Where do I put 50k I don't need?
Where do I put 50k I don't need?
I want the 50k back someday of course, but I'm not sure when. It's not for retirement or emergency but maybe I'll buy something frivolous in 5-7 years. I don't want to simply put it in a bank nor do I want 100% stock index where it may be down 50%. Perhaps a 50/50 blend between equity and bonds. Any ideas?
- ResearchMed
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Re: Where do I put 50k I don't need?
Oh. I had a GREAT idea for you, but....zz4 wrote: ↑Mon Dec 11, 2017 7:17 pm I want the 50k back someday of course, but I'm not sure when. It's not for retirement or emergency but maybe I'll buy something frivolous in 5-7 years. I don't want to simply put it in a bank nor do I want 100% stock index where it may be down 50%. Perhaps a 50/50 blend between equity and bonds. Any ideas?
... In the title, you didn't mention you wanted it back someday
RM
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Re: Where do I put 50k I don't need?
Place it in bitcoin.
Lights match.... watches the thread catch fire.
In all reality I'd just total market index this, or a 60/40 balanced fund.
Lights match.... watches the thread catch fire.
In all reality I'd just total market index this, or a 60/40 balanced fund.
Re: Where do I put 50k I don't need?
Answer depends entirely upon your other assets. Assuming you have substantial other investments, just invest according to your predefined asset allocation. The timeline and purpose is too ill-defined to waste time with mental accounting on this.
Re: Where do I put 50k I don't need?
My other assets are fine. I just need a place to store the 50k where I can take some risks, but not all out. Something in the Fidelity family would be nice.
- ruralavalon
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Re: Where do I put 50k I don't need?
Vanguard Balanced Index Fund Admiral Shares (VBIAX) ER 0.07%.zz4 wrote: ↑Mon Dec 11, 2017 7:17 pm I want the 50k back someday of course, but I'm not sure when. It's not for retirement or emergency but maybe I'll buy something frivolous in 5-7 years. I don't want to simply put it in a bank nor do I want 100% stock index where it may be down 50%. Perhaps a 50/50 blend between equity and bonds. Any ideas?
Fidelity doesn't have a balanced index fund with anything like a 50/50 asset allocation.
But for an undefined purpose at an indefinite time, I suggest just investing "as if" for retirement using your ordinary asset allocation.
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: Where do I put 50k I don't need?
The default is to do a stock/bond mix with as many bonds as you're comfortable with.
Alternatively, you might do something like 35K in CDs (or something else safe) and 15K in something aggressive (small caps, emerging markets, etc.). With this, the bulk of the money is very safe to give you a nice floor, but you have that aggressive portion to give you some upside.
Yet another option you might look at would be to reduce the risk/volatility more on the equity side (low volatility funds, for example).
Alternatively, you might do something like 35K in CDs (or something else safe) and 15K in something aggressive (small caps, emerging markets, etc.). With this, the bulk of the money is very safe to give you a nice floor, but you have that aggressive portion to give you some upside.
Yet another option you might look at would be to reduce the risk/volatility more on the equity side (low volatility funds, for example).
Re: Where do I put 50k I don't need?
Vanguard Balanced Index Fund.
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee
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Re: Where do I put 50k I don't need?
If you want fidelity you could do a blend of ITOT and AGG in the fidelity ETF family.
- ruralavalon
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Re: Where do I put 50k I don't need?
If you want Fidelity you could use a 50/50 mix of:
Fidelity Total Stock Market Index Fund Premium Class (FSTVX) ER 0.035%
Fidelity U.S. Aggregate Bond Index Fund Premium Class (FSITX) ER 0.045%
Fidelity Total Stock Market Index Fund Premium Class (FSTVX) ER 0.035%
Fidelity U.S. Aggregate Bond Index Fund Premium Class (FSITX) ER 0.045%
"Everything should be as simple as it is, but not simpler." - Albert Einstein |
Wiki article link: Bogleheads® investment philosophy
Re: Where do I put 50k I don't need?
This question seems to have a wrong premise.
The OP has money that has no purpose today, but will sometime in the future.
What other money might the OP have that shares similar characteristics? Money for retirement?
There is only one correct strategy, and that is invest it alongside/in the same pool of funds for all other money that has no specific need. 50/50, 80/20, whatever the OP has settled on.
Now, this could be in a taxable account -- that's fine -- just treat all the money as one big pool of cash and strategically place tax efficient stuff there and don't trade all that often (if at all). But it's not invested any differently than the rest of your funds.
NOTE, and this is important, that WHEN this money gets a name -- maybe a roof remodel, or a major vacation, or a car, or a house downpayment -- get it to cash equivalent and rebalance the rest of your portfolio.
Simple, ain't it?
The OP has money that has no purpose today, but will sometime in the future.
What other money might the OP have that shares similar characteristics? Money for retirement?
There is only one correct strategy, and that is invest it alongside/in the same pool of funds for all other money that has no specific need. 50/50, 80/20, whatever the OP has settled on.
Now, this could be in a taxable account -- that's fine -- just treat all the money as one big pool of cash and strategically place tax efficient stuff there and don't trade all that often (if at all). But it's not invested any differently than the rest of your funds.
NOTE, and this is important, that WHEN this money gets a name -- maybe a roof remodel, or a major vacation, or a car, or a house downpayment -- get it to cash equivalent and rebalance the rest of your portfolio.
Simple, ain't it?
Re: Where do I put 50k I don't need?
ruralavalon wrote: ↑Tue Dec 12, 2017 7:32 am If you want Fidelity you could use a 50/50 mix of:
Fidelity Total Stock Market Index Fund Premium Class (FSTVX) ER 0.035%
Fidelity U.S. Aggregate Bond Index Fund Premium Class (FSITX) ER 0.045%
Wow! That was exactly what I came up with too. I think it is sound.
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Re: Where do I put 50k I don't need?
Personally, I'd put it in some mix of TSM and international TSM in my taxable account. If a crash happens, then TLH it to a similar fund.
I wouldn't use a balanced fund in taxable for two reasons: bond dividends get taxed as ordinary income; and if stock market crash happens, TLHing is not as clean...
I wouldn't use a balanced fund in taxable for two reasons: bond dividends get taxed as ordinary income; and if stock market crash happens, TLHing is not as clean...
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Re: Where do I put 50k I don't need?
You lost me at TLH. What is that? Tax loss harvesting? How does it work?The Wizard wrote: ↑Tue Dec 12, 2017 9:33 am Personally, I'd put it in some mix of TSM and international TSM in my taxable account. If a crash happens, then TLH it to a similar fund.
I wouldn't use a balanced fund in taxable for two reasons: bond dividends get taxed as ordinary income; and if stock market crash happens, TLHing is not as clean...
Re: Where do I put 50k I don't need?
If you want more than the minimal risk of cash and less than the minimal risk of 100% stocks and there is no more information than that, then you have answered your own question. What is it that you think remains to be discussed?
Re: Where do I put 50k I don't need?
https://www.bogleheads.org/wiki/Tax_loss_harvesting The Wiki is a great resource for a lot of information about investing.zz4 wrote: ↑Tue Dec 12, 2017 9:38 amYou lost me at TLH. What is that? Tax loss harvesting? How does it work?The Wizard wrote: ↑Tue Dec 12, 2017 9:33 am Personally, I'd put it in some mix of TSM and international TSM in my taxable account. If a crash happens, then TLH it to a similar fund.
I wouldn't use a balanced fund in taxable for two reasons: bond dividends get taxed as ordinary income; and if stock market crash happens, TLHing is not as clean...
Re: Where do I put 50k I don't need?
How did you arrive at the 50k number? Is that the cost of the future possible frivolous expense? It seems many people who ask questions like this want to know what to do with some money they came into at one time--proceeds of a home sale, work bonus, something like that. But once it's yours it doesn't matter how you got it. If that's your case, this 50k is like every other dollar you have and should be treated as such.
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Re: Where do I put 50k I don't need?
I might mention that this is exactly what I'm doing with spare cash for my New Car Fund, 100% stocks in my taxable account.The Wizard wrote: ↑Tue Dec 12, 2017 9:33 am Personally, I'd put it in some mix of TSM and international TSM in my taxable account. If a crash happens, then TLH it to a similar fund...
In the event of a crash just before the time I'm ready to buy the new car, then Plan B kicks in: get a car loan for a good portion of the cost and give the TLHed stock funds time to recover...
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- tennisplyr
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Re: Where do I put 50k I don't need?
+1 I did this about a year agoruralavalon wrote: ↑Mon Dec 11, 2017 8:10 pmVanguard Balanced Index Fund Admiral Shares (VBIAX) ER 0.07%.zz4 wrote: ↑Mon Dec 11, 2017 7:17 pm I want the 50k back someday of course, but I'm not sure when. It's not for retirement or emergency but maybe I'll buy something frivolous in 5-7 years. I don't want to simply put it in a bank nor do I want 100% stock index where it may be down 50%. Perhaps a 50/50 blend between equity and bonds. Any ideas?
Fidelity doesn't have a balanced index fund with anything like a 50/50 asset allocation.
But for an undefined purpose at an indefinite time, I suggest just investing "as if" for retirement using your ordinary asset allocation.
“Those who move forward with a happy spirit will find that things always work out.” -Retired 13 years 😀
Re: Where do I put 50k I don't need?
It's weird to me to say that you don't really need it, or that maybe you can spend it on something frivolous in a few years. I say that because what if your investments that you do "need" take a big hit from a market crash or something similar? Invest it wisely, just as you would anything else. Who knows what life will throw at you!
Re: Where do I put 50k I don't need?
jwaxjwax wrote: ↑Tue Dec 12, 2017 6:16 pm It's weird to me to say that you don't really need it, or that maybe you can spend it on something frivolous in a few years. I say that because what if your investments that you do "need" take a big hit from a market crash or something similar? Invest it wisely, just as you would anything else. Who knows what life will throw at you!
I meant that to mean I don't need it now. Maybe in 5-7 years I would consider a remodel or a new boat. The point is if it drops 50% I'd be mad but I would simply wait for it to rebound. These funds are unlike an emergency fund, where I would feel significant pain if it dropped when I needed to access it. Your most valid point does make me think of the great "what if?".
Re: Where do I put 50k I don't need?
I have a taxable account at Wealthfront, where i put all the money I don't "need", over and above maxing out both of our 401k accounts and funding my son's 529. I let their algorithms invest it (and TLH as appropriate), based on my 8.5 score on their risk assessment.
Some of this money will be used at some indeterminate point to buy a car, or perhaps to further fund my son's education. But most of it will likely wind up being retirement money.
Some of this money will be used at some indeterminate point to buy a car, or perhaps to further fund my son's education. But most of it will likely wind up being retirement money.
Re: Where do I put 50k I don't need?
Buying a separate fund might help your mind keep the allocation to frivolous.
I like simplicity and value holding few funds.
But I know me, and I know if I put 50k into index funds I already owned, I'd be less likely to spend it in future if I wanted to. (vs say, checking my frivolous mutual fund value to see what indulgent thing I could buy)
I like simplicity and value holding few funds.
But I know me, and I know if I put 50k into index funds I already owned, I'd be less likely to spend it in future if I wanted to. (vs say, checking my frivolous mutual fund value to see what indulgent thing I could buy)
Re: Where do I put 50k I don't need?
I use Vanguard's Wellesley fund for money like this. It's conservatively invested in dividend paying stocks and bonds. It does throw off taxable income if not in a tax sheltered account.
I just moved the rest of my money from Vanguard to Fidelity so I will lose the admiral E/R, but I think it will be worth it in the long run.
I just moved the rest of my money from Vanguard to Fidelity so I will lose the admiral E/R, but I think it will be worth it in the long run.
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Re: Where do I put 50k I don't need?
I had $55,000 that I didn't need in an ALLY Bank savings account for several years. I wanted that money to be liquid so that 1.55% interest was OK. When our 2 1/2 year old Subaru Forester turned out to be a little bit narrow for comfort and its 2.0 Turbo engine somewhat weak on steep dirt roads, we stopped by an Acura dealer on a lark. That night, we turned the Subaru over to the dealer with a $30,000 check and drove the Acura home.
We felt good that we could do that on a lark without batting an eye or second thought. That's what money you don't need is for: spend it on something you don't need but maybe...want.
We felt good that we could do that on a lark without batting an eye or second thought. That's what money you don't need is for: spend it on something you don't need but maybe...want.