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Taxable investment account

Posted: Wed Sep 16, 2020 1:54 pm
by StarGazer81
Hey everyone,

My emergency saving account has 107k. I don't want my money to disappear over time due to inflation. So, I found that 20k should be sufficient for short-term emergencies. I want to invest the 87k, but what the best approach for buying ETF/mutual funds? I love the idea of Dollar Cost Averaging (DCA). I understand that predicting the market is a fool's game, but the market seems pretty high and I don't want to drop 87k at a peak. How would you all chunk this money?

Re: Taxable investment account

Posted: Wed Sep 16, 2020 2:21 pm
by SmileyFace
I would put it all in at the same time - and right away. Time in the market beats trying to time the market. Statistically you are better off with a lump sum investment if you already have the money (DCA'ing works well as you make income - you invest the money over time as you make it - in both cases you are getting your money working in the market as soon as possible).
However - if it makes you feel better - you could invest 1/8 of it every other week for the next 16 weeks - might make you feel better (and you won't have a regret if the market tanks after a lump sum).

Re: Taxable investment account

Posted: Wed Sep 16, 2020 2:33 pm
by nix4me
VTI. All at once.

Re: Taxable investment account

Posted: Wed Sep 16, 2020 3:12 pm
by LilyFleur
I hold SCHB and SCHD in taxable.

Re: Taxable investment account

Posted: Wed Sep 16, 2020 3:20 pm
by nix4me
LilyFleur wrote: Wed Sep 16, 2020 3:12 pm I hold SCHB and SCHD in taxable.
SCHD should go in Roth or other tax advantaged account. Those dividends are taxable. I use SCHD, SCHB, and SCHZ in my HSA.

Re: Taxable investment account

Posted: Wed Sep 16, 2020 3:30 pm
by StarGazer81
Thanks everyone. I was a little gun shy, but I need to trust the long game and have faith.

Nix4me, VTI was my target. I love it. I have the mutual funds in my 401k accounts and it has treated me well.

DaftInvestor, I love that approach. It's a nice compromise.

Re: Taxable investment account

Posted: Wed Sep 16, 2020 3:43 pm
by LilyFleur
nix4me wrote: Wed Sep 16, 2020 3:20 pm
LilyFleur wrote: Wed Sep 16, 2020 3:12 pm I hold SCHB and SCHD in taxable.
SCHD should go in Roth or other tax advantaged account. Those dividends are taxable. I use SCHD, SCHB, and SCHZ in my HSA.
They are not available in my Roth. Under ERISA rules, my Roth 401k is better protected from creditors than if I rolled it over to a Roth IRA, so I have decided to leave it there, with a more limited number of low-cost index funds available than in my Schwab brokerage account. I don't have access to an HSA.
I'm retired, and I can use the dividends to help pay bills, anyway. So, since they are taxed at the lower capital gains rate for federal taxes, I come out better than if I pull money from my tax-deferred account which would be taxable at the regular income tax rate. As SCHB and SCHD grow, I have the option of selling stock to live on and paying long-term capital gains on the profits (Schwab has a really handy calculator to help people decide to average, or FIFO, or whatever, when selling). Or I can leave it untouched, as the cost basis would be set back to zero upon my death for my children. And, if the market drops excessively, I have the option of tax loss harvesting.

One size does not fit all. But this forum is really great for understanding our options.

Re: Taxable investment account

Posted: Wed Sep 16, 2020 3:54 pm
by BolderBoy
StarGazer81 wrote: Wed Sep 16, 2020 1:54 pmHow would you all chunk this money?
Well I would lump sum it. But you aren't living in my skin.

Do it however you feel you can live with doing so.