contributions in order to rebalance / buy dips / invest regardless

Mors
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Re: Help me get back into the market

Post by Mors » Tue Jan 23, 2018 6:54 pm

Invest in a 60/40 stocks bonds allocation. This way you leave some money out of the stock market which will benefit you in case of a recession, but you will still enjoy the benefits of the market returns.

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BenfromToronto
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Re: Help me get back into the market

Post by BenfromToronto » Sat Feb 10, 2018 1:59 pm

Dear 67vwbug,

I am wondering what you did in late December and how you feel about it 6 weeks later?

Reading all the recent posts about market timing vs. ignoring the market gyrations has reinforced my belief that a no-sell Dollar Value Averaging (DVA) strategy is a great compromise:
(1) It benefits from volatility --i.e., if there is volatility, DVA will beat a more traditional Dollar Cost Averaging (DCA) strategy.
(2) More importantly, it allows us to resists the temptation to time the market by letting us "do something" rational and preplanned based on the market fluctuations (in that sense, it can be thought as a form of constant rebalancing based on contributions rather than selling -- which is also advantageous for assets in taxable accounts).
Becoming rich slowly is simple --earn, save, invest following a Bogleheads philosophy-- but it is not easy.

DrGoogle2017
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Re: Help me get back into the market

Post by DrGoogle2017 » Sat Feb 10, 2018 2:45 pm

What's exactly the difference between DCA vs DVA?

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BenfromToronto
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Re: Help me get back into the market

Post by BenfromToronto » Mon Feb 12, 2018 10:19 am

Check the two Wikis:

Value averaging (DVA): https://www.bogleheads.org/wiki/Value_averaging (the Wiki presents the original DVA approach with which you can either buy or sell shares depending on the value of your asset vs. your value path; I use the "no-sell DVA" approach).

Cost averaging (DCA): https://www.bogleheads.org/wiki/Dollar_cost_averaging

:moneybag
Becoming rich slowly is simple --earn, save, invest following a Bogleheads philosophy-- but it is not easy.

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Toons
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Re: Help me get back into the market

Post by Toons » Mon Feb 12, 2018 10:20 am

Lump Sum.
Don't look at it
:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

Finridge
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Re: Help me get back into the market

Post by Finridge » Mon Feb 12, 2018 4:56 pm

Ari wrote:
Wed Dec 21, 2016 1:19 pm
Remember that no matter the valuations, expected returns are always positive, or nobody would own stocks.You're not smarter than the market.
Exactly, and so on average, the sooner you invest the better.

Also, this might help psychologically. This link was posted in another Bogleheads forum thread:

http://awealthofcommonsense.com/2014/02 ... ket-timer/

Finridge
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Re: Help me get back into the market

Post by Finridge » Mon Feb 12, 2018 5:04 pm

On average, lump-summing beats DCA'ing (investing it in pieces over time), but many people find lump-summing it to be psychologically difficult, and DCA'ing it is exponentially better than keeping it in money-markets.

What I personally recommend: Make a buy-in today--as small as it needs to be in order to be psychologically palatable. Then come back tomorrow and buy more... again, as small as it needs to be for you to do it. If you do this, once or twice, I think you will find it psychologically easier to start making larger transactions.

Thinks of this as like dipping your foot into the pool, before you jump in. It's easier for a lot of people to jump in if they dip their foot in first. Nobody knows why, but that's just how it is.

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