Where to put 65k cash

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carguy1993
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Where to put 65k cash

Post by carguy1993 » Sun Jul 09, 2017 2:42 pm

Vanguard Target Retirement 2055
Vanguard Wellington Admiral
Vanguard Wellesley Income
Other and why

Looking to gain the most on my return while also covering myself if there is an upcoming bear market. Need advice from someone who has experience. My money is post tax.

MotoTrojan
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Re: Where to put 65k cash

Post by MotoTrojan » Sun Jul 09, 2017 3:37 pm

carguy1993 wrote:Vanguard Target Retirement 2055
Vanguard Wellington Admiral
Vanguard Wellesley Income
Other and why

Looking to gain the most on my return while also covering myself if there is an upcoming bear market. Need advice from someone who has experience. My money is post tax.
You're asking two questions. Asset allocation, and active vs. passive.

Those are both good active choices if you like that route, but bonds in all 3 are not great in taxable, depending on your tax-rate.

How much are you willing to lose? What's the money for?

carguy1993
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Re: Where to put 65k cash

Post by carguy1993 » Sun Jul 09, 2017 3:39 pm

Money is for retirement. Just dont know what to do. IRA's have a limit and I cant move all 65k into it.

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jimb_fromATL
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Re: Where to put 65k cash

Post by jimb_fromATL » Sun Jul 09, 2017 3:41 pm

carguy1993 wrote:Vanguard Target Retirement 2055
Vanguard Wellington Admiral
Vanguard Wellesley Income
Other and why

Looking to gain the most on my return while also covering myself if there is an upcoming bear market. Need advice from someone who has experience. My money is post tax.
How much risk are you wiling to take?
How soon do you need the money?
Or to put it another way, how long could you easily afford to wait for your funds to recover after a market crash?

What kind of account is the money in now?

Are you maxing all available tax-deferred and tax advantaged retirement plans?

Do you have any debts -- like a mortgage?


jimb

carguy1993
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Re: Where to put 65k cash

Post by carguy1993 » Sun Jul 09, 2017 3:47 pm

In Vanguard Target Retirement 2055 fund. Im willing to let it sit and continue to contribute $500 a month until age 60-65 when Im nearing retirement. I am conservative by nature but want a good return. I have no debt at all but also no house but planning to put a 20% down payment by the time I am in my 30s. IRAs a hard because you can only imvest 5500 per year. I need somewhere to invest 65k that will earn money but tax friendly.

carguy1993
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Re: Where to put 65k cash

Post by carguy1993 » Sun Jul 09, 2017 3:48 pm

I just started a 401k at my job and they will match 3% so I put 7% in there. I make 30k a year before taxes.

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badbreath
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Re: Where to put 65k cash

Post by badbreath » Sun Jul 09, 2017 3:54 pm

OP you may want to read this on tax efficient funds

https://www.bogleheads.org/wiki/Tax-eff ... _placement
“While money can’t buy happiness, it certainly lets you choose your own form of misery.” Groucho Marx

Gill
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Re: Where to put 65k cash

Post by Gill » Sun Jul 09, 2017 3:55 pm

As a starter, max out the 401k.
Gill

mortfree
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Re: Where to put 65k cash

Post by mortfree » Sun Jul 09, 2017 3:59 pm

Gill wrote:As a starter, max out the 401k.
Gill
that would be impressive - contribute 18k to a 401k on a 30k salary and only have 12k to live on... guess that is where the 65k comes into play.

OP, there is a saver's credit that you should look into; I think you would probably qualify.

where is your 20% downpayment on a home coming from?

carguy1993
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Re: Where to put 65k cash

Post by carguy1993 » Sun Jul 09, 2017 4:13 pm

I am gradually saving up. I dont want to touch the 65k though for a house. I want that for retirement. Wellington admiral shares or target retirement 2055 is a hard choice.

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Re: Where to put 65k cash

Post by mortfree » Sun Jul 09, 2017 6:04 pm

carguy1993 wrote:I am gradually saving up. I dont want to touch the 65k though for a house. I want that for retirement. Wellington admiral shares or target retirement 2055 is a hard choice.
Go with Wellington based solely on the fact that you need 50k to even get into the admiral shares.

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Re: Where to put 65k cash

Post by jimb_fromATL » Sun Jul 09, 2017 6:23 pm

mortfree wrote:
carguy1993 wrote:I am gradually saving up. I dont want to touch the 65k though for a house. I want that for retirement. Wellington admiral shares or target retirement 2055 is a hard choice.
Go with Wellington based solely on the fact that you need 50k to even get into the admiral shares.
... and as little as a week or a month or so difference one way or the other in when you invest the money may make more difference than the small difference in expenses for investor shares versus admiral shares anyway

jimb

carguy1993
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Re: Where to put 65k cash

Post by carguy1993 » Sun Jul 09, 2017 6:27 pm

jimb_fromATL wrote:
mortfree wrote:
carguy1993 wrote:I am gradually saving up. I dont want to touch the 65k though for a house. I want that for retirement. Wellington admiral shares or target retirement 2055 is a hard choice.
Go with Wellington based solely on the fact that you need 50k to even get into the admiral shares.
... and as little as a week or a month or so difference one way or the other in when you invest the money may make more difference than the small difference in expenses for investor shares versus admiral shares anyway

jimb
So does that mean that I am good in either fund really?

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Re: Where to put 65k cash

Post by mortfree » Sun Jul 09, 2017 6:30 pm

carguy1993 wrote:
jimb_fromATL wrote:
mortfree wrote:
carguy1993 wrote:I am gradually saving up. I dont want to touch the 65k though for a house. I want that for retirement. Wellington admiral shares or target retirement 2055 is a hard choice.
Go with Wellington based solely on the fact that you need 50k to even get into the admiral shares.
... and as little as a week or a month or so difference one way or the other in when you invest the money may make more difference than the small difference in expenses for investor shares versus admiral shares anyway

jimb
So does that mean that I am good in either fund really?
I'll defer on that. I wasn't coming from the perspective of expense rates. Moreso from perspective of having 50k available to you to get into that fund's admiral shares.

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Re: Where to put 65k cash

Post by jimb_fromATL » Sun Jul 09, 2017 6:44 pm

carguy1993 wrote:
jimb_fromATL wrote:
mortfree wrote:
carguy1993 wrote:I am gradually saving up. I dont want to touch the 65k though for a house. I want that for retirement. Wellington admiral shares or target retirement 2055 is a hard choice.
Go with Wellington based solely on the fact that you need 50k to even get into the admiral shares.
... and as little as a week or a month or so difference one way or the other in when you invest the money may make more difference than the small difference in expenses for investor shares versus admiral shares anyway

jimb
So does that mean that I am good in either fund really?
I was talking about the difference in expenses for admiral versus investor shares in either fund.

Either fund is great. Which fund might be more appropriate -- if either one -- still depends on some unanswered questions above ... mainly

How much risk are you wiling to take?

I'll get back tonight or tomorrow with some dollar figures to show how much more you might gain or lose depending on timing between Wellington and Wellesley.

jimb

jeffh19
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Re: Where to put 65k cash

Post by jeffh19 » Sun Jul 09, 2017 7:08 pm

Off the wall idea here...

What if you did max your 401k now for the tax advantages over just using a brokerage if you 100% want this for retirement, and then paid yourself a small amount/same amount out of the 65k until it's all gone into your IRA/401k. Can keep the money in a high interest savings until then?

Just a thought.

carguy1993
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Re: Where to put 65k cash

Post by carguy1993 » Sun Jul 09, 2017 7:34 pm

It is an idea. Im not sure how much risk I can handle but I have 35-40 years for the market to ride through so I am assuming agressiveish? But I am conservative by nature. But want a minimum annual return of 5% in order to meet retirement needs.

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Re: Where to put 65k cash

Post by jimb_fromATL » Sun Jul 09, 2017 7:49 pm

carguy1993 wrote:It is an idea. Im not sure how much risk I can handle but I have 35-40 years for the market to ride through so I am assuming agressiveish? But I am conservative by nature. But want a minimum annual return of 5% in order to meet retirement needs.
You don't have to take any more risk in a 401(k) than you do in a taxable account or IRA. Virtually all 401(k) plans have at least some lower risk bond or stable value funds choices. In a way you're not putting as much money at riak anyway, because some of the money would otherwise have been paid in taxes and would be doing nothing for you for the next 35-40 years.



jimb

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Re: Where to put 65k cash

Post by triceratop » Sun Jul 09, 2017 7:53 pm

carguy1993 wrote:I just started a 401k at my job and they will match 3% so I put 7% in there. I make 30k a year before taxes.
Does your job have a Roth 401k option?
"To play the stock market is to play musical chairs under the chord progression of a bid-ask spread."

carguy1993
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Re: Where to put 65k cash

Post by carguy1993 » Sun Jul 09, 2017 8:01 pm

I put 7% they match 3%. Just started that last week. Its a traditional 401k pre tax dollars not roth.

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Re: Where to put 65k cash

Post by jimb_fromATL » Mon Jul 10, 2017 10:24 am

Here are some numbers to help put the volatility – the risk versus reward – in perspective for Wellington and Wellesley. This also shows rolling averages for shorter time periods using monthly total performance data, to illustrate the differences that depend on whether you may be starting the investment while the market is in a peak or lull.

Long term growth of lump sum:
  • VG Wellesley: For VWINX for 36. years from 12/1980 through 12/2016 the CAGR (Compound Annual Growth Rate, or APY) for a lump sum investment has been 9.805%. $65,000 would have grown to $2,186,288..

    VG Wellington: For VWELX for 36. years from 12/1980 through 12/2016 the CAGR (Compound Annual Growth Rate, or APY) for a lump sum investment has been 10.019%. $65,000 would have grown to $2,359,312..
Long term growth for DCA (Dollar Cost Averaging)
  • VG Wellesley: For VWINX for 36. years from 12/1980 through 12/2016 DCA contributions of $400 per month would have grown to $1,259,758 with an APY of 8.85%.

    VG Wellington: For VWELX for 36. years from 12/1980 through 12/2016 DCA contributions of $400 per month would have grown to $1,449,308 with an APY of 9.38%
5 years rolling lump sum
  • For 373 rolling 60 month periods in VWINX the average for a lump sum has been 9.75%. On the average, $65,000 would have grown to $105,629. . The worst rolling 60 month period for a lump sum of $65,000 with a total gain of 5.01% (.98% APY) would have been worth $68,259 at the end of 02/2009. The best lump sum with an APY of 20.18% would have been worth $176,782 at the end of 08/1986.

    For 373 rolling 60 month periods in VWELX the average for a lump sum has been 10.08%. On the average, $65,000 would have grown to $107,381. . The worst rolling 60 month period for a lump sum of $65,000 with a total drop of 1.08% (-.22% APY) would have been worth $64,298 at the end of 02/2009. The best lump sum with an APY of 20.94% would have been worth $183,499 at the end of 07/1987.
10 years rolling lump sum
  • VG Wellesley: For VWINX For 313 rolling 120 month periods in VWINX the average for a lump sum has been 9.39%. On the average, $65,000 would have grown to $165,559. . The worst rolling 120 month period for a lump sum of $65,000 with a total gain of 51.84% (4.18% APY) would have been worth $98,694 at the end of 02/2009. The best lump sum with an APY of 15.% would have been worth $288,541 at the end of 07/1992.

    VG Wellington: For 313 rolling 120 month periods in VWELX the average for a lump sum has been 9.8%. On the average, $65,000 would have grown to $172,427. . The worst rolling 120 month period for a lump sum of $65,000 with a total gain of 40.73% (3.42% APY) would have been worth $91,472 at the end of 02/2009. The best lump sum with an APY of 14.39% would have been worth $271,643 at the end of 07/1992.
15 years lump sum
  • VG Wellesley: For 253 rolling 180 month periods in VWINX the average for a lump sum has been 9.39%. On the average, $65,000 would have grown to $264,321. . The worst rolling 180 month period for a lump sum of $65,000 with a total gain of 166.05% (6.54% APY) would have been worth $172,930 at the end of 02/2016. The best lump sum with an APY of 13.91% would have been worth $517,163 at the end of 07/1997.

    VG Wellington: For 253 rolling 180 month periods in VWELX the average for a lump sum has been 9.93%. On the average, $65,000 would have grown to $286,353. . The worst rolling 180 month period for a lump sum of $65,000 with a total gain of 167.43% (6.58% APY) would have been worth $173,828 at the end of 01/2016. The best lump sum with an APY of 14.71% would have been worth $582,235 at the end of 07/1997.

jmb

carguy1993
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Re: Where to put 65k cash

Post by carguy1993 » Mon Jul 10, 2017 12:24 pm

I like the Wellington just dont know if I should choose Vanguard Wellington or Vanguard Target Retirement 2055. Wellington is 65/35 TR2055 is 90/10 but TR has more diversity with international and will hopefully lower such risk but Wellington has the track history. Both good funds but which one is better for the 10, 20, 30, 40 year period? Mutual fund or index fund is pretty much the debate between these two great Vanguard funds.

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Re: Where to put 65k cash

Post by zuma » Mon Jul 10, 2017 12:29 pm

carguy1993 wrote:I like the Wellington just dont know if I should choose Vanguard Wellington or Vanguard Target Retirement 2055. Wellington is 65/35 TR2055 is 90/10 but TR has more diversity with international and will hopefully lower such risk but Wellington has the track history. Both good funds but which one is better for the 10, 20, 30, 40 year period? Mutual fund or index fund is pretty much the debate between these two great Vanguard funds.
I think you're approaching this the wrong way.

Your first step should be to choose an appropriate asset allocation to match your need, ability, and willingness to take risk.

After that (not before), start looking for a fund or a combination of funds to realize your desired allocation.

carguy1993
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Re: Where to put 65k cash

Post by carguy1993 » Mon Jul 10, 2017 12:31 pm

Ideally 50/50 to 60/40 because I couldn't withstand to lose more than 25% of my fund in a given year. But I want very diverse, safe, and atleast a 5-7% return on my investments.

carguy1993
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Re: Where to put 65k cash

Post by carguy1993 » Mon Jul 10, 2017 12:32 pm

But its tough because bonds are pretty volatile as well but doesnt have the same returns as stocks. So definitely diverse. Should I go index with TR2055 or mutual fund with Wellington admiral?

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Re: Where to put 65k cash

Post by dbr » Mon Jul 10, 2017 12:42 pm

carguy1993 wrote:Ideally 50/50 to 60/40 because I couldn't withstand to lose more than 25% of my fund in a given year. But I want very diverse, safe, and atleast a 5-7% return on my investments.
It is highly likely that your understanding of safe and 5%-7% return is highly marginal. If you want no more than 50% stocks then it makes no sense whatsoever to be suggesting TR2055 at 90% stocks. It is not crazy to hope for 5% expected return over thirty years from a 50/50 allocation, but it would be important to understand the chances of falling below that result in reality. Note 5% expected return involves about half the outcomes being less than that.

carguy1993
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Re: Where to put 65k cash

Post by carguy1993 » Mon Jul 10, 2017 12:46 pm

Then I would rather take alittle more risk to cover the performance of less than 5% roi if that makes sense?

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Re: Where to put 65k cash

Post by zuma » Mon Jul 10, 2017 12:47 pm

carguy1993 wrote:Should I go index with TR2055 or mutual fund with Wellington admiral?
Neither of those funds match your desired allocation, which you just said would ideally be 50/50 to 60/40.

I would stop looking at funds for a moment. Think hard about what asset allocation is right for you. What you've written so far suggests to me that you aren't really sure.

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Re: Where to put 65k cash

Post by dbr » Mon Jul 10, 2017 12:54 pm

carguy1993 wrote:Then I would rather take a little more risk to cover the performance of less than 5% roi if that makes sense?
What makes sense is to

1. Run some Monte Carlo or historical data models to see what rates of saving and asset allocations enable you to enter retirement able to spend what you think you want at what possibilities of not making the lowest acceptable outcome. Rather than worry about the difference between need and want, just think in terms of objectives. At this step you can see how much you might benefit from taking more risk.

As an example if you enter FireCalc with zero portfolio, $10K contribution for 30 years, and then retire for 30 years spending $30k a year, then if the portfolio is 50/50 the failure rate is 29%, at 60/40 it is 8%, and at 70/30 it is 2%. Models like this involve a lot of uncertainty that is not reported alongside the results, but you can get the picture.

2. Look at your ability to cope with the situation if positive results don't materialize. How much ability would you have to work more, save more, or adjust your objectives. How much of your situation is protected by prospective SS, pensions, and other income sources.

3. Consider your psychological ability to stay the course in case of adverse results. If you are 90/10 would you persevere if your assets fell by half, by 75%, etc. What is your committment to stay with what you choose.

carguy1993
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Re: Where to put 65k cash

Post by carguy1993 » Mon Jul 10, 2017 1:57 pm

Where can I find that model calculator and any hit I face now. 30-40 years the market will rebound.

dbr
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Re: Where to put 65k cash

Post by dbr » Mon Jul 10, 2017 2:16 pm

carguy1993 wrote:Where can I find that model calculator and any hit I face now. 30-40 years the market will rebound.
https://www.bogleheads.org/wiki/Retirem ... d_spending

also

www.cfiresim.org

These pages might be helpful:

http://www.firecalc.com/intro.php
http://www.cfiresim.com/faq.php

MoonOrb
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Re: Where to put 65k cash

Post by MoonOrb » Mon Jul 10, 2017 2:58 pm

OP, read the getting started section on the wiki if you haven't already; after that take a while to read one or two of the recommended books on planning for retirement.

It's great that people here are so willing to jump in with suggestions for you but you are in a position where learning some basic principles will (1) make the answers you receive make more sense and (2) let you reap the rewards for the rest of your life by understanding these things early on.

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Re: Where to put 65k cash

Post by jimb_fromATL » Mon Jul 10, 2017 3:49 pm

carguy1993 wrote:Ideally 50/50 to 60/40 because I couldn't withstand to lose more than 25% of my fund in a given year. But I want very diverse, safe, and at least a 5-7% return on my investments.
carguy1993 wrote:But its tough because bonds are pretty volatile as well but doesnt have the same returns as stocks. So definitely diverse. Should I go index with TR2055 or mutual fund with Wellington admiral?
If you don't want to see your portfolio drop 40% or more, you don't want a long-range target fund or anything with such a high ratio of equities. The target 2055 fund didn't exist during the crash of 2008, and it would have been hard for a fund not to do well in the recovery since around 2009. But target funds with aggressive allocations were terrible in the crash of 2008 ... far worse than Wellington or Wellesley.

From monthly performance data for a $65,000 lump sum:

VG Wellesley: For 421 rolling 12 month periods in VWINX the average for a lump sum has been 9.95%. On the average, $65,000 would have grown to $71,769. The worst rolling 12 month period for a lump sum of $65,000 with a total drop of 16.5% (-17.9% APY) would have been worth $54,274 at the end of 02/2009. The best lump sum with an APY of 34.06% would have been worth $90,941 at the end of 06/1983.

VG Wellington: For 421 rolling 12 month periods in VWELX the average for a lump sum has been 10.21%. On the average, $65,000 would have grown to $71,957. The worst rolling 12 month period for a lump sum of $65,000 with a total drop of 28.71% (-33.37% APY) would have been worth $46,339 at the end of 02/2009. The best lump sum with an APY of 43.04% would have been worth $99,211 at the end of 06/1983.

Here's the S&P 500:

VG S&P 500 Index: For 421 rolling 12 month periods in VFINX the average for a lump sum has been 9.75%. On the average, $65,000 would have grown to $71,630. The worst rolling 12 month period for a lump sum of $65,000 with a total drop of 43.33% (-55.46% APY) would have been worth $36,838 at the end of 02/2009. The best lump sum with an APY of 45.67% would have been worth $101,755 at the end of 06/1983.

Here's a target fund that did exist during the crash of 2008.

Vanguard Target 2040: For VFORX for 11. years from 07/2006 through 07/2017 For 121 rolling 12 month periods in VFORX the average for a lump sum has been 5.6%. On the average, $65,000 would have grown to $68,737. The worst rolling 12 month period for a lump sum of $65,000 with a total drop of 40.8% (-51.3% APY) would have been worth $38,480 at the end of 02/2009. The best lump sum with an APY of 42.93% would have been worth $99,106 at the end of 02/2010.

Wellesley and Wellington look better and better. They average out about as well as more aggressive funds, and don't have the heart-stopping factor in the bad times.

jimb

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Re: Where to put 65k cash

Post by Explorer » Mon Jul 10, 2017 7:12 pm

If I am going to invest $65K today all at once, I will invest in Wellesley - period and end of story.

Don't fall for the recency bias (of the last 8 years being a great bull market) - the market has gone up with borrowed/printed money across the world.

Wellesley Wellesley Wellesley... one answer for all your investing questions.

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Re: Where to put 65k cash

Post by radiowave » Mon Jul 10, 2017 7:40 pm

carguy1993 wrote:In Vanguard Target Retirement 2055 fund. Im willing to let it sit and continue to contribute $500 a month until age 60-65 when Im nearing retirement. I am conservative by nature but want a good return. I have no debt at all but also no house but planning to put a 20% down payment by the time I am in my 30s. IRAs a hard because you can only imvest 5500 per year. I need somewhere to invest 65k that will earn money but tax friendly.
You have competing interests, long term investment for retirement vs. a possible future house down payment. The absolute safest place in the short term would be in a high yield, FDIC insured savings account or CD, e.g. Ally has a 1.15% savings rate or 1.50% 11 mo CD. That's not the 5% long term return you're looking for on the retirement side but is prevents a deep loss in capital if you invest, then try to buy a house in a deep market downturn and don't have enough liquidity for the down payment. If you don't want to use the $65K for down payment, then the options above are certainly worthwhile to consider for long term investment geared towards retirement. I am assuming that most of the $65K would go into a taxable account. Personally, for the long haul, I would invest the $ in a taxable account using a total US stock fund (e.g. Vanguard VTSAX) and the equivalent VG total international fund then use the 401k to invest in the bond portion of your portfolio as needed to achieve your desired asset allocation.
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Re: Where to put 65k cash

Post by radiowave » Mon Jul 10, 2017 7:41 pm

Explorer wrote:If I am going to invest $65K today all at once, I will invest in Wellesley - period and end of story.

Don't fall for the recency bias (of the last 8 years being a great bull market) - the market has gone up with borrowed/printed money across the world.

Wellesley Wellesley Wellesley... one answer for all your investing questions.
Is Wellesley a good choice for a taxable account?
Bogleheads Wiki: https://www.bogleheads.org/wiki/Main_Page

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Re: Where to put 65k cash

Post by Goal33 » Mon Jul 10, 2017 9:09 pm

If your job has a Roth 401k, maxing that out and using the 65k to live until you run out of money is the obvious answer to me. And maybe by the time you run out of the 65k. Maybe if your lucky your earnings will go up and you'll never spend the 65k.
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carguy1993
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Re: Where to put 65k cash

Post by carguy1993 » Mon Jul 10, 2017 10:30 pm

jimb_fromATL wrote:
carguy1993 wrote:Ideally 50/50 to 60/40 because I couldn't withstand to lose more than 25% of my fund in a given year. But I want very diverse, safe, and at least a 5-7% return on my investments.
carguy1993 wrote:But its tough because bonds are pretty volatile as well but doesnt have the same returns as stocks. So definitely diverse. Should I go index with TR2055 or mutual fund with Wellington admiral?
If you don't want to see your portfolio drop 40% or more, you don't want a long-range target fund or anything with such a high ratio of equities. The target 2055 fund didn't exist during the crash of 2008, and it would have been hard for a fund not to do well in the recovery since around 2009. But target funds with aggressive allocations were terrible in the crash of 2008 ... far worse than Wellington or Wellesley.

From monthly performance data for a $65,000 lump sum:

VG Wellesley: For 421 rolling 12 month periods in VWINX the average for a lump sum has been 9.95%. On the average, $65,000 would have grown to $71,769. The worst rolling 12 month period for a lump sum of $65,000 with a total drop of 16.5% (-17.9% APY) would have been worth $54,274 at the end of 02/2009. The best lump sum with an APY of 34.06% would have been worth $90,941 at the end of 06/1983.

VG Wellington: For 421 rolling 12 month periods in VWELX the average for a lump sum has been 10.21%. On the average, $65,000 would have grown to $71,957. The worst rolling 12 month period for a lump sum of $65,000 with a total drop of 28.71% (-33.37% APY) would have been worth $46,339 at the end of 02/2009. The best lump sum with an APY of 43.04% would have been worth $99,211 at the end of 06/1983.

Here's the S&P 500:

VG S&P 500 Index: For 421 rolling 12 month periods in VFINX the average for a lump sum has been 9.75%. On the average, $65,000 would have grown to $71,630. The worst rolling 12 month period for a lump sum of $65,000 with a total drop of 43.33% (-55.46% APY) would have been worth $36,838 at the end of 02/2009. The best lump sum with an APY of 45.67% would have been worth $101,755 at the end of 06/1983.

Here's a target fund that did exist during the crash of 2008.

Vanguard Target 2040: For VFORX for 11. years from 07/2006 through 07/2017 For 121 rolling 12 month periods in VFORX the average for a lump sum has been 5.6%. On the average, $65,000 would have grown to $68,737. The worst rolling 12 month period for a lump sum of $65,000 with a total drop of 40.8% (-51.3% APY) would have been worth $38,480 at the end of 02/2009. The best lump sum with an APY of 42.93% would have been worth $99,106 at the end of 02/2010.

Wellesley and Wellington look better and better. They average out about as well as more aggressive funds, and don't have the heart-stopping factor in the bad times.

jimb
Thats where I am leaning. I have my yearly dividends due at the end of september for vanguard tr2055 fund but before the end of 2017 will go to Wellington or Wellesley.

Explorer
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Re: Where to put 65k cash

Post by Explorer » Tue Jul 11, 2017 7:18 pm

Absolutely! Many people argue that Wellesley throws a lot of income and thus unsuitable for taxable accounts.

True but what do you do if the money you have available to invest is in a taxable account? Do you get into riskier funds just for the sake of taxes??

ABSOLUTELY NOT.

Your risk consideration has to be the first priority.. Taxes next. There is nothing wrong in sharing a portion of your earnings with Uncle Sam..

Best of Luck.
radiowave wrote:
Explorer wrote:If I am going to invest $65K today all at once, I will invest in Wellesley - period and end of story.

Don't fall for the recency bias (of the last 8 years being a great bull market) - the market has gone up with borrowed/printed money across the world.

Wellesley Wellesley Wellesley... one answer for all your investing questions.
Is Wellesley a good choice for a taxable account?

amateurnovice
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Re: Where to put 65k cash

Post by amateurnovice » Tue Jul 11, 2017 7:43 pm

Plenty of good individual stocks to put that in and reinvest the dividends without worrying about which fund or why. Funds are so high right now, you'd be getting in and possibly staying at a plateau for a while. I'd look at some individual companies that are competing against others and have grown - midcap banks, large cap retail, midcap energy - lots of potential for growth plus reinvestment and you're not stuck in a high priced fund, but it's your call.
Last edited by amateurnovice on Tue Jul 11, 2017 8:33 pm, edited 1 time in total.

MoonOrb
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Re: Where to put 65k cash

Post by MoonOrb » Tue Jul 11, 2017 8:12 pm

amateurnovice wrote:Plenty of good individual stocks to put that in and reinvest the dividends without worrying about which fund or why. Funds are so high right now, you'd be getting in and possibly staying at a plateau for a while. I'd look at some individual companies that are competing against others and have grown - midcap banks, large cap retail, midcap energy - lots of potential for growth plus reinvestment and you're not stuck in a high priced fund, but it's you're call.
:confused

amateurnovice
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Re: Where to put 65k cash

Post by amateurnovice » Tue Jul 11, 2017 8:33 pm

MoonOrb wrote:
amateurnovice wrote:Plenty of good individual stocks to put that in and reinvest the dividends without worrying about which fund or why. Funds are so high right now, you'd be getting in and possibly staying at a plateau for a while. I'd look at some individual companies that are competing against others and have grown - midcap banks, large cap retail, midcap energy - lots of potential for growth plus reinvestment and you're not stuck in a high priced fund, but it's your call.
:confused

8-)

Out of the frying pan and into the fire, stocks or funds, your call. If you're willing to put in the effort to analyze funds, the same can be done to stocks. Just sayin'.

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InKirkWeTrust
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Re: Where to put 65k cash

Post by InKirkWeTrust » Tue Jul 11, 2017 8:45 pm

My advice,

If you want to save it all for retirement:

$5500 - Total Bond Market in Roth IRA
$59,500 - Total Stock Market in taxable account

This is 91.5/8.5 stock to bond allocation, which for your age (TR 2055 makes you <30?) is fine. You can then direct future Roth contributions to Total Bond Market to get up to 80/20 or 70/30 or whatever you prefer in a few years.

If you are planning on buying a house in 5 years or less:

$65,000 - High-interest savings account like Ally @ 1.15%

If you want to buy a house in the near future, then keep your cash. You are going to need it.

Good luck with your decision!
Control the controllables

zuma
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Re: Where to put 65k cash

Post by zuma » Wed Jul 12, 2017 2:27 am

amateurnovice wrote:
MoonOrb wrote:
amateurnovice wrote:Plenty of good individual stocks to put that in and reinvest the dividends without worrying about which fund or why. Funds are so high right now, you'd be getting in and possibly staying at a plateau for a while. I'd look at some individual companies that are competing against others and have grown - midcap banks, large cap retail, midcap energy - lots of potential for growth plus reinvestment and you're not stuck in a high priced fund, but it's your call.
:confused

8-)

Out of the frying pan and into the fire, stocks or funds, your call. If you're willing to put in the effort to analyze funds, the same can be done to stocks. Just sayin'.
The relevant issue here is diversification -- a core Boglehead principle. "Funds are so high right now", even if true, is not a compelling reason to abandon that principle. The amount of effort you put into analysis is beside the point. Even if you think you've picked 30 winning stocks, if that's all you hold, you aren't diversified.

BD w/ Kung-Fu Grip
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Re: Where to put 65k cash

Post by BD w/ Kung-Fu Grip » Wed Jul 12, 2017 7:53 am

carguy1993 wrote:I just started a 401k at my job and they will match 3% so I put 7% in there. I make 30k a year before taxes.
Why not 60%? Pay no taxes for the year by effectively putting ~16k of your 65k into your 401k.

amateurnovice
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Re: Where to put 65k cash

Post by amateurnovice » Wed Jul 12, 2017 8:39 am

zuma wrote:
amateurnovice wrote:
MoonOrb wrote:
amateurnovice wrote:Plenty of good individual stocks to put that in and reinvest the dividends without worrying about which fund or why. Funds are so high right now, you'd be getting in and possibly staying at a plateau for a while. I'd look at some individual companies that are competing against others and have grown - midcap banks, large cap retail, midcap energy - lots of potential for growth plus reinvestment and you're not stuck in a high priced fund, but it's your call.
:confused

8-)

Out of the frying pan and into the fire, stocks or funds, your call. If you're willing to put in the effort to analyze funds, the same can be done to stocks. Just sayin'.
The relevant issue here is diversification -- a core Boglehead principle. "Funds are so high right now", even if true, is not a compelling reason to abandon that principle. The amount of effort you put into analysis is beside the point. Even if you think you've picked 30 winning stocks, if that's all you hold, you aren't diversified.
put some in a bond fund to level off the volatility, big deal. diversify among industries, caps, growth, value, energy, etc.

MoonOrb
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Re: Where to put 65k cash

Post by MoonOrb » Wed Jul 12, 2017 8:44 am

What if you were to accomplish that diversification by buying a fund like Total Stock Market? Sounds like a solid plan to me.

amateurnovice
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Re: Where to put 65k cash

Post by amateurnovice » Wed Jul 12, 2017 1:11 pm

MoonOrb wrote:What if you were to accomplish that diversification by buying a fund like Total Stock Market? Sounds like a solid plan to me.
Sounds like putting all the eggs in one basket, which isn't a great idea if you've ever bought any eggs.

zuma
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Re: Where to put 65k cash

Post by zuma » Wed Jul 12, 2017 1:22 pm

amateurnovice wrote:
MoonOrb wrote:What if you were to accomplish that diversification by buying a fund like Total Stock Market? Sounds like a solid plan to me.
Sounds like putting all the eggs in one basket, which isn't a great idea if you've ever bought any eggs.
Could you elaborate? How would you describe the risks of the TSM basket?

amateurnovice
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Re: Where to put 65k cash

Post by amateurnovice » Wed Jul 12, 2017 1:43 pm

zuma wrote:
amateurnovice wrote:
MoonOrb wrote:What if you were to accomplish that diversification by buying a fund like Total Stock Market? Sounds like a solid plan to me.
Sounds like putting all the eggs in one basket, which isn't a great idea if you've ever bought any eggs.
Could you elaborate? How would you describe the risks of the TSM basket?
First off, I'm not going sway anyone's thinking here so I'm not going to open myself up for ad hominems. I'll give my brief assessment which is easily eviscerated by boglehead "stay the course" logic because, honestly, there isn't much to that argument and every deviation from it is flat out wrong, that's indisputable. "Staying the course" is simple, elegant, and not risky. That's just it though - the stock market (the whole market not just large caps or energy companies) is actually very risky - something that is sorta forgotten when you have a very easy methodology that has been rewritten as many times as the King James version of the Bible. It's watered down and eggheady and doesn't apply to everyone's needs.

Without getting too specific into OP's profile, I think he said $30,000 and knows he can't throw it all at once in an IRA, but the money is for retirement so he wants it to grow, am I right? I'm not going to go screen capture the cost of VTSMX but it's pricier than it's ever been. That's indisputable, but it may go higher right, endlessly higher? That's what everyone here seems to be trying to suggest as a counterpoint. I guess it could keep going up from there, or it could drastically turn down, could that happen? $65,000 isn't life changing money, but who knows, he may have more, but $30,000 a year isn't usually considered life changing. VTSMX may not go down much if any and could hover around the same cost, but what does $65,000 do in one fund if that fund doesn't grow any more from where it's at or worse, loses value considerably due to cyclical economic effects. I guess he's just SOL, but hey, stay the course with whatever you've got left, that'll show 'em.

I don't want to get into all the worldly effects that are driving this bull and signaling the prospect of a potential bear because the thread will be locked, but to me, VTSMX is high right now, just as the overall market is. You can think it isn't all you want and so can everybody else. But I think that won't hold up outside of an internet forum thread.

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