Where to invest new cash at this time of all time high market

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InvestVS
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Where to invest new cash at this time of all time high market

Post by InvestVS » Mon Jul 08, 2019 1:02 am

I just received around 250K due to a stock vesting and not sure if this is the right time to put that money in the market as the market is so high. I got it, this is timing the market but the market seems very very high based upon recent news.

My asset allocation for my current assets is 70 Stock and 30 Bonds currently and I am 45 years old.

Update: This new 250K is around 8.5% of my portfolio.
Last edited by InvestVS on Mon Jul 08, 2019 11:16 am, edited 1 time in total.

psy1
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Re: Where to invest new cash at this time of all time high market

Post by psy1 » Mon Jul 08, 2019 1:16 am

If you are confident in your current asset allocation, then you should put 70% in stocks and 30% in bonds on day 1! Otherwise, your asset allocation is out the window.

But I am in a similar situation and sympathize. In the end, I have split the difference even if it does not make 100% statistical sense, and decided to dollar cost average into the market over a period of time negotiated with my wife. In our case, we would rather sacrifice some potential return for the sake of security during the DCA interval. In our case the interval is ~24 months.

In the meantime, the extra cash is in MMF and T-Bills.

It might also depend on the size of your current portfolio. If 250K is a lot of money, then I say be cautious. If it is a drop int he bucket, just roll it in to your asset allocation.

typical.investor
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Re: Where to invest new cash at this time of all time high market

Post by typical.investor » Mon Jul 08, 2019 1:18 am

If you believe the “valuation” chicken will come home to roost, why not invest internationally? It has higher expected returns based on current valuations.

If you don't believe valuations are meaningful, why are you talking about the (presumably US) market being high?

And if you are a US only investor for patriotic, tax, and/or fund cost reasons, but still think the chicken will come home to roost, then what about US value funds? The value growth spread is wide by historical measures now.

Sorry, only questions and no answers from me.

heyyou
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Re: Where to invest new cash at this time of all time high market

Post by heyyou » Mon Jul 08, 2019 2:52 am

$10K per month for 25 months. When you forget, just do it when you remember since it is only $10K each time.

Caught a falling knife: I bought into a commodities fund when it was down 10% from a recent high. Sold it eight years later for maybe half my cost, since it had still not recovered. The rest of my portfolio had significant growth, so all is well.

anoop
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Re: Where to invest new cash at this time of all time high market

Post by anoop » Mon Jul 08, 2019 3:14 am

InvestVS wrote:
Mon Jul 08, 2019 1:02 am
I just received around 250K due to a stock vesting and not sure if this is the right time to put that money in the market as the market is so high. I got it, this is timing the market but the market seems very very high based upon recent news.

My asset allocation for my current assets is 70 Stock and 30 Bonds currently and I am 45 years old.
Make sure the tax liability is taken care of. The withholding rate for stock/bonuses is usually not enough to cover the entire federal tax liability. At least that has been my experience with several employers.

student
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Re: Where to invest new cash at this time of all time high market

Post by student » Mon Jul 08, 2019 4:52 am

I would DCA over 1-2 years for psychological reasons.

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dogagility
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Re: Where to invest new cash at this time of all time high market

Post by dogagility » Mon Jul 08, 2019 5:37 am

InvestVS wrote:
Mon Jul 08, 2019 1:02 am
I just received around 250K due to a stock vesting and not sure if this is the right time to put that money in the market as the market is so high. I got it, this is timing the market but the market seems very very high based upon recent news.

My asset allocation for my current assets is 70 Stock and 30 Bonds currently and I am 45 years old.
The market is typically at or near an all time high. This is meaningless.
Do not listen to or read financial "news".
Take psychology out of investing by always being aware of your feelings and understanding the decisions made based upon feelings have no sound basis.
Your investing time horizon is probably another 45 years. Lump sum the amount into your asset allocation.
Taking "risk" since 1995.

DoWahDaddy
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Re: Where to invest new cash at this time of all time high market

Post by DoWahDaddy » Mon Jul 08, 2019 6:29 am

My two cents. Just from personal experience, I find that people who decide to keep an amount in cash for a period of time tend to keep that cash balance for much longer than they anticipated. There's a certain paralysis that occurs when holding and waiting. You thing you're waiting for one specific thing (investing $x each month) but you end up finding other reasons to wait. And also, it'll take a lot more brain power than you initially anticipated to end up allocating the whole amount over a long period of time. The benefit of doing any of this is of course unknowable. For these reasons, I would allocate based on your allocation ratio on day 1 and be done with it.

DWD
Me: 75/25 stocks/bonds | Son: 45/45/10 matchbox/hotwheels/thomas & friends

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dwickenh
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Re: Where to invest new cash at this time of all time high market

Post by dwickenh » Mon Jul 08, 2019 6:31 am

I'm in a similar situation due to the sale of a farm with about 200K to invest. I thought about DCA and waiting for a RBD, but decided to just rebalance per my IPS. I had hit a 5% band for rebalance, so I will be dumping it all in today. Much of it has to go into bonds, so this is an easy choice. It may not be as easy if it was all going into stocks.

Do what lets you sleep.

Dan
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

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jabberwockOG
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Re: Where to invest new cash at this time of all time high market

Post by jabberwockOG » Mon Jul 08, 2019 6:45 am

Fairly easy problem to solve. Dollar cost average 10% of it into your investments each month per your normal asset allocation until it is all in.

NotWhoYouThink
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Re: Where to invest new cash at this time of all time high market

Post by NotWhoYouThink » Mon Jul 08, 2019 6:53 am

All of it into your asset allocation on day 1. I've done this many times. Make a decision, implement it, move on. [OT comment removed by moderator oldcomputerguy]

JBeck
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Re: Where to invest new cash at this time of all time high market

Post by JBeck » Mon Jul 08, 2019 6:56 am

NotWhoYouThink wrote:
Mon Jul 08, 2019 6:53 am
All of it into your asset allocation on day 1. I've done this many times. Make a decision, implement it, move on. If you can't do that I don't know how you get a job that pays that kind of bonus.
Agree. I think the market spends something to the extent of 25% of the time flirting with new all time highs. Invest it and don't sweat it!

bradinsky
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Re: Where to invest new cash at this time of all time high market

Post by bradinsky » Mon Jul 08, 2019 7:02 am

I believe that you should do what makes you comfortable. We just invested $150K two weeks back. For us, lump sum is the only way to fly.

Brad

Rus In Urbe
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Re: Where to invest new cash at this time of all time high market

Post by Rus In Urbe » Mon Jul 08, 2019 7:26 am

InvestVS wrote:
I just received around 250K due to a stock vesting and not sure if this is the right time to put that money in the market as the market is so high. I got it, this is timing the market but the market seems very very high based upon recent news.
My asset allocation for my current assets is 70 Stock and 30 Bonds currently and I am 45 years old.

dogagility »
The market is typically at or near an all time high. This is meaningless.
Do not listen to or read financial "news".
Take psychology out of investing by always being aware of your feelings and understanding the decisions made based upon feelings have no sound basis.
Your investing time horizon is probably another 45 years. Lump sum the amount into your asset allocation.
:thumbsup :thumbsup :thumbsup
THIS.

Over decades, the market goes gradually up and up; occasionally it goes down and then it goes up again. Thus, it is almost always at a new high. DUH. Think of the long-game.

This question (I got a new wad, the market is high, yikes should I put it in?) comes up over and over again on this forum, despite the fact that Bogleheads are generally averse to market-timing. But, we all want to feel like we did the 'smart' thing, and it's super hard to believe data (Time IN the market) rather than our own eyes (Agh, the market is at an all-time high).

You can act emotionally. Or you can have a rational plan (DCA it, or lump-sum it, and make sure your AA is right for you). But whatever you do, just do it and don't look back. No Shoulda/Woulda/Coulda.

One other thought: if you are holding a mortgage, and this makes sense, pay it off: voila, instant diversification and guaranteed gain. Also, though it hardly needs to be said, if you have any, pay off any consumer debt immediately. And make sure your emergency fund is adequate.

Good luck! :sharebeer
I'd like to live as a poor man with lots of money. ~Pablo Picasso

rascott
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Re: Where to invest new cash at this time of all time high market

Post by rascott » Mon Jul 08, 2019 7:36 am

When one looks at the 20 year return of the stock market, it doesn't look very impressive at all, historically. Like 6% annual return.... well below historical average.

And it's been basically flat for the last 18 months.

Maybe that will make you feel better.

DCA in over a year if it makes you feel even better, even though all the academic research indicates to do it all at once.

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Sandtrap
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Re: Where to invest new cash at this time of all time high market

Post by Sandtrap » Mon Jul 08, 2019 8:36 am

dwickenh wrote:
Mon Jul 08, 2019 6:31 am
I'm in a similar situation due to the sale of a farm with about 200K to invest. I thought about DCA and waiting for a RBD, but decided to just rebalance per my IPS. I had hit a 5% band for rebalance, so I will be dumping it all in today. Much of it has to go into bonds, so this is an easy choice. It may not be as easy if it was all going into stocks.

Do what lets you sleep.

Dan
+1
I just had a couple substantial CD's and Muni's come to maturity.
Hemmed and Hawed for weeks.
Ended up putting it in Vanguard's REIT Index.

Take your time, make up your mind, then do something.
j
Wiki Bogleheads Wiki: Everything You Need to Know

chevca
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Re: Where to invest new cash at this time of all time high market

Post by chevca » Mon Jul 08, 2019 8:49 am

InvestVS wrote:
Mon Jul 08, 2019 1:02 am
I just received around 250K due to a stock vesting and not sure if this is the right time to put that money in the market as the market is so high. I got it, this is timing the market but the market seems very very high based upon recent news.

My asset allocation for my current assets is 70 Stock and 30 Bonds currently and I am 45 years old.
So, it was in a single stock before and you would be uncomfortable now putting it in a diversified 70/30 AA??

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ruralavalon
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Re: Where to invest new cash at this time of all time high market

Post by ruralavalon » Mon Jul 08, 2019 9:05 am

InvestVS wrote:
Mon Jul 08, 2019 1:02 am
I just received around 250K due to a stock vesting and not sure if this is the right time to put that money in the market as the market is so high. I got it, this is timing the market but the market seems very very high based upon recent news.

My asset allocation for my current assets is 70 Stock and 30 Bonds currently and I am 45 years old.
In my opinion an asset allocation not 70/30 stocks/bonds is within the range of what is reasonable at age 45. My suggestion is to invest your new cash using the same asset allocation.

Holding on to cash while you wait for a better time to invest is certain to give you a negative real return net of inflation and taxes. I think it is better to invest in something with the reasonable prospect of a positive real return.

Market timing (waiting for a good time to buy) is a fool's errand. No one can successfully do that consistently. If you wait for a good day to buy, you will never know if the next day, or the next week, or the next month, or even the next year might be an even better time to buy.

It was always my policy to invest whenever I had extra money available to invest.

Please read this: "What if you only invested at market peaks?"

If it would alleviate your anxiety about the market you might invest part in a lump sum now, and the rest in stages. For example invest 50% in a lump sum now, and invest the other 50% in stages (like an additional 10% on a predetermined date each month for the next 5 months). Don't needlessly agonize over when the best time may be to invest.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

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Time2Quit
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Re: Where to invest new cash at this time of all time high market

Post by Time2Quit » Mon Jul 08, 2019 9:33 am

I was always a lump sum proponent, until last year, I had a large sum to invest but decided to DCA it. I decided on 12 months of DCA. After the second month of DCA, we had the December drop, that is when I lump summed the rest. I supposed it could have dropped even further from the december lows or the markets could have had a large gain. One never knows, do what feels right.
"It is not the man who has too little, but the man who craves more, that is poor." --Seneca

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yangtui
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Re: Where to invest new cash at this time of all time high market

Post by yangtui » Mon Jul 08, 2019 10:02 am

This question seems to come up multiple times every day. You should use the search function to see what answers other people have received. I also highly recommend that you stop consuming "news". It is worse than a waste of time.

Chris K Jones
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Re: Where to invest new cash at this time of all time high market

Post by Chris K Jones » Mon Jul 08, 2019 10:09 am

I would invest it according to your investment policy statement. I would not dollar cost average it. I would just put it whereverr your plan calls for it. If you must DCA, then do it in 12 months or less.

Also, the above advice about ignoring financial "news" is spot on. It is background noise. They get paid to broadcast or print "news". Ignore it. Make a workable plan and stick to it. Best wishes.

pyld76
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Re: Where to invest new cash at this time of all time high market

Post by pyld76 » Mon Jul 08, 2019 10:18 am

The academic research on the subject says "dump it all in." That's sometimes difficult for people to do--because the academic research also suggests that it's behavioral biases which hurt investors a lot in the long run.

If you believe you can dump it in today, and have October of 2007 or September 2008 come along tomorrow and not panic or take action that will screw yourself in the long term than dump it in today in accordance with your IPS/allocation.

If you don't believe you can weather that swing, DCA it in over a year.

The regret from having "missed out" if you DCA in and the market continues to rise is likely to produce fewer ill effects "in the end" than lump summing tomorrow and pulling it out if the market dips.

However, in the interest of some light humor on the "all time high of a market" side--if you can tell us when you think the next all time high will be, and the one after that, and the one after that, then your spidey-senses are correct (and you should tell us). Is as likely the case, if you don't know this, you are historically likely to be better served by dumping it in today and going back to spending productive time on what made you the bonus in the first place.

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Noble Knight
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Re: Where to invest new cash at this time of all time high market

Post by Noble Knight » Mon Jul 08, 2019 10:18 am

I would put half in now and half after the Federal Reserve meeting on 7/30-31.

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ruralavalon
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Re: Where to invest new cash at this time of all time high market

Post by ruralavalon » Mon Jul 08, 2019 10:22 am

"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link:Getting Started

delamer
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Re: Where to invest new cash at this time of all time high market

Post by delamer » Mon Jul 08, 2019 10:25 am

chevca wrote:
Mon Jul 08, 2019 8:49 am
InvestVS wrote:
Mon Jul 08, 2019 1:02 am
I just received around 250K due to a stock vesting and not sure if this is the right time to put that money in the market as the market is so high. I got it, this is timing the market but the market seems very very high based upon recent news.

My asset allocation for my current assets is 70 Stock and 30 Bonds currently and I am 45 years old.
So, it was in a single stock before and you would be uncomfortable now putting it in a diversified 70/30 AA??
This is a very good perspective.

Also, when you retire in 20 years I almost can guarantee that you’ll look back in stock prices in 2019 and marvel at how cheap they were.

Always bet that stock investing will reward you over the long term, and ignore the short term.

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