Invest 400k Cash ?

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jagga
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Joined: Thu Sep 21, 2017 8:07 pm

Invest 400k Cash ?

Post by jagga » Sat Sep 23, 2017 1:54 pm

Emergency funds: $40k
Debt: $250k (Home Mortgage)
Tax Filing Status: Married Filing Jointly
Tax Rate: 20% Federal, ? % State
State of Residence: NJ
Age: 45
Desired Asset allocation: 70% stocks / 30% bonds
Desired International allocation: 20% of stocks

Current retirement assets
Rental Property Equity: $300k
Investment Property: $100k
Company Stock: $60k
Company Stock Grants: $300k
Fixed Deposit: $50k

His 401k: $379k (as below)

Name/Initial Purchase Date Asset Class Category % Invested Balance
FID US EQ INDX Stock Investments Large Cap 22.93% $86,941
FID US BOND IDX IS (FXSTX) Bond/Managed Income Income 21.48% $81,424
SS RSL SM CAP IDX S Stock Investments N/A 12.99% $49,230
BTC MID CAP EQ IDX M Stock Investments Mid-Cap 12.68% $48,059
DEUT REAL ESTATE IS (RRRRX) Stock Investments Specialty 10.37% $39,301
FID INTL INDEX INS (FSPNX) Stock Investments International 10.15% $38,494
FID DIVERSIFD INTL K (FDIKX) Stock Investments International 8.02% $30,408
PRU CORE PL BD CL 5 Bond/Managed Income Income 1.38% $5,225

Account Total 100% $379,082


Contributions
His 401k: $18k / Year (max)
Company Stock Grants: $60k / Year (pre-tax)
Taxable Contributions: $24k / Year (plan to add to the investment plan that is hashed out for the 400k cash below)

Available Cash for Investment
$400k

Questions
Need advice on where to invest (portfolio recommendation) the available cash given the current market highs?
Should all of it be invested at the same time (lump-sum) or in a staggered incremental manner?
Last edited by jagga on Sat Sep 23, 2017 4:06 pm, edited 1 time in total.

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prudent
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Re: Invest 400k Cash ?

Post by prudent » Sat Sep 23, 2017 2:03 pm

Welcome!

it's difficult to give a good answer without seeing the big picture. Can you edit your first post (using the pencil icon in the upper right corner) to provide your information in the format outlined here?

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TomatoTomahto
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Joined: Mon Apr 11, 2011 1:48 pm

Re: Invest 400k Cash ?

Post by TomatoTomahto » Sat Sep 23, 2017 3:00 pm

Welcome to the forum!

I won't address "where," but I can say that mathematically, the "how" favors a lump sum investment. That's assuming that you aren't inclined to bouts of "coulda, woulda, shoulda," in which case you could dollar cost average.

If you already have an AA, I would, as a first approximation, use that for a taxable account. If you want a more precise recommendation, people on this board will come forward after you post using the preferred format.

jagga
Posts: 2
Joined: Thu Sep 21, 2017 8:07 pm

Re: Invest 400k Cash ?

Post by jagga » Sat Sep 23, 2017 4:09 pm

Thanks for the prompt responses. Have edited the initial post with the details in the recommended format.

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prudent
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Re: Invest 400k Cash ?

Post by prudent » Mon Sep 25, 2017 5:03 am

Bump for a new member.

livesoft
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Re: Invest 400k Cash ?

Post by livesoft » Mon Sep 25, 2017 5:28 am

It appears, but I cannot be sure, that you have some accounts at Fidelity. So invest the $400K for the long-term in Fidelity index funds. I recommend that you do not put any bond funds in your taxable account, so just invest in a Total US Stock Market Index fund such as FSTVX and Total International Index fund FTIPX with the money in the taxable account in the proportion that you want.

But ALSO shift some of your equity funds in your 401(k) into the bond fund in your 401(k) to keep your overall portfolio at 30% of bonds. I didn't look at your current allocation, but 30% of $400K is $120K, so you will need to shift $120K of equity funds in your 401(k) into FXSTX in order to offset the extra $120K in equity funds in your taxable account.

When to invest? It's up to you:

1. Invest in Lump Sum all at once today or this week,
-or-
2. Invest 50% in Lump Sum all at once today or this, then the rest over the next 5 to 10 months. If you do this, tell us your schedule of doing this.
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TomatoTomahto
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Re: Invest 400k Cash ?

Post by TomatoTomahto » Mon Sep 25, 2017 6:40 am

In addition to livesoft's advice, which I agree with, there are some other suggestions I would make (which aren't part of your initial question).

1. Is the company stock ($60k) the result of a stock grant that vested and was then retained? I believe, and many BHs agree, that company stock is risky, in that so much of your financial future is tied into the performance of one company. My wife and I always sold our RSUs the instant that they vested -- sometimes we were the bug, sometimes we were the windshield, but in the end it worked out well. Since it appears that you have $300k of additional grants waiting to vest, you will still benefit from good company performance, and, typically, you will get additional grants every year (otherwise, they're not really handcuffs, are they?),

2. No offense, but your 401k appears to be a bit of a dog's breakfast. I would simplify that, as much as possible, into a low ER 4 fund-ish portfolio. If you absolutely have an urge to slice and dice, okay, but what effect does a 1.38% allocation to PRU CORE PL BD CL 5 Bond/Managed Income do for you?
Need advice on where to invest (portfolio recommendation) the available cash given the current market highs?
Don't go there. That's market timing; there be dragons. I've made many percent growth while the market has been at "current market highs." Someday, it will go down. Don't wait for that to happen.

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