Where to deploy a lump sum

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dmk395
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Joined: Sat Dec 30, 2017 9:13 am

Where to deploy a lump sum

Post by dmk395 » Sun Sep 15, 2019 7:45 am

With things the way they are where do I deploy a lump sum of 200k?

My fix flip houses seem to have dried up, need to do something passive with this cash, better than earning peanuts in interest at the bank.

Thought of deploying in the SP500 index fund, where the yield is now better than the 10 yr bond, however with the fluctuations lately, not sure that's best. I don't mind having it sit in the bank, just looking for a better return.

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vineviz
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Re: Where to deploy a lump sum

Post by vineviz » Sun Sep 15, 2019 7:57 am

dmk395 wrote:
Sun Sep 15, 2019 7:45 am
With things the way they are where do I deploy a lump sum of 200k?
"Deploy" with what time horizon? When do you expect to want to spend the $200k?
"Far more money has been lost by investors preparing for corrections than has been lost in corrections themselves." ~~ Peter Lynch

CurledMoss
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Re: Where to deploy a lump sum

Post by CurledMoss » Sun Sep 15, 2019 8:04 am

Can at least do high interest savings account that yields 2.15% or so.

What's the math? Like 70% of the time you are better off investing the entire lump sum at once.

16.6k each month for 12 months in a large index. You will get the 1 year average.

I have same situation as you. So far I have been maxing out my HSA, ROTH IRA, 457b, and SEP or Individual 401k. With the extra I have each year a big chunk into taxable account (1/3 of each, large cap, mid cap, small cap). Then have some left in the high interest savings account for if housing or market crashes, then all in with that.

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dmk395
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Joined: Sat Dec 30, 2017 9:13 am

Re: Where to deploy a lump sum

Post by dmk395 » Sun Sep 15, 2019 8:14 am

CurledMoss wrote:
Sun Sep 15, 2019 8:04 am
Can at least do high interest savings account that yields 2.15% or so.

What's the math? Like 70% of the time you are better off investing the entire lump sum at once.

16.6k each month for 12 months in a large index. You will get the 1 year average.

I have same situation as you. So far I have been maxing out my HSA, ROTH IRA, 457b, and SEP or Individual 401k. With the extra I have each year a big chunk into taxable account (1/3 of each, large cap, mid cap, small cap). Then have some left in the high interest savings account for if housing or market crashes, then all in with that.
I've had both your thoughts....

dbr
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Re: Where to deploy a lump sum

Post by dbr » Sun Sep 15, 2019 8:45 am

The first thing you do is read and learn enough about investing to understand risk and return and how those relate to your specific objective. Then you can make a good decision about where to invest that money depending on what you want to do with it in the future.

To start with you do not measure how much money you will make or lose in the S&P 500 by looking at the yield, because return adds together yield and changes in capital value and return determines what you will get at any point in time.

Otherwise you can stick to interest paying accounts that do not involve changes to value of principal invested such as savings, CDs, etc. or bonds held to maturity.

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dwickenh
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Re: Where to deploy a lump sum

Post by dwickenh » Sun Sep 15, 2019 10:06 am

If you will need this money back in less than 5-7 years, I would stick with cash or very short term fixed income. Stocks are too variable over shorter periods to be trusted to maintain principal.
The market is the most efficient mechanism anywhere in the world for transferring wealth from impatient people to patient people.” | — Warren Buffett

retiredflyboy
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Re: Where to deploy a lump sum

Post by retiredflyboy » Sun Sep 15, 2019 12:08 pm

What is the goal for this money? Will it be needed in the next 3 to 5 years etc. If you need money in the next 3 to 5 years, stay with high yield online savings, money market with vanguard/fidelity, short term bond fund or a CD to match your time horizon. If you don’t need the money for many years, perhaps based on your risk tolerance do a 50% equity ( 500 fund would be good) and 50% bonds or a CD ladder.
Facts are stubborn things. Everything works until it doesn’t.

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Wiggums
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Re: Where to deploy a lump sum

Post by Wiggums » Sun Sep 15, 2019 12:14 pm

retiredflyboy wrote:
Sun Sep 15, 2019 12:08 pm
What is the goal for this money? Will it be needed in the next 3 to 5 years etc. If you need money in the next 3 to 5 years, stay with high yield online savings, money market with vanguard/fidelity, short term bond fund or a CD to match your time horizon. If you don’t need the money for many years, perhaps based on your risk tolerance do a 50% equity ( 500 fund would be good) and 50% bonds or a CD ladder.
+1

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