What to do with all this money?

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bldg429
Posts: 1
Joined: Thu Jan 10, 2019 4:33 pm

What to do with all this money?

Post by bldg429 » Thu Jan 10, 2019 4:51 pm

Thanks for all the great help so far, I've updated my post in green given some of the comments and questions.

Thanks especially for the article Managing a windfall This is very helpful. I'm definitely at the "Establish Goals" part. I guess that is the crux of my problem, I never really expected this to pay off and consequently I don't have any goals.


Here is the background before my question ... from the Prioritizing Investments link:
  • Contribute to the work-based plan (401(k), 403b,) Done
  • Pay off high interest debt - We have no debt at all
  • Contribute to a Health Savings Account (HSA) - N/A
  • Contribute the maximum to an IRA Done
  • Contribute the remainder of the maximum employee contribution to the work-based plan, Done
Additionally
  • College funds are established for all kids and are well funded. Kids are 14, 13, and 11. I've put enough in their 529 plan that I'm starting to wonder if I should scale it back a little.
  • We have far more than enough in our emergency fund
  • I have a decent sized life insurance policy on myself
  • I am 45 and plan on working for about 20 years. My FIRE plan has a 100% chance of remaining positive with my planned spending
  • Roughly 10% is already going to charity, that is the fun part!
  • This windfall represents 85% of my investable money
Now the question:
We just sold our company and I've got to find something to do with a healthy sized chunk of cash, high 6 figures. We have absolutely no financial needs or wants so I need to find something to do with this money. Right now, I have it parked in the highest interest savings accounts I can find.

How do I invest when I don't even know what I want to do with the money? Since I don't know what to do, I can't set my time horizon so I can't be sure how much risk to accept. At the same time, I can't just let it sit in a savings account. At best it is keeping up with inflation but that is not a long term strategy.
Last edited by bldg429 on Fri Jan 11, 2019 8:45 am, edited 2 times in total.

retiredjg
Posts: 37132
Joined: Thu Jan 10, 2008 12:56 pm

Re: What to do with all this money?

Post by retiredjg » Thu Jan 10, 2019 5:20 pm

bldg429 wrote:
Thu Jan 10, 2019 4:51 pm
How do I invest when I don't even know what I want to do with the money?
You probably shouldn't invest it until you have a better idea of what you will use the money for. Or invest it in a short term bond fund until your future plans are clearer. Tax-exempt short term fund if you are in a higher tax bracket. Taxable short term fund if you are in a lower bracket.

This option preserves your choices for long term investment. If you invest in stocks now, the money may disappear for awhile.

If you decide later that this money will stay invested long term, you can exchange the short term bonds into stock index funds at a later date. Broad stock index funds are very tax-efficient.

MotoTrojan
Posts: 5474
Joined: Wed Feb 01, 2017 8:39 pm

Re: What to do with all this money?

Post by MotoTrojan » Thu Jan 10, 2019 5:21 pm

What is the size and AA of your investable portfolio not including this cash?

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Sandtrap
Posts: 7979
Joined: Sat Nov 26, 2016 6:32 pm
Location: Hawaii No Ka Oi , N. Arizona

Re: What to do with all this money?

Post by Sandtrap » Thu Jan 10, 2019 5:24 pm

This first:
MANAGING A WINDFALL
https://www.bogleheads.org/wiki/Managing_a_windfall

Then this:
GETTING STARTED
https://www.bogleheads.org/wiki/Getting_started

Within the context of doing this:
Asking Portfolio Questions (portfolio review and input)
https://www.bogleheads.org/forum/viewt ... =1&t=6212

As you do this:
Suggested Reading List
https://www.bogleheads.org/RecommendedReading.php
Forum Library of Investing Advice with links
https://www.bogleheads.org/wiki/Main_Page
Wiki Bogleheads Wiki: Everything You Need to Know

DaftInvestor
Posts: 4680
Joined: Wed Feb 19, 2014 10:11 am

Re: What to do with all this money?

Post by DaftInvestor » Thu Jan 10, 2019 5:36 pm

I'd give 10% to my favorite charity and then drop the rest with an 80/20 stock/bond allocation (using a 3-fund index strategy) until I decided what to do next (making sure to use tax-managed bond funds). I would buy iBonds (Max) and EE Bonds as well and perhaps a few CDs.

Wricha
Posts: 467
Joined: Sun Mar 25, 2012 10:33 am

Re: What to do with all this money?

Post by Wricha » Thu Jan 10, 2019 5:43 pm

Probably need to how old you are? Are you planning to work? Does this high six figures windfall represent 10% or 100%+ of your current investable assets? Age of kids? If people knew this you might get more focused responses.

nix4me
Posts: 267
Joined: Sat Oct 13, 2018 9:32 am

Re: What to do with all this money?

Post by nix4me » Thu Jan 10, 2019 5:45 pm

I would open a Vanguard or Fidelity taxable brokerage account.

I would park 50% in money market
I would park 50% in VOO or VTI or ITOT or IVV

Then I would consider buying real estate if that’s your thing. Otherwise I’d sit and ponder my retirement date.

dbr
Posts: 29798
Joined: Sun Mar 04, 2007 9:50 am

Re: What to do with all this money?

Post by dbr » Thu Jan 10, 2019 6:51 pm

bldg429 wrote:
Thu Jan 10, 2019 4:51 pm

Now the question:
We just sold our company and I've got to find something to do with a healthy sized chunk of cash, high 6 figures. We have absolutely no financial needs or wants so I need to find something to do with this money. Right now, I have it parked in the highest interest savings accounts I can find.

How do I invest when I don't even know what I want to do with the money? Since I don't know what to do, I can't set my time horizon so I can't be sure how much risk to accept. At the same time, I can't just let it sit in a savings account. At best it is keeping up with inflation but that is not a long term strategy.
1. Actually you don't have to do anything with the money other than keep it safe. Where it is would be fine as long as the accounts are FDIC insured and you aren't over the limits. It doesn't even matter right now how much interest you do or don't earn.

2. Actually in the absence of any objectives you certainly can let it sit in a savings account (see above) and probably should.

3. Now you have the luxury and the obligation to think about what you want to do.

4. If there is some extraordinary situation that might change things. Is there?

bloom2708
Posts: 6541
Joined: Wed Apr 02, 2014 2:08 pm
Location: Fargo, ND

Re: What to do with all this money?

Post by bloom2708 » Fri Jan 11, 2019 2:42 pm

bldg429 wrote:
Thu Jan 10, 2019 4:51 pm
  • I am 45 and plan on working for about 20 years. My FIRE plan has a 100% chance of remaining positive with my planned spending
This seems a bit strange. 45 working for 20 more years is 65. Using 65 and FIRE in the same sentence seems like a conflict.

65 instead of 67 or 70 is technically early.

We really don't know enough about the amounts to understand the full picture along side what annual spending might look like.

Planning on working until 65 and being able to are two different things. Ageism and health issues are two primary factors.

Do the things you want to do and invest the rest at an asset allocation that meets your criteria for 45 and your appetite for risk. Perhaps 70/30 or 65/35.

Congrats and good luck with your plan. You are in the right place to figure it out. Go slow. Make not rushed decisions.
"We are not here to agree with you; we are here to provoke thoughtfulness." Unknown Boglehead

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