When to invest 100000?

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vu8
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When to invest 100000?

Post by vu8 » Tue Jul 17, 2018 3:16 pm

Hi there, let's say right now I have 100000 and I want to invest them all into VTI. The bull market has been running for 10 years now and I am 100% sure that a crash (35-50%) is coming. In that situation, should I still dump my money into the stock market knowing that a crisis is not far away? Or should I wait until like the PE ratio drops down to like 10 and then invest?

WhiteMaxima
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Re: When to invest 100000?

Post by WhiteMaxima » Tue Jul 17, 2018 3:21 pm

best time is Now.

The Wizard
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Re: When to invest 100000?

Post by The Wizard » Tue Jul 17, 2018 3:26 pm

When the CAPE gets down to 10 sounds like a good time also...
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omgbirdman
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Re: When to invest 100000?

Post by omgbirdman » Tue Jul 17, 2018 3:26 pm

Historically lump-sum has beaten dollar-cost averaging. Thus, historically speaking now is the best time, but if DCA would make you feel better, go ahead.

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David Jay
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Re: When to invest 100000?

Post by David Jay » Tue Jul 17, 2018 3:27 pm

Waiting for a crash is a loser's game. You could be out of the market for 10 years if you decide to wait for, say, a 35% drop before putting your money in. In that time the market may have gone up 70%. So you waited 10 years and lost half of the gains (70% - 35%) by waiting for a crash.

There are two reasonable choices. Put it all in today in a lump sum or dollar-cost-average (DCA) into the fund on a scheduled basis. Don't take more than 2 years to DCA into the fund, better to do it in one year. Put 1/12 of the investment ($8300) in each month. If the market does drop, you will buy shares "on sale" in the months after the drop. If not, you will be fully invested within a year.

Financially, lump sum beats DCA about 65% of the time. But if you can't bring yourself to invest the lump sum, DCA provides some emotional security so it is the second best option.

BTW, in the financial world, nothing is even close to "100%".
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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Sandtrap
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Re: When to invest 100000?

Post by Sandtrap » Tue Jul 17, 2018 3:30 pm

The time to invest $ 100, 000 dollars depends on what is happening with the rest of the entirety of one's income stream, investments, and assets.
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lostdog
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Re: When to invest 100000?

Post by lostdog » Tue Jul 17, 2018 3:31 pm

Time is your friend. Let the magic of compounding work asap.

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David Jay
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Re: When to invest 100000?

Post by David Jay » Tue Jul 17, 2018 3:32 pm

You should go back and read all the threads on BH by people who were sure that the market would crash after the inauguration in 2017. They were going to cash out of fear. In the end the market was up some 25% in 2017. So much for being "sure" of what Mr. Market will do.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

JoeRetire
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Re: When to invest 100000?

Post by JoeRetire » Tue Jul 17, 2018 3:33 pm

vu8 wrote:
Tue Jul 17, 2018 3:16 pm
I am 100% sure that a crash (35-50%) is coming.
100% ?
35-50% ?

I have no idea what this is supposed to mean.
In that situation, should I still dump my money into the stock market knowing that a crisis is not far away? Or should I wait until like the PE ratio drops down to like 10 and then invest?
You should hold on to the 100000 and earn nothing until you are 100% sure you want to invest it. Use whatever metrics mean something to you. I think the last time the PE ratio was 10 was back in 1984. If you've been in cash that long, waiting a few more years probably won't matter much.

Good luck with the upcoming crisis.
Last edited by JoeRetire on Tue Jul 17, 2018 3:38 pm, edited 1 time in total.

livesoft
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Re: When to invest 100000?

Post by livesoft » Tue Jul 17, 2018 3:34 pm

If you are 100% sure there is a crash of 35%-50% from these levels, then you should sell short VTI. Somehow if push comes to shove, I just don't think you are 100% sure and so you won't do this. But I am willing to be proved wrong.

But if you are 100% sure there is a crash of 35%-50% from some unknown level such as 3 times the current level, then you should invest now.

I don't mind if you lose money.

For myself, I am fully invested and will lose more than $50,000 on any given down day in the stock market.
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Nate79
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Re: When to invest 100000?

Post by Nate79 » Tue Jul 17, 2018 3:37 pm

vu8 wrote:
Tue Jul 17, 2018 3:16 pm
Hi there, let's say right now I have 100000 and I want to invest them all into VTI. The bull market has been running for 10 years now and I am 100% sure that a crash (35-50%) is coming. In that situation, should I still dump my money into the stock market knowing that a crisis is not far away? Or should I wait until like the PE ratio drops down to like 10 and then invest?
Well, you are 100% sure a crash is coming. Why would you invest if you are 100% sure?

If you are 100% sure that a crash is coming soon which means no chance of it not happening then I would wait until the crash and invest at the bottom.

But perhaps you want to revisit the certainty of the crash coming. Unless you can predict the future you can't actually know with 100% certainty that a crash is coming unless you are uncertain on the timing. Even a monkey can predict that sometime in the future that a crash will come. The question is when, not if.

yousha
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Re: When to invest 100000?

Post by yousha » Tue Jul 17, 2018 3:40 pm

I would invest now!

AlwaysWannaLearn
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Re: When to invest 100000?

Post by AlwaysWannaLearn » Tue Jul 17, 2018 3:42 pm

.....
Last edited by AlwaysWannaLearn on Wed Jul 18, 2018 9:52 pm, edited 1 time in total.

DesertDiva
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Re: When to invest 100000?

Post by DesertDiva » Tue Jul 17, 2018 3:47 pm

Start with a basic Boglehead education by reading this site, and also check out the recommended reading in the Amazon bookstore

https://www.amazon.com/s/?search-alias= ... Bogleheads

You will learn more about why trying to time the market is a bad idea (and practically impossible).
♫ Stocks go up ♫ Stocks go down ♫ Stocks go up ♫ Stocks go down ♫ - Second verse same as the first

Good Listener
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Re: When to invest 100000?

Post by Good Listener » Tue Jul 17, 2018 4:23 pm

If you are 100% sure a crash is coming soon, how could you possibly invest a penny until after the crash? So to be able to invest now, you need to check the accuracy of your predictive abilities. I personally have no skills in this area. A close friend has been in money markets 100% for 10 years because he "knew" the stock markets were going to crash and interest rates were going to go wildly high. And he's in finance.

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DaftInvestor
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Re: When to invest 100000?

Post by DaftInvestor » Tue Jul 17, 2018 4:29 pm

vu8 wrote:
Tue Jul 17, 2018 3:16 pm
I am 100% sure that a crash (35-50%) is coming.
If this statement is true then you are smarter than all of us so why are you asking us this question?

You should not only hold this money in cash until the crash happens but you should also cash out anything you have invested and then take all the money and SHORT the stock market!
Now maybe your not the math purist I am and you aren't really "100%" sure....

tesuzuki2002
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Re: When to invest 100000?

Post by tesuzuki2002 » Tue Jul 17, 2018 4:38 pm

vu8 wrote:
Tue Jul 17, 2018 3:16 pm
Hi there, let's say right now I have 100000 and I want to invest them all into VTI. The bull market has been running for 10 years now and I am 100% sure that a crash (35-50%) is coming. In that situation, should I still dump my money into the stock market knowing that a crisis is not far away? Or should I wait until like the PE ratio drops down to like 10 and then invest?


Crash of 35-50% is coming... LOL... you should have invested it back in 2009... you'd have well over 200K right now...

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UpsetRaptor
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Re: When to invest 100000?

Post by UpsetRaptor » Tue Jul 17, 2018 4:42 pm

Thread should've ended on post #2.

When stocks were so clearly overpriced in 1996 that Alan Greenspan gave his "irrational exuberance" speech, they doubled from there before crashing. If you sold when he gave the speech and decided to wait until they crashed back down to that day's level before buying back in, you'd still be waiting.

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Pajamas
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Re: When to invest 100000?

Post by Pajamas » Tue Jul 17, 2018 5:16 pm

Almost everyone will agree with you that there is a 100% chance of a significant decline in the markets in the future. The real question is what to do, knowing that it will happen but not when.

What you might do depends. For some people, the right answer is to keep assets in near-cash because avoiding any loss is critical because they have a specific use for them. For others with long-term goals for their investing, setting an appropriate allocation that they can stick to regardless of what the markets do in the future is the right answer.

Part of the problem may be that you have already decided to invest in VTI (Vanguard Total Stock Market ETF) and are trying to decide when and how to go about doing that. Maybe take a step back and consider why you are investing and what your goals are and share that information here.

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arcticpineapplecorp.
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Re: When to invest 100000?

Post by arcticpineapplecorp. » Tue Jul 17, 2018 5:20 pm

"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

chevca
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Re: When to invest 100000?

Post by chevca » Tue Jul 17, 2018 5:25 pm

vu8 wrote:
Tue Jul 17, 2018 3:16 pm
I am 100% sure that a crash (35-50%) is coming.
Well, obviously you should wait for that to happen then invest it all. I mean, 100% is a sure thing, right? :happy

VaR
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Re: When to invest 100000?

Post by VaR » Tue Jul 17, 2018 5:29 pm

First, read the following two articles from the wiki:
https://www.bogleheads.org/wiki/Managing_a_windfall - in case this $100k is a windfall to you
https://www.bogleheads.org/wiki/Dollar_ ... s_lump_sum - summarizes the tradeoffs between lump sum investment of a windfall vs dollar cost averaging

And here are some useful threads from the board:
The Final, Definitive Thread on Dollar-Cost Averaging
Dollar Cost Averaging inferior [but Vanguard disagrees]

And here's a recent thread with references to other recent threads:
How do you avoid bad market timing for lump sum investments?

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sergeant
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Re: When to invest 100000?

Post by sergeant » Tue Jul 17, 2018 5:49 pm

vu8 is 100% sure a crash is coming and is out of the market. Sergeant is 100% sure a correction is coming (no idea when) and is 50/50 in his allocation. vu8 has 100k to invest. Sergeant would lose 10x that with a 50% correction and doesn't lose any sleep over it. Maybe vu8 should short the market if he is so sure.
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FireHorse
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Re: When to invest 100000?

Post by FireHorse » Tue Jul 17, 2018 5:58 pm

Investing is a long term journey that could experience bear market and bull market, but the statistics have shown that ultimately the winner is stay in the game, believe the power of compounding.

minesweep
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Re: When to invest 100000?

Post by minesweep » Tue Jul 17, 2018 6:12 pm

The best time to plant a tree was 20 years ago. The second best time is now. - Old Chinese Proberb

retiredjg
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Re: When to invest 100000?

Post by retiredjg » Tue Jul 17, 2018 6:12 pm

When the question is "when to invest?"... the answer is almost always "now". Do you have a reason to think that may not apply?

The market is almost always on a high or near some high. Invest now for what will be something higher in the future, even if it goes to something lower in the meantime.

nasrullah
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Re: When to invest 100000?

Post by nasrullah » Tue Jul 17, 2018 6:52 pm

"We have a lot to do, and very little time, so we must work slowly." Liviu Ciulei | | Thanks vineviz (https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=134698) for the quote.

nasrullah
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Re: When to invest 100000?

Post by nasrullah » Tue Jul 17, 2018 6:53 pm

Also, there's lots of research showing what happens if you miss just the x best days of the market. Feels like every few months one of these comes out again.

http://www.businessinsider.com/cost-of- ... 500-2015-3
https://am.jpmorgan.com/us/en/asset-man ... retirement
"We have a lot to do, and very little time, so we must work slowly." Liviu Ciulei | | Thanks vineviz (https://www.bogleheads.org/forum/memberlist.php?mode=viewprofile&u=134698) for the quote.

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arcticpineapplecorp.
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Re: When to invest 100000?

Post by arcticpineapplecorp. » Tue Jul 17, 2018 7:37 pm

So you won't invest if the market falls by 20% because you're waiting for the market to fall 35%-50%? Have you thought this through?

Do you know how many times the market has fallen by 35%-50% since the 1920s?

http://www.businessinsider.com/illustra ... ts-2014-12

That's right. Just 4 times.

And with the exception of the 2000s in which 2 of those 4 declines occurred, you would have had to wait several decades for a drop of 35%-50%. You willing to wait that long?

Finally, have you ever invested (or dumped a largish amount of moolah) into the market during a market that declined 35%-50%? If not, you really have no idea whether you'd really be able to do that. Many think they can. But then they're too scared to actually do it. They instead wait til the dust settles and it seems "safer" (after the market's gone back up), which of course means buying higher, not lower.

What if the market falls 35% and you're waiting for it to fall more (to 50% loss) but it never does, and then it goes on a tear (upwards). Whoops, you missed the boat waiting for a better buying opportunity you were 100% sure would come that didn't.

What if you instead buy in after a 35% decline (or 50%, use whatever numbers you want) and then the market falls further (you gonna regret that)?! The market did just that during the great depression. You just don't know how bad it can get. That means you don't know what the bottom is or the top. That's the problem with market timing. It doesn't usually work.

It's time in the market, not timing the market that matters.

Jack Bogle said (paraphrasing) that he never met anyone who successfully and consistently timed the market and he didn't know anyone who knew anyone who's ever done it. What makes you think you're different?
"Invest we must." -- Jack Bogle | “The purpose of investing is not to simply optimise returns and make yourself rich. The purpose is not to die poor.” -- William Bernstein

CFR
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Re: When to invest 100000?

Post by CFR » Wed Jul 18, 2018 10:28 am

vu8 wrote:
Tue Jul 17, 2018 3:16 pm
Hi there, let's say right now I have 100000 and I want to invest them all into VTI. The bull market has been running for 10 years now and I am 100% sure that a crash (35-50%) is coming. In that situation, should I still dump my money into the stock market knowing that a crisis is not far away? Or should I wait until like the PE ratio drops down to like 10 and then invest?
OP,

I should be in the exact same quandary as you in a few weeks, unless the sale of a property falls through, although it is a larger amount. I have spent a significant amount of time in this forum. All I can tell you is what I am going to do.

1. Invest the funds... all of it
2. Only question right now: Am I going to use it to tilt a bit to mid-cap and small cap.
3. I will also use it to maintain my current Stocks/Bonds.

I know I will do this because I have done so every time I have extra money. I simply do not know what else to do be be frank. I cannot sit on the cash I guess. I invest every single month like this regardless of the amount. Usually within hours of receiving funds. Practice makes perfect. Push the Vanguard buy button and walk away.

CFR

alex_686
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Re: When to invest 100000?

Post by alex_686 » Wed Jul 18, 2018 10:31 am

vu8 wrote:
Tue Jul 17, 2018 3:16 pm
Hi there, let's say right now I have 100000 and I want to invest them all into VTI. The bull market has been running for 10 years now and I am 100% sure that a crash (35-50%) is coming. In that situation, should I still dump my money into the stock market knowing that a crisis is not far away? Or should I wait until like the PE ratio drops down to like 10 and then invest?
If you are 100% sure that there will be a crash of at least 35%, the time to invest is now. Specifically, to short the market. You can easily triple your money. Shorting the market is risky, but since you are 100% sure....

On a more serious note, the length of a bull market has no predictive power on when the next correction will take place.

WhiteMaxima
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Re: When to invest 100000?

Post by WhiteMaxima » Wed Jul 18, 2018 10:35 am

Pajamas wrote:
Tue Jul 17, 2018 5:16 pm
Almost everyone will agree with you that there is a 100% chance of a significant decline in the markets in the future. The real question is what to do, knowing that it will happen but not when.

Yes. there is 100% chance of significant draw down in the future. However, there is 100% chance a significant up in the future too. I would put 50% in 100% equity and rest 50% in CDs or other fix income. 50/50 of chance. No worry if market is down and no regret when market is up

What you might do depends. For some people, the right answer is to keep assets in near-cash because avoiding any loss is critical because they have a specific use for them. For others with long-term goals for their investing, setting an appropriate allocation that they can stick to regardless of what the markets do in the future is the right answer.

Part of the problem may be that you have already decided to invest in VTI (Vanguard Total Stock Market ETF) and are trying to decide when and how to go about doing that. Maybe take a step back and consider why you are investing and what your goals are and share that information here.

1CEBITN
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Re: When to invest 100000?

Post by 1CEBITN » Wed Jul 18, 2018 11:35 am

I had a similar quandry on a lump sum a little bigger than that because VTI is at its 52 week high pretty much right now. Terrible time to buy in theory and a lot of market indicators point to the market being over-valued at the moment, meaning a correction is coming. Personally, I put in half of mine when VTI dropped to 139 a couple weeks back during the fear around a trade war. I would not wait for a 35-50% market correction as who knows if that will happen but buying on a smaller blip of $5/share or so off the 52-week high makes sense to me though. I am holding the rest in a MM account for now. This keeps my AA close to correct for my purposes (which you should think about as well, OP) and allows me some free cash to buy at a lower price if we see a larger correction. Given our current political climate I would prefer to have more cash on hand anyway vs bonds. Given my tax bracket at 2% in the Vanguard Prime MMF I am netting a bit over 3% which is a decent return on safe money, similar to bonds.

I don't need the money for a long time so I can wait. I'm not 100% sold on the "invest it now" mentality because a share bought at 140 is worth 140 no matter when you bought it, it doesn't matter how long you have had your money in the fund. There is no interest to be earned over time on stocks besides dividends which are typically less than a MM fund so how long you are in the market really doesn't matter as much as the price you buy in at and the price you sell at imho. That said, you can definitely miss out on gains if the share price never drops below what it is today but I don't think that logic is applicable in our market right now. I agree that market-timing in general is a bad idea because the market typically will gain over time regardless of where you buy in but, right now, the market is so volatile that I am taking a DCA approach to putting new money in to lower my average share purchase price. Now I'm putting my fire suit on...

magicrat
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Re: When to invest 100000?

Post by magicrat » Wed Jul 18, 2018 12:04 pm

vu8 wrote:
Tue Jul 17, 2018 3:16 pm
Hi there, let's say right now I have 100000 and I want to invest them all into VTI. The bull market has been running for 10 years now and I am 100% sure that a crash (35-50%) is coming. In that situation, should I still dump my money into the stock market knowing that a crisis is not far away? Or should I wait until like the PE ratio drops down to like 10 and then invest?
Why do you assume that a crash has to follow a bull market?

dacalo
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Re: When to invest 100000?

Post by dacalo » Wed Jul 18, 2018 12:34 pm

I remember seeing a similar post (this kind of post pops up regularly in the forums I read) a few weeks back or so. During that time frame, I have been regularly investing and have over 4% gain. Of course, the market could have gone down instead, but how would have I known? I don't, so I just invest without timing.

WhiteMaxima
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Re: When to invest 100000?

Post by WhiteMaxima » Wed Jul 18, 2018 1:07 pm

10 years from now, when you look back and you will see anytime is good time to invest. Of course, you can DCA (spread invest in different time) to even out the market noise. Using balanced (1/3 divide among US/Int'l/Bond) approach is also good way to filter out market noise.

FOGU
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Re: When to invest 100000?

Post by FOGU » Wed Jul 18, 2018 1:56 pm

By all means short VTI.

At 100% certainty you are sure to make money on the crash.

Then buy in when you are 100% sure the market has reached bottom and you will make boatloads of money on the way up.

At 100% certainty this is a flawless plan.
~ Don't just do something. Sit there. ~

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