Investing large sum, wait or buy?

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Topic Author
Cnich
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Joined: Wed Mar 06, 2019 12:26 pm

Investing large sum, wait or buy?

Post by Cnich » Sun Mar 10, 2019 5:28 pm

Hello all!

I have 150k cash that I would like to invest. I am 32 years old so this is something that would be invested long term in Vanguard index funds. I am unsure if now is the right time to invest it or wait until a decline. I know it is impossible to guess what the market is going to do and since this will be a long term investment, I am leaning toward just investing it now.

Anyways, I would love to hear anyone's thoughts on this and if I am thinking about his correctly or not. If I can provide more information please let me know. I am not looking for specific advice on index funds but just general thoughts on investing large sums of cash in the market.

Also, I have been investing for quite sometime, just have never been confronted this scenario before.

Thank you for your time and I look forward to hearing back!

Chris

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Dale_G
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Location: Central Florida - on the grown up side of 82

Re: Investing large sum, wait or buy?

Post by Dale_G » Sun Mar 10, 2019 6:55 pm

The right time to invest is when you have the money that doesn't need to be set aside for near term expense.

My son sold a home last week - the money goes to Vanguard tonight - it will be invested on Monday.

Good luck!

Dale
Volatility is my friend

Topic Author
Cnich
Posts: 2
Joined: Wed Mar 06, 2019 12:26 pm

Re: Investing large sum, wait or buy?

Post by Cnich » Sun Mar 10, 2019 7:19 pm

Dale_G wrote:
Sun Mar 10, 2019 6:55 pm
The right time to invest is when you have the money that doesn't need to be set aside for near term expense.

My son sold a home last week - the money goes to Vanguard tonight - it will be invested on Monday.

Good luck!

Dale
Congratulations to your son! Thank you for your response Dale!

John Laurens
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Re: Investing large sum, wait or buy?

Post by John Laurens » Sun Mar 10, 2019 7:29 pm

If there is decline from current prices, you should invest at the nadir. If today’s prices are the lowest they will ever be going forward, you should invest all of it now. If you will admit to yourself that you don’t know what prices will do in the short term and neither does anyone else, you should study historical, empirical, and behavioral finance to come to a conclusion.

Regards,
John

averagedude
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Re: Investing large sum, wait or buy?

Post by averagedude » Sun Mar 10, 2019 7:59 pm

Since you are only 32 years old i would suggest that you invest all of the money tomorrow and also make a commitment going forward that whenever you have the funds that you are going to invest it. I have no doubt that if you do these two things, this advice will serve you well over the next 30 years.

printer86
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Re: Investing large sum, wait or buy?

Post by printer86 » Sun Mar 10, 2019 8:36 pm

The main objective of investing is to have your money worth more when you finally need to use it. It's that simple.

The real question for you is determine the timing of the need for this money. If you truly are not going to touch this money anytime soon, and you expect the market to be higher when you finally extract this money, then invest the money. If any, or all, of this money is needed at earlier time, then you need to consider alternate investing ideas for that portion of money.

mrsurr
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Re: Investing large sum, wait or buy?

Post by mrsurr » Sun Mar 10, 2019 9:16 pm

I’m 35 and have a similar problem. Personally, I think the conditions of the global economy are pretty clear and have moved much of the money I want to put in VTSAX into diversified debt, real estate, cash and bonds. You really ought to come to a studied conclusion on your own.

I tend to side with Benjamin Graham who wrote that when a period of irrational exuberance leads to inflated prices, one might consider going as high as 50% fixed income. And when equities price are again rational, rebalance and snap up the deals (but never fully leave the market).

In theory, you’d likely be fine to invest today if you really didn’t touch it for a decade or so. But ask yourself if you have the discipline to ignore a possible 30% drawdown in the next six months? May not happen. Or it may. But psychology is what typically messes investors up.

alpha88
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Location: Southern California

Re: Investing large sum, wait or buy?

Post by alpha88 » Sun Mar 10, 2019 9:23 pm

I'd first make sure that you have a sound investment plan, and understand the risks and expectations that come along with your plan.

Once you have that, I advise going in lump sum, rather than trying to time your entry.

JustinR
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Re: Investing large sum, wait or buy?

Post by JustinR » Mon Mar 11, 2019 3:40 am

Invest it all as soon as possible (lump sum)

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PurpleArc
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Re: Investing large sum, wait or buy?

Post by PurpleArc » Mon Mar 11, 2019 5:25 am

Hi, I am also being confronted with similar situation. A good problem.

I have made $1M USD in the past year, a fortune considering that I was net negative another two years back. I have about 60% in cash and TD and the rest in ETFS and shares. Should I also move th me rest of the 60% into the market?

My current strategy is for the 60% to mature in TD over 3, 6, 12 months as a reminder to put those into ETFs when it matures.

I do not need the money now and expect to make about 500k or more in the next 12 months so well covered.

I know the game here is not to time the market, but contrary wisdom welcomed :)

And thanks OP for the piggybacking :)

malabargold
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Re: Investing large sum, wait or buy?

Post by malabargold » Mon Mar 11, 2019 7:16 am

So if you’ve been “investing for quite some time” you must already have a lot in, right?

What makes this any different?

The contrary of wisdom is not wisdom

3funder
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Re: Investing large sum, wait or buy?

Post by 3funder » Mon Mar 11, 2019 7:21 am

mrsurr wrote:
Sun Mar 10, 2019 9:16 pm
I’m 35 and have a similar problem. Personally, I think the conditions of the global economy are pretty clear and have moved much of the money I want to put in VTSAX into diversified debt, real estate, cash and bonds. You really ought to come to a studied conclusion on your own.

I tend to side with Benjamin Graham who wrote that when a period of irrational exuberance leads to inflated prices, one might consider going as high as 50% fixed income. And when equities price are again rational, rebalance and snap up the deals (but never fully leave the market).

In theory, you’d likely be fine to invest today if you really didn’t touch it for a decade or so. But ask yourself if you have the discipline to ignore a possible 30% drawdown in the next six months? May not happen. Or it may. But psychology is what typically messes investors up.
I, too, agree with Graham regarding price inflation. OP, I think your biggest risk right now is investing the entire sum in VTSAX. Yes, over a long period of time, you will make money; however, I think it would be wise to invest at least 1/3 in VTIAX.

simas
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Re: Investing large sum, wait or buy?

Post by simas » Mon Mar 11, 2019 8:24 am

PurpleArc wrote:
Mon Mar 11, 2019 5:25 am
My current strategy is for the 60% to mature in TD over 3, 6, 12 months as a reminder to put those into ETFs when it matures.
well.. it depends on how disciplined you are meaning how much you let greed and fear control you. if you can not invest it now 'because whatever', do you really think it would change in 3,6, 12 months or would other reasons come up and greed/fear will get the best of you (supported by all kids of financial noise).

Personally, I have seen people calling the top for 5+ years now ...

KingRiggs
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Location: Indiana

Re: Investing large sum, wait or buy?

Post by KingRiggs » Mon Mar 11, 2019 8:28 am

If you figure out when the market low point is, could you please remember to tell the rest of us? Thanks.

:sharebeer

Wanderingwheelz
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Re: Investing large sum, wait or buy?

Post by Wanderingwheelz » Mon Mar 11, 2019 8:40 am

There’s nothing wrong with dollar cost averaging into the stock market (or even the bond market), if you know yourself to be the type who’d feel remorseful if prices became substantially cheaper soon after you made a large lump sum purchase. $150k is a lot of money to most 32 year olds, and at that age, and without experience riding out best markets, there is a high probability that bailing at lower prices is going to happen. That’s what most people do.

I say average the money in, but under no circumstances take more than 18 months to do it. Buying stocks into a decline can be even more nerve racking as buying “high”. By doing this you reduce your risk of having a substantial negative experience that discourages you from acccumulating stock over the next 30+ years.

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