Retirement investment question

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Houdini563
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Retirement investment question

Post by Houdini563 »

So over the next week I will have $800,000 to invest into VWIAX (Vanguard Wellesley Income Admiral shares). This money is originally from old employer 401K plans all pre tax. It has been sitting in CDs paying 3.5% the past three years. I have no interest in a ROTH conversion right now.

My predicament is that I plan on retiring this coming October 1st (not official yet but this is my current mindset).

So my question is what methodology should I use to transfer this money from a money market to VWIAX? I realize trying to time the market is unwise but I cannot afford to dump the $800,000 into VWIAX now and then see it collapse heading into an October retirement date.

My one thought is to be cautious and buy on the dips periodically until October 1st with the intent of having the entire amount transferred by then.

Thoughts?
delamer
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Re: Retirement investment question

Post by delamer »

What would you do if the share price collapsed on November 1?
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
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Bogle7
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Re: Retirement investment question

Post by Bogle7 »

If you are nervous, then split it 80/20 stocks/short-term bonds
Old fart who does three index funds, baby.
dbr
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Re: Retirement investment question

Post by dbr »

Houdini563 wrote: Sat Jan 08, 2022 10:53 am
So my question is what methodology should I use to transfer this money from a money market to VWIAX? I realize trying to time the market is unwise but I cannot afford to dump the $800,000 into VWIAX now and then see it collapse heading into an October retirement date.
If you can't afford it then, you can't afford it any other time.

In other words the dilemma here is not when but what, meaning VWIAX is too risky for you. The answer to this is to back up and decide what your overall asset allocation should be and then get there posthaste.
ColoradoRick
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Re: Retirement investment question

Post by ColoradoRick »

Houdini563 wrote: Sat Jan 08, 2022 10:53 am So over the next week I will have $800,000 to invest into VWIAX (Vanguard Wellesley Income Admiral shares). This money is originally from old employer 401K plans all pre tax. It has been sitting in CDs paying 3.5% the past three years. I have no interest in a ROTH conversion right now.

My predicament is that I plan on retiring this coming October 1st (not official yet but this is my current mindset).

So my question is what methodology should I use to transfer this money from a money market to VWIAX? I realize trying to time the market is unwise but I cannot afford to dump the $800,000 into VWIAX now and then see it collapse heading into an October retirement date.

My one thought is to be cautious and buy on the dips periodically until October 1st with the intent of having the entire amount transferred by then.

Thoughts?
I was fortunate in the year I was ready to retire someone from our Bible Study was a financial advisor. I was and still am a Boglehead (didn't use a financial advisor/index fund etc.) but my wife wisely suggested we get an outside opinion BEFORE I retired. He did show me that if I went 50/50 BEFORE I retired that it would decrease volatility 2 standard deviations with only a small impact on returns.

I understand what previous posters are saying but I think your concern is sequence or returns risk which is a real thing. If I were you (which I am not) I'd go AA 50/50; sell the 50% before the switch and then put the rest in in monthly increments over 6 months whatever you decide your AA is; knowing the science and facts say historically its best to do all at once. Most of us will feel better that other way. There is an emotional side of investing too often ignored.
iamblessed
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Re: Retirement investment question

Post by iamblessed »

Houdini563 wrote: Sat Jan 08, 2022 10:53 am So over the next week I will have $800,000 to invest into VWIAX (Vanguard Wellesley Income Admiral shares). This money is originally from old employer 401K plans all pre tax. It has been sitting in CDs paying 3.5% the past three years. I have no interest in a ROTH conversion right now.

My predicament is that I plan on retiring this coming October 1st (not official yet but this is my current mindset).

So my question is what methodology should I use to transfer this money from a money market to VWIAX? I realize trying to time the market is unwise but I cannot afford to dump the $800,000 into VWIAX now and then see it collapse heading into an October retirement date.

My one thought is to be cautious and buy on the dips periodically until October 1st with the intent of having the entire amount transferred by then.

Thoughts?
Even in a downturn the Wellesley has only fallen about 10% so you are not doing something risky.
Topic Author
Houdini563
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Re: Retirement investment question

Post by Houdini563 »

I am comfortable and have been comfortable with 1.5 million in CDs, fixed income IRA and cash with another $600,000 in the market and growing significantly the past 3 years. However now is the time I start setting up for retirement where I do need to be within a vehicle that has a safe long history of success where I can pull 4% annually. VWIAX is my choice at 40/60, stocks/bonds.

The only issue is how to enter VWIAX. Do I dump the entire $800,000 into this fund by months end or do I buy in say $100,000 increments monthly looking to buy best I can at the dips? (Trying to buy low). My thought is as we approach Q4 the economy will become less volatile and I can cruise into my October 1 retirement. Or is their another option I’m overlooking?
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Wiggums
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Re: Retirement investment question

Post by Wiggums »

I don’t have a crystal ball, but I would expect volatility in 2022 due to the rising interest rates and the need for the Fed to shrink the balance sheet. We are retired and still buying stock. My mom is 92 and she uses Wellesley which is approximately 30% equities. Vanguard has a 50/50 tax managed fund. The life-strategy funds are also worth considering. Vanguard LifeStrategy conservative Growth Fd has about 40% equities. Your AA of 40/60 sounds reasonable. In terms of your 4% withdrawal rate, we held out cash your Roth conversion . You can hold cash for retirement expenses if you are worried about selling in a down market.
Investors need to be better informed about the costs they pay. “High fund fees can be hazardous to your wealth in the same way that high calories can be hazardous for your health.”
bigjoec
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Re: Retirement investment question

Post by bigjoec »

Been a while since I was on here last, but you seem to be asking Bogleheads how best to time the market?

The idea here is to think exclusively long term. Once you figure out your allocation, just make the move. From there, watch the allocation and rebalance to meet it on whatever schedule feels appropriate to you.

That's it.
Topic Author
Houdini563
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Re: Retirement investment question

Post by Houdini563 »

bigjoec wrote: Sat Jan 08, 2022 10:00 pm Been a while since I was on here last, but you seem to be asking Bogleheads how best to time the market?

The idea here is to think exclusively long term. Once you figure out your allocation, just make the move. From there, watch the allocation and rebalance to meet it on whatever schedule feels appropriate to you.

That's it.
I certainly agree except in this case, since I’m retiring in 9 months, I think I need to be cautious in the current economic environment.

As an example I have already invested $70,000 in VWIAX and waited until a dip in its price before jumping in. The result has been with all the ups and downs of the market I’ve continually kept my principal.

Anyway my thought was to use the volatility expected in the marketplace to my advantage by investing the $800,000 in bits and pieces on the dips over the next 9 months.
orrsmills
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Re: Retirement investment question

Post by orrsmills »

VWIAX has recently come down a bit. Like someone already said, this fund is not very volatile. I think you better off getting in now, for what my opinion is worth.
Dandy
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Re: Retirement investment question

Post by Dandy »

Wellesley is a moderate risk fund with a decent track record so it should weather market drops better than most. I understand the equity market is near a top and the Fed is signaling some interest raises which will hurt bond over the short term.

You can put a large percent in the fund and then add to it. The risk is that you will resist adding when the fund is dropping.

What I did in similar circumstances was to put 50% down and automated monthly investments of 1/12 of the remaining dollars. And I doubled the monthly investment when the fund dropped any month. Got me off the sidelines and helped me learn to invest when the market was down and things looked scary.

Just remember at some point you will be all in the fund and then have the same risk down the line when the market is at a very high value.
RickyAZ
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Re: Retirement investment question

Post by RickyAZ »

Wellesley is about as safe as you can get. You might lose 5% in the next 9 months or gain 5%

You will probably lose 5% to inflation holding cash in the next 9 months

There is no riskless investment

Cheers
cjcerny
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Re: Retirement investment question

Post by cjcerny »

Honestly, there really isn’t any way for anyone to answer this question for you. No one knows what is going to happen between now and your retirement date. My advice: look back through the history of Wellesley and see what the historic worst dip has been and base your decision on that. Could happen again. Could be worse. Stock market could be stellar between now and your retirement date and you might kick yourself for not having invested more.

Absolutely no way to tell what the future holds. You just have to dig deep inside and make a choice that lets you sleep at night. All we can do for you is remind you of that.
bigjoec
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Re: Retirement investment question

Post by bigjoec »

Houdini563 wrote: Sun Jan 09, 2022 7:53 am
bigjoec wrote: Sat Jan 08, 2022 10:00 pm Been a while since I was on here last, but you seem to be asking Bogleheads how best to time the market?

The idea here is to think exclusively long term. Once you figure out your allocation, just make the move. From there, watch the allocation and rebalance to meet it on whatever schedule feels appropriate to you.

That's it.
I certainly agree except in this case, since I’m retiring in 9 months, I think I need to be cautious in the current economic environment.

As an example I have already invested $70,000 in VWIAX and waited until a dip in its price before jumping in. The result has been with all the ups and downs of the market I’ve continually kept my principal.

Anyway my thought was to use the volatility expected in the marketplace to my advantage by investing the $800,000 in bits and pieces on the dips over the next 9 months.
There's no free lunch. You can't use volatility to your advantage -- to increase your returns. You can reduce your exposure to volatility, but you correspondingly reduce your expected return. Dollar-cost-averaging offers a minimal benefit over all-at-once investment in a

In reality, by holding money out, you're betting that the market will go down in the first period. Then when you invest more but continue to hold some out for future months, you're again betting that the market will go down in the upcoming period. It's market timing, and if you think those are smart bets then go ahead and play them that way. But the buy and hold approach is much simpler. Just buy, then hold.

dbr's comment is what you should be thinking through.
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goingup
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Re: Retirement investment question

Post by goingup »

Houdini563 wrote: Sun Jan 09, 2022 7:53 am I certainly agree except in this case, since I’m retiring in 9 months, I think I need to be cautious in the current economic environment.

As an example I have already invested $70,000 in VWIAX and waited until a dip in its price before jumping in. The result has been with all the ups and downs of the market I’ve continually kept my principal.
This thought process is problematic. It is very possible that you will lose principal, if only temporarily. Over the long run, market participants bet that stocks will go up. There are no guarantees.

What happens if you get all $800K into Wellesley Fund and it slowly declines 10-15% over a year or more right after you retire?
Minty
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Re: Retirement investment question

Post by Minty »

Well, a number of posts discuss a "bond tent" to mitigate sequence-of-returns risk. The bond tent seems different from market timing.
Core Four w/ nominal bonds & TIPS. Refi Rampage: Purchase: 3.875% 30 -> R1 3% 20 -> R2 2.375% 15 -> R3 1.99% 15 -> R4 1.875% 15
Topic Author
Houdini563
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Re: Retirement investment question

Post by Houdini563 »

goingup wrote: Sun Jan 09, 2022 11:08 am
Houdini563 wrote: Sun Jan 09, 2022 7:53 am I certainly agree except in this case, since I’m retiring in 9 months, I think I need to be cautious in the current economic environment.

As an example I have already invested $70,000 in VWIAX and waited until a dip in its price before jumping in. The result has been with all the ups and downs of the market I’ve continually kept my principal.
This thought process is problematic. It is very possible that you will lose principal, if only temporarily. Over the long run, market participants bet that stocks will go up. There are no guarantees.

What happens if you get all $800K into Wellesley Fund and it slowly declines 10-15% over a year or more right after you retire?
Why is it problematic? Most every expert is predicting a major stock decline at some point or numerous points this year mainly due to the Feds pullback in monetary supply and increases in short term interest rates. KNOWING THIS at the start of a year where I plan on retiring why would it not pay to be cautious? The Fed has telegraphed its intentions and most all experts feel this policy change will affect the stock market very negatively. Bearing this in mind why rush into the market PRIOR to the Fed starting this process?

Again the whole idea is that I’m building up to retire October 1 this year. If I jump in and the market tanks as many predict my inclination would be not to retire until the market rebounds. I want to avoid being put into that situation. Once I retire it’s a different story as I have a plan of action.

I will have $200,000 cash in saving which is my back up if the market tanks after I retire. I’ll stop taking my monthly snippets from VWIAX and instead use cash until the market normalizes.
bigjoec
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Re: Retirement investment question

Post by bigjoec »

Houdini563 wrote: Sun Jan 09, 2022 4:11 pm
goingup wrote: Sun Jan 09, 2022 11:08 am
Houdini563 wrote: Sun Jan 09, 2022 7:53 am I certainly agree except in this case, since I’m retiring in 9 months, I think I need to be cautious in the current economic environment.

As an example I have already invested $70,000 in VWIAX and waited until a dip in its price before jumping in. The result has been with all the ups and downs of the market I’ve continually kept my principal.
This thought process is problematic. It is very possible that you will lose principal, if only temporarily. Over the long run, market participants bet that stocks will go up. There are no guarantees.

What happens if you get all $800K into Wellesley Fund and it slowly declines 10-15% over a year or more right after you retire?
Why is it problematic? Most every expert is predicting a major stock decline at some point or numerous points this year mainly due to the Feds pullback in monetary supply and increases in short term interest rates. KNOWING THIS at the start of a year where I plan on retiring why would it not pay to be cautious? The Fed has telegraphed its intentions and most all experts feel this policy change will affect the stock market very negatively. Bearing this in mind why rush into the market PRIOR to the Fed starting this process?

Again the whole idea is that I’m building up to retire October 1 this year. If I jump in and the market tanks as many predict my inclination would be not to retire until the market rebounds. I want to avoid being put into that situation. Once I retire it’s a different story as I have a plan of action.

I will have $200,000 cash in saving which is my back up if the market tanks after I retire. I’ll stop taking my monthly snippets from VWIAX and instead use cash until the market normalizes.
After you get it all invested, then the next time every expert is predicting a major stock decline, are you going to pull it all out and follow this process again? If not, why not?

The question is whether you're comfortable having this chunk of money exposed to the risk of this investment. If not, then perhaps a re-think of the investment is in order.

Note that the downside of exposure to volatility typically increases when you hit the point where you need to start drawing down your assets, not decrease. If you have a plan of action that protects you from that downside once you retire, then implement it now.
ddbtoth
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Re: Retirement investment question

Post by ddbtoth »

Houdini563 wrote: Sun Jan 09, 2022 4:11 pm
goingup wrote: Sun Jan 09, 2022 11:08 am
Houdini563 wrote: Sun Jan 09, 2022 7:53 am I certainly agree except in this case, since I’m retiring in 9 months, I think I need to be cautious in the current economic environment.

As an example I have already invested $70,000 in VWIAX and waited until a dip in its price before jumping in. The result has been with all the ups and downs of the market I’ve continually kept my principal.
This thought process is problematic. It is very possible that you will lose principal, if only temporarily. Over the long run, market participants bet that stocks will go up. There are no guarantees.

What happens if you get all $800K into Wellesley Fund and it slowly declines 10-15% over a year or more right after you retire?
Why is it problematic? Most every expert is predicting a major stock decline at some point or numerous points this year mainly due to the Feds pullback in monetary supply and increases in short term interest rates. KNOWING THIS at the start of a year where I plan on retiring why would it not pay to be cautious? The Fed has telegraphed its intentions and most all experts feel this policy change will affect the stock market very negatively. Bearing this in mind why rush into the market PRIOR to the Fed starting this process?

Again the whole idea is that I’m building up to retire October 1 this year. If I jump in and the market tanks as many predict my inclination would be not to retire until the market rebounds. I want to avoid being put into that situation. Once I retire it’s a different story as I have a plan of action.

I will have $200,000 cash in saving which is my back up if the market tanks after I retire. I’ll stop taking my monthly snippets from VWIAX and instead use cash until the market normalizes.
I’m pretty much in the same boat as you- I’ve used about 20% of an inheritance so far it VTSAX, was going to buy into some bond funds, then heard about the planned rate increases. I think I’ll wait, sure the inflation will get me for 6%, but better that than a 30% haircut in equities or bonds.
Topic Author
Houdini563
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Re: Retirement investment question

Post by Houdini563 »

bigjoec wrote: Sun Jan 09, 2022 4:53 pm
Houdini563 wrote: Sun Jan 09, 2022 4:11 pm
goingup wrote: Sun Jan 09, 2022 11:08 am
Houdini563 wrote: Sun Jan 09, 2022 7:53 am I certainly agree except in this case, since I’m retiring in 9 months, I think I need to be cautious in the current economic environment.

As an example I have already invested $70,000 in VWIAX and waited until a dip in its price before jumping in. The result has been with all the ups and downs of the market I’ve continually kept my principal.
This thought process is problematic. It is very possible that you will lose principal, if only temporarily. Over the long run, market participants bet that stocks will go up. There are no guarantees.

What happens if you get all $800K into Wellesley Fund and it slowly declines 10-15% over a year or more right after you retire?
Why is it problematic? Most every expert is predicting a major stock decline at some point or numerous points this year mainly due to the Feds pullback in monetary supply and increases in short term interest rates. KNOWING THIS at the start of a year where I plan on retiring why would it not pay to be cautious? The Fed has telegraphed its intentions and most all experts feel this policy change will affect the stock market very negatively. Bearing this in mind why rush into the market PRIOR to the Fed starting this process?

Again the whole idea is that I’m building up to retire October 1 this year. If I jump in and the market tanks as many predict my inclination would be not to retire until the market rebounds. I want to avoid being put into that situation. Once I retire it’s a different story as I have a plan of action.

I will have $200,000 cash in saving which is my back up if the market tanks after I retire. I’ll stop taking my monthly snippets from VWIAX and instead use cash until the market normalizes.
After you get it all invested, then the next time every expert is predicting a major stock decline, are you going to pull it all out and follow this process again? If not, why not?

The question is whether you're comfortable having this chunk of money exposed to the risk of this investment. If not, then perhaps a re-think of the investment is in order.

Note that the downside of exposure to volatility typically increases when you hit the point where you need to start drawing down your assets, not decrease. If you have a plan of action that protects you from that downside once you retire, then implement it now.
The plan I have is a retirement plan. I am not yet retired. Again my inclination would be not to retire if I’m all in PRIOR to retiring and the market takes a huge hit. Once I’m retired it’s a different story as I have a plan to combat it.

Again I do not want to be put in a position where I will feel that I should not retire in October due to the market tanking. If I buy the dips until October I should accomplish the main goal of not being put in a position where I feel I should not retire.
bigjoec
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Re: Retirement investment question

Post by bigjoec »

Houdini563 wrote: Sun Jan 09, 2022 5:47 pm
bigjoec wrote: Sun Jan 09, 2022 4:53 pm
Houdini563 wrote: Sun Jan 09, 2022 4:11 pm
goingup wrote: Sun Jan 09, 2022 11:08 am
Houdini563 wrote: Sun Jan 09, 2022 7:53 am I certainly agree except in this case, since I’m retiring in 9 months, I think I need to be cautious in the current economic environment.

As an example I have already invested $70,000 in VWIAX and waited until a dip in its price before jumping in. The result has been with all the ups and downs of the market I’ve continually kept my principal.
This thought process is problematic. It is very possible that you will lose principal, if only temporarily. Over the long run, market participants bet that stocks will go up. There are no guarantees.

What happens if you get all $800K into Wellesley Fund and it slowly declines 10-15% over a year or more right after you retire?
Why is it problematic? Most every expert is predicting a major stock decline at some point or numerous points this year mainly due to the Feds pullback in monetary supply and increases in short term interest rates. KNOWING THIS at the start of a year where I plan on retiring why would it not pay to be cautious? The Fed has telegraphed its intentions and most all experts feel this policy change will affect the stock market very negatively. Bearing this in mind why rush into the market PRIOR to the Fed starting this process?

Again the whole idea is that I’m building up to retire October 1 this year. If I jump in and the market tanks as many predict my inclination would be not to retire until the market rebounds. I want to avoid being put into that situation. Once I retire it’s a different story as I have a plan of action.

I will have $200,000 cash in saving which is my back up if the market tanks after I retire. I’ll stop taking my monthly snippets from VWIAX and instead use cash until the market normalizes.
After you get it all invested, then the next time every expert is predicting a major stock decline, are you going to pull it all out and follow this process again? If not, why not?

The question is whether you're comfortable having this chunk of money exposed to the risk of this investment. If not, then perhaps a re-think of the investment is in order.

Note that the downside of exposure to volatility typically increases when you hit the point where you need to start drawing down your assets, not decrease. If you have a plan of action that protects you from that downside once you retire, then implement it now.
The plan I have is a retirement plan. I am not yet retired. Again my inclination would be not to retire if I’m all in PRIOR to retiring and the market takes a huge hit. Once I’m retired it’s a different story as I have a plan to combat it.

Again I do not want to be put in a position where I will feel that I should not retire in October due to the market tanking. If I buy the dips until October I should accomplish the main goal of not being put in a position where I feel I should not retire.
Do the actions involved in the retirement plan yield a better return than keeping the assets in cash until October? If so, then just do that.

Separately, what happens if the first dip is in November?
Topic Author
Houdini563
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Re: Retirement investment question

Post by Houdini563 »

bigjoec wrote: Sun Jan 09, 2022 5:51 pm
Houdini563 wrote: Sun Jan 09, 2022 5:47 pm
bigjoec wrote: Sun Jan 09, 2022 4:53 pm
Houdini563 wrote: Sun Jan 09, 2022 4:11 pm
goingup wrote: Sun Jan 09, 2022 11:08 am

This thought process is problematic. It is very possible that you will lose principal, if only temporarily. Over the long run, market participants bet that stocks will go up. There are no guarantees.

What happens if you get all $800K into Wellesley Fund and it slowly declines 10-15% over a year or more right after you retire?
Why is it problematic? Most every expert is predicting a major stock decline at some point or numerous points this year mainly due to the Feds pullback in monetary supply and increases in short term interest rates. KNOWING THIS at the start of a year where I plan on retiring why would it not pay to be cautious? The Fed has telegraphed its intentions and most all experts feel this policy change will affect the stock market very negatively. Bearing this in mind why rush into the market PRIOR to the Fed starting this process?

Again the whole idea is that I’m building up to retire October 1 this year. If I jump in and the market tanks as many predict my inclination would be not to retire until the market rebounds. I want to avoid being put into that situation. Once I retire it’s a different story as I have a plan of action.

I will have $200,000 cash in saving which is my back up if the market tanks after I retire. I’ll stop taking my monthly snippets from VWIAX and instead use cash until the market normalizes.
After you get it all invested, then the next time every expert is predicting a major stock decline, are you going to pull it all out and follow this process again? If not, why not?

The question is whether you're comfortable having this chunk of money exposed to the risk of this investment. If not, then perhaps a re-think of the investment is in order.

Note that the downside of exposure to volatility typically increases when you hit the point where you need to start drawing down your assets, not decrease. If you have a plan of action that protects you from that downside once you retire, then implement it now.
The plan I have is a retirement plan. I am not yet retired. Again my inclination would be not to retire if I’m all in PRIOR to retiring and the market takes a huge hit. Once I’m retired it’s a different story as I have a plan to combat it.

Again I do not want to be put in a position where I will feel that I should not retire in October due to the market tanking. If I buy the dips until October I should accomplish the main goal of not being put in a position where I feel I should not retire.
Do the actions involved in the retirement plan yield a better return than keeping the assets in cash until October? If so, then just do that.

Separately, what happens if the first dip is in November?
I’m beginning to wonder if I am writing a foreign language.
Again I will have $200,000 WHEN I RETIRE to cover market downturns. If VWIAX drops in value significantly I’ll stop withdrawals and use cash until the market rebounds.

Again the issue is that I do not want to be put in a position where I will feel I can’t retire prior to my retirement date.
delamer
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Joined: Tue Feb 08, 2011 6:13 pm

Re: Retirement investment question

Post by delamer »

Houdini563 wrote: Sun Jan 09, 2022 6:18 pm
bigjoec wrote: Sun Jan 09, 2022 5:51 pm
Houdini563 wrote: Sun Jan 09, 2022 5:47 pm
bigjoec wrote: Sun Jan 09, 2022 4:53 pm
Houdini563 wrote: Sun Jan 09, 2022 4:11 pm

Why is it problematic? Most every expert is predicting a major stock decline at some point or numerous points this year mainly due to the Feds pullback in monetary supply and increases in short term interest rates. KNOWING THIS at the start of a year where I plan on retiring why would it not pay to be cautious? The Fed has telegraphed its intentions and most all experts feel this policy change will affect the stock market very negatively. Bearing this in mind why rush into the market PRIOR to the Fed starting this process?

Again the whole idea is that I’m building up to retire October 1 this year. If I jump in and the market tanks as many predict my inclination would be not to retire until the market rebounds. I want to avoid being put into that situation. Once I retire it’s a different story as I have a plan of action.

I will have $200,000 cash in saving which is my back up if the market tanks after I retire. I’ll stop taking my monthly snippets from VWIAX and instead use cash until the market normalizes.
After you get it all invested, then the next time every expert is predicting a major stock decline, are you going to pull it all out and follow this process again? If not, why not?

The question is whether you're comfortable having this chunk of money exposed to the risk of this investment. If not, then perhaps a re-think of the investment is in order.

Note that the downside of exposure to volatility typically increases when you hit the point where you need to start drawing down your assets, not decrease. If you have a plan of action that protects you from that downside once you retire, then implement it now.
The plan I have is a retirement plan. I am not yet retired. Again my inclination would be not to retire if I’m all in PRIOR to retiring and the market takes a huge hit. Once I’m retired it’s a different story as I have a plan to combat it.

Again I do not want to be put in a position where I will feel that I should not retire in October due to the market tanking. If I buy the dips until October I should accomplish the main goal of not being put in a position where I feel I should not retire.
Do the actions involved in the retirement plan yield a better return than keeping the assets in cash until October? If so, then just do that.

Separately, what happens if the first dip is in November?
I’m beginning to wonder if I am writing a foreign language.
Again I will have $200,000 WHEN I RETIRE to cover market downturns. If VWIAX drops in value significantly I’ll stop withdrawals and use cash until the market rebounds.

Again the issue is that I do not want to be put in a position where I will feel I can’t retire prior to my retirement date.
How many years of expenses are covered by the $200,000 in cash?
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
Topic Author
Houdini563
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Re: Retirement investment question

Post by Houdini563 »

delamer wrote: Sun Jan 09, 2022 6:35 pm
Houdini563 wrote: Sun Jan 09, 2022 6:18 pm
bigjoec wrote: Sun Jan 09, 2022 5:51 pm
Houdini563 wrote: Sun Jan 09, 2022 5:47 pm
bigjoec wrote: Sun Jan 09, 2022 4:53 pm

After you get it all invested, then the next time every expert is predicting a major stock decline, are you going to pull it all out and follow this process again? If not, why not?

The question is whether you're comfortable having this chunk of money exposed to the risk of this investment. If not, then perhaps a re-think of the investment is in order.

Note that the downside of exposure to volatility typically increases when you hit the point where you need to start drawing down your assets, not decrease. If you have a plan of action that protects you from that downside once you retire, then implement it now.
The plan I have is a retirement plan. I am not yet retired. Again my inclination would be not to retire if I’m all in PRIOR to retiring and the market takes a huge hit. Once I’m retired it’s a different story as I have a plan to combat it.

Again I do not want to be put in a position where I will feel that I should not retire in October due to the market tanking. If I buy the dips until October I should accomplish the main goal of not being put in a position where I feel I should not retire.
Do the actions involved in the retirement plan yield a better return than keeping the assets in cash until October? If so, then just do that.

Separately, what happens if the first dip is in November?
I’m beginning to wonder if I am writing a foreign language.
Again I will have $200,000 WHEN I RETIRE to cover market downturns. If VWIAX drops in value significantly I’ll stop withdrawals and use cash until the market rebounds.

Again the issue is that I do not want to be put in a position where I will feel I can’t retire prior to my retirement date.
How many years of expenses are covered by the $200,000 in cash?
3.5-4 years.
delamer
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Re: Retirement investment question

Post by delamer »

Houdini563 wrote: Sun Jan 09, 2022 7:03 pm
delamer wrote: Sun Jan 09, 2022 6:35 pm
Houdini563 wrote: Sun Jan 09, 2022 6:18 pm
bigjoec wrote: Sun Jan 09, 2022 5:51 pm
Houdini563 wrote: Sun Jan 09, 2022 5:47 pm

The plan I have is a retirement plan. I am not yet retired. Again my inclination would be not to retire if I’m all in PRIOR to retiring and the market takes a huge hit. Once I’m retired it’s a different story as I have a plan to combat it.

Again I do not want to be put in a position where I will feel that I should not retire in October due to the market tanking. If I buy the dips until October I should accomplish the main goal of not being put in a position where I feel I should not retire.
Do the actions involved in the retirement plan yield a better return than keeping the assets in cash until October? If so, then just do that.

Separately, what happens if the first dip is in November?
I’m beginning to wonder if I am writing a foreign language.
Again I will have $200,000 WHEN I RETIRE to cover market downturns. If VWIAX drops in value significantly I’ll stop withdrawals and use cash until the market rebounds.

Again the issue is that I do not want to be put in a position where I will feel I can’t retire prior to my retirement date.
How many years of expenses are covered by the $200,000 in cash?
3.5-4 years.
If I had 5 years of expenses in cash, then I wouldn’t be worried about the short-term performance of my other investments.

So I’d set aside a bit of the $800,000 in cash (in addition to the $200,000), invest the rest in VWIAX tomorrow, and retire in October regardless.

Good luck.
One thing that humbles me deeply is to see that human genius has its limits while human stupidity does not. | | Alexandre Dumas, fils
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mrpotatoheadsays
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Re: Retirement investment question

Post by mrpotatoheadsays »

Houdini563 wrote: Sat Jan 08, 2022 10:53 am Thoughts?
You're market timing.

Wellington income is 40/60 (US large-cap value/intermediate). Historically, that allocation, that fund, has experienced drawdowns just under 20%. So if you can't handle losing 20% tomorrow or next week or next month or next year, you shouldn't be investing in it. Equally, the annual return has been approximately 9%.
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Houdini563
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Re: Retirement investment question

Post by Houdini563 »

mrpotatoheadsays wrote: Sun Jan 09, 2022 7:41 pm
Houdini563 wrote: Sat Jan 08, 2022 10:53 am Thoughts?
You're market timing.

Wellington income is 40/60 (US large-cap value/intermediate). Historically, that allocation, that fund, has experienced drawdowns just under 20%. So if you can't handle losing 20% tomorrow or next week or next month or next year, you shouldn't be investing in it. Equally, the annual return has been approximately 9%.
Again it’s all about having my plan fully in place as of October 1st. I’ve studied VWIAX/VWINX left and right, forward and back. I’m comfortable with it. However everything I’ve planned has to be in place as of retirement. Hence the caution. Once retired I have backup contingency plans to handle most economic situations.
bigjoec
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Re: Retirement investment question

Post by bigjoec »

Houdini563 wrote: Sun Jan 09, 2022 7:48 pm
mrpotatoheadsays wrote: Sun Jan 09, 2022 7:41 pm
Houdini563 wrote: Sat Jan 08, 2022 10:53 am Thoughts?
You're market timing.

Wellington income is 40/60 (US large-cap value/intermediate). Historically, that allocation, that fund, has experienced drawdowns just under 20%. So if you can't handle losing 20% tomorrow or next week or next month or next year, you shouldn't be investing in it. Equally, the annual return has been approximately 9%.
Again it’s all about having my plan fully in place as of October 1st. I’ve studied VWIAX/VWINX left and right, forward and back. I’m comfortable with it. However everything I’ve planned has to be in place as of retirement. Hence the caution. Once retired I have backup contingency plans to handle most economic situations.
Let's say it drops 5% on Nov 1, after you're fully invested. You're fine, right?
Alternatively, let's say you fully invest now, and it drops 5% on Sep 1. But you're not fine?

What's the difference? Walk me through the math.
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Houdini563
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Re: Retirement investment question

Post by Houdini563 »

bigjoec wrote: Sun Jan 09, 2022 7:53 pm
Houdini563 wrote: Sun Jan 09, 2022 7:48 pm
mrpotatoheadsays wrote: Sun Jan 09, 2022 7:41 pm
Houdini563 wrote: Sat Jan 08, 2022 10:53 am Thoughts?
You're market timing.

Wellington income is 40/60 (US large-cap value/intermediate). Historically, that allocation, that fund, has experienced drawdowns just under 20%. So if you can't handle losing 20% tomorrow or next week or next month or next year, you shouldn't be investing in it. Equally, the annual return has been approximately 9%.
Again it’s all about having my plan fully in place as of October 1st. I’ve studied VWIAX/VWINX left and right, forward and back. I’m comfortable with it. However everything I’ve planned has to be in place as of retirement. Hence the caution. Once retired I have backup contingency plans to handle most economic situations.
Let's say it drops 5% on Nov 1, after you're fully invested. You're fine, right?
Alternatively, let's say you fully invest now, and it drops 5% on Sep 1. But you're not fine?

What's the difference? Walk me through the math.
I’m not understanding why what I have wrote is not communicating accurately.

I have a plan.

If I have my job paying a very significant salary and I’m all in now and the market drops significantly prior to Oct 1st. I WILL FEEL COMPELLED NOT TO RETIRE OCTOBER 1st. I DONT WANT TO BE PUT IN THAT POSITION.

Hence my thought to gradually enter into VWIAX gradually on dips so WHAT I JUST CONVEYED does not occur. (or is less likely to occur).
bigjoec
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Re: Retirement investment question

Post by bigjoec »

Houdini563 wrote: Sun Jan 09, 2022 8:17 pm
bigjoec wrote: Sun Jan 09, 2022 7:53 pm
Houdini563 wrote: Sun Jan 09, 2022 7:48 pm
mrpotatoheadsays wrote: Sun Jan 09, 2022 7:41 pm
Houdini563 wrote: Sat Jan 08, 2022 10:53 am Thoughts?
You're market timing.

Wellington income is 40/60 (US large-cap value/intermediate). Historically, that allocation, that fund, has experienced drawdowns just under 20%. So if you can't handle losing 20% tomorrow or next week or next month or next year, you shouldn't be investing in it. Equally, the annual return has been approximately 9%.
Again it’s all about having my plan fully in place as of October 1st. I’ve studied VWIAX/VWINX left and right, forward and back. I’m comfortable with it. However everything I’ve planned has to be in place as of retirement. Hence the caution. Once retired I have backup contingency plans to handle most economic situations.
Let's say it drops 5% on Nov 1, after you're fully invested. You're fine, right?
Alternatively, let's say you fully invest now, and it drops 5% on Sep 1. But you're not fine?

What's the difference? Walk me through the math.
I’m not understanding why what I have wrote is not communicating accurately.

I have a plan.

If I have my job paying a very significant salary and I’m all in now and the market drops significantly prior to Oct 1st. I WILL FEEL COMPELLED NOT TO RETIRE OCTOBER 1st. I DONT WANT TO BE PUT IN THAT POSITION.

Hence my thought to gradually enter into VWIAX gradually on dips so WHAT I JUST CONVEYED does not occur. (or is less likely to occur).
If you were all in on September 1 and it dropped, you would have your choice of continuing to work or retiring as planned. You indicate that in that situation you would choose not to retire.

If you were all in on November 1 and it dropped, you would NOT have the choice of continuing to work.

Yet even though the drop on Nov 1 is worse -- since you can't react to it in the way you'd like to -- you state that you're fine with bearing that risk. If you're going to be fine with that greater risk on Nov 1, Dec 1, Jan 1, Feb 1, etc until your death, why are you not okay with it on Sep 1, Aug 1, Jul 1 and back to today? You can always promise yourself that you'll retire no matter what.
Topic Author
Houdini563
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Re: Retirement investment question

Post by Houdini563 »

bigjoec wrote: Sun Jan 09, 2022 8:37 pm
Houdini563 wrote: Sun Jan 09, 2022 8:17 pm
bigjoec wrote: Sun Jan 09, 2022 7:53 pm
Houdini563 wrote: Sun Jan 09, 2022 7:48 pm
mrpotatoheadsays wrote: Sun Jan 09, 2022 7:41 pm

You're market timing.

Wellington income is 40/60 (US large-cap value/intermediate). Historically, that allocation, that fund, has experienced drawdowns just under 20%. So if you can't handle losing 20% tomorrow or next week or next month or next year, you shouldn't be investing in it. Equally, the annual return has been approximately 9%.
Again it’s all about having my plan fully in place as of October 1st. I’ve studied VWIAX/VWINX left and right, forward and back. I’m comfortable with it. However everything I’ve planned has to be in place as of retirement. Hence the caution. Once retired I have backup contingency plans to handle most economic situations.
Let's say it drops 5% on Nov 1, after you're fully invested. You're fine, right?
Alternatively, let's say you fully invest now, and it drops 5% on Sep 1. But you're not fine?

What's the difference? Walk me through the math.
I’m not understanding why what I have wrote is not communicating accurately.

I have a plan.

If I have my job paying a very significant salary and I’m all in now and the market drops significantly prior to Oct 1st. I WILL FEEL COMPELLED NOT TO RETIRE OCTOBER 1st. I DONT WANT TO BE PUT IN THAT POSITION.

Hence my thought to gradually enter into VWIAX gradually on dips so WHAT I JUST CONVEYED does not occur. (or is less likely to occur).
If you were all in on September 1 and it dropped, you would have your choice of continuing to work or retiring as planned. You indicate that in that situation you would choose not to retire.

If you were all in on November 1 and it dropped, you would NOT have the choice of continuing to work.

Yet even though the drop on Nov 1 is worse -- since you can't react to it in the way you'd like to -- you state that you're fine with bearing that risk. If you're going to be fine with that greater risk on Nov 1, Dec 1, Jan 1, Feb 1, etc until your death, why are you not okay with it on Sep 1, Aug 1, Jul 1 and back to today? You can always promise yourself that you'll retire no matter what.
Correct if the drop occurred after I retired I would not have the option to continue working my present job. However my plan would be fully enacted and my bases covered. Again the idea is not being put in the position prior to retirement to feel compelled not to retire.
vested1
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Re: Retirement investment question

Post by vested1 »

In my opinion you're overthinking this. I agree with dbr and delamer. Agonizing over this decision will only increase your stress at a time when you should be celebrating your impending retirement. Your choice of investment for the 800k is very safe, also my opinion, and even if it declined temporarily you have a plan to halt withdrawals by using a higher percentage of your 200k backup in the short term.

Currently the inflation rate is surpassing your return on that 800k, so I would suggest changing course and not looking back.

Lump sum investing has the advantage in your case because by using DCA you will be experiencing the same anxiety you're feeling now every time you transfer from the CD's or cash into your new investment. It's time to rip off the bandaid and get it over with. You'll be fine.
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Houdini563
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Re: Retirement investment question

Post by Houdini563 »

vested1 wrote: Mon Jan 10, 2022 5:24 am In my opinion you're overthinking this. I agree with dbr and delamer. Agonizing over this decision will only increase your stress at a time when you should be celebrating your impending retirement. Your choice of investment for the 800k is very safe, also my opinion, and even if it declined temporarily you have a plan to halt withdrawals by using a higher percentage of your 200k backup in the short term.

Currently the inflation rate is surpassing your return on that 800k, so I would suggest changing course and not looking back.

Lump sum investing has the advantage in your case because by using DCA you will be experiencing the same anxiety you're feeling now every time you transfer from the CD's or cash into your new investment. It's time to rip off the bandaid and get it over with. You'll be fine.
Definitely overthinking. I moved today $210,000 to VWIAX. Felt a strong sense of relief!

Expecting another $520,000 will be available to invest next week.

In the end I should have:

$1,250,000 in VWIAX which I’ll take $50,000 annually.
$200,000 in my IRA paying 4.5% which I’ll take $12,000 annually.
Social security which should be $31,000 annually.

$93,000 pre tax. About $6500 after tax per month. A bit more than my current take home pay.
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arcticpineapplecorp.
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Re: Retirement investment question

Post by arcticpineapplecorp. »

Houdini563 wrote: Tue Jan 11, 2022 9:03 pm Definitely overthinking. I moved today $210,000 to VWIAX. Felt a strong sense of relief!

Expecting another $520,000 will be available to invest next week.

In the end I should have:

$1,250,000 in VWIAX which I’ll take $50,000 annually.
$200,000 in my IRA paying 4.5% which I’ll take $12,000 annually.
Social security which should be $31,000 annually.

$93,000 pre tax. About $6500 after tax per month. A bit more than my current take home pay.
assuming this is a taxable acct.

are you aware that all in one funds tend to distribute dividends and capital gains (source: https://investor.vanguard.com/mutual-fu ... ions/vwiax)? there was a topic about this regarding target date retirement funds which are also all in one funds (the reason for that large distribution in TD funds in 2021 may have been a one off) but have you looked at the distribution page of VWIAX to determine how much in dividends and cap gains you likely may receive and if you are planning on reinvesting those dividends/cap gains or if you are going to distribute to cash settlement and what the difference taxwise might be?

Based on $1,250,000 in vwiax (18,063 shares at $69.20/share using amount on distributions page) and using dividends ($1.7909 total) and cap gains for 2021 ($0.6185 Short term and $1.8721 Long term):

$32,349 dividends
$11,506 Short term cap gains
$33,815 Long term cap gains

something to be aware of and the tax implications of distributions.
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tibbitts
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Re: Retirement investment question

Post by tibbitts »

Houdini563 wrote: Sun Jan 09, 2022 7:53 am ...I think I need to be cautious in the current economic environment.
Has there ever been an economic environment in which you wouldn't feel you had to be cautious?
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arcticpineapplecorp.
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Re: Retirement investment question

Post by arcticpineapplecorp. »

Houdini563 wrote: Sun Jan 09, 2022 4:11 pm Why is it problematic? Most every expert is predicting a major stock decline at some point or numerous points this year mainly due to the Feds pullback in monetary supply and increases in short term interest rates. KNOWING THIS at the start of a year where I plan on retiring why would it not pay to be cautious? The Fed has telegraphed its intentions and most all experts feel this policy change will affect the stock market very negatively. Bearing this in mind why rush into the market PRIOR to the Fed starting this process?
i infer from your statement that an expert is someone who:
1. is right all the time
2. knows the future

in addition, your statements imply:
3. if interest rates rise then stock markets must fall.

do you think you should consider your assumptions?

could there be times when #1, 2 and 3 might be opposite what you think/expect?

how would that impact decisions you make because of others, especially if those other's opinions turn out wrong?

of course, let's look at some evidence because I know that to be an expert, you really only need to be a stranger with a briefcase, but not much more. Here's some evidence:

Image
We are attracted to voices that confidently claim to know what the future holds because we seek certainty in an
uncertain world. Every January, "experts" pronounce their forecasts for the economy and the global markets in the New
Year. They do this despite the dismal track record of their past forecasts. The 2021 winner of my "Most Embarrassingly
Bad Forecast from A Wall Street Big Shot Award" is Morgan Stanley's chief U.S. equity strategist, Mike Wilson, who
predicted that the S&P 500 would gain 4% in 2021. Peter Lynch, the legendary manager of the Fidelity Magellan Fund
during its glory days, said that if he spent 13 minutes studying economic forecasts, he had wasted 10 minutes. Be
skeptical of all predictions of extreme events which, by definition, are outliers and unlikely to occur – regardless of the
number of their YouTube views.

source: https://oncoursefp.com/images/Vectors%2 ... 0final.pdf
Image

see how they got it wrong, or rather if you had not listened and just stayed the course, you'd have made out well?

Here's 67 economists who made predictions on the movement of short term interest rates over a 6 month period of time. They all guessed rates would go up over the next 6 months, but instead rates went down:

Image

source:
https://www.marketwatch.com/story/yes-1 ... 2014-10-21

experts and active managers think they know (overconfidence bias) or are really good at convincing you they know what will happen (they don't. they can't. they'd have to know the future ahead of time). here's another article about "sure things":

https://www.advisorperspectives.com/art ... ure-things

There are people who get paid a lot of money, like Jim Cramer, who surely knows what he's talking about, right? If so, why did he say on 3/11/2008:

Bear Stearns is FINE!!

(it was sold in a fire sale to JP Morgan on March 17, 2008)

Look at how the stock market did during the 80s when Volcker rose interest rates to choke off inflation:

Image

did the market tank just "because" rates rose? And rose dramatically?

Finally, everyone already knows that the the rate hikes are coming. The fed said so. So if everyone already knows that, wouldn't that have already been factored into the stock prices? I.E., if you believe rate hikes will tank the market, and everyone already knows the rate hikes are coming, then why hasn't the market already tanked?

it's ok to not have answers to these questions. it's better to embrace uncertainty instead of operating under overconfidence.
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arcticpineapplecorp.
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Re: Retirement investment question

Post by arcticpineapplecorp. »

Houdini563 wrote: Sat Jan 08, 2022 10:53 am So my question is what methodology should I use to transfer this money from a money market to VWIAX? I realize trying to time the market is unwise but I cannot afford to dump the $800,000 into VWIAX now and then see it collapse heading into an October retirement date.

My one thought is to be cautious and buy on the dips periodically until October 1st with the intent of having the entire amount transferred by then.

Thoughts?
From Larry Swedroe:
Here is another way to think about DCA. Assume that staying fully invested in equities is suboptimal, meaning you should sell all your equities and then DCA back into the market. At the next investment period you have some money in the stock market already. While you planned to periodically reinvest in the market, you also determined that staying fully invested is suboptimal. You run into this difficulty: Do you continue to buy equities, sell your existing holdings, or do both? Logicaly, DCA cannot be effective...

While DCA is not an optimal investment strategy, it has value when facing the "lesser of two evils," that is, when an investor simply cannot "take the plunge" and invest all at once for fear of what could happen to the stock market. Fear causes paralysis. If the market rises after they delay, they think, "How can I buy now at even higher prices?" If the market falls, "I can't buy now. That bear market I was afraid of is here." Once deciding not to buy, how do you decide to ever buy again?

The Only Guide You'll Ever Need for the Right Financial Plan, by Larry Swedroe, page 182, appendix B
if you have a plan, just follow it. DCA makes one feel good because if they have some (but not all) invested and the market goes up, they made money (just on what was invested, not all). If the market falls, they feel smart because they didn't lose more money (because it wasn't all invested).

Larry says:
Investors and advisors do not always base decisions on logic or evidence. Emotions, such as fear often play a far greater role in decision making.
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Houdini563
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Re: Retirement investment question

Post by Houdini563 »

arcticpineapplecorp. wrote: Fri Jan 14, 2022 12:27 pm
Houdini563 wrote: Tue Jan 11, 2022 9:03 pm Definitely overthinking. I moved today $210,000 to VWIAX. Felt a strong sense of relief!

Expecting another $520,000 will be available to invest next week.

In the end I should have:

$1,250,000 in VWIAX which I’ll take $50,000 annually.
$200,000 in my IRA paying 4.5% which I’ll take $12,000 annually.
Social security which should be $31,000 annually.

$93,000 pre tax. About $6500 after tax per month. A bit more than my current take home pay.
assuming this is a taxable acct.

are you aware that all in one funds tend to distribute dividends and capital gains (source: https://investor.vanguard.com/mutual-fu ... ions/vwiax)? there was a topic about this regarding target date retirement funds which are also all in one funds (the reason for that large distribution in TD funds in 2021 may have been a one off) but have you looked at the distribution page of VWIAX to determine how much in dividends and cap gains you likely may receive and if you are planning on reinvesting those dividends/cap gains or if you are going to distribute to cash settlement and what the difference taxwise might be?

Based on $1,250,000 in vwiax (18,063 shares at $69.20/share using amount on distributions page) and using dividends ($1.7909 total) and cap gains for 2021 ($0.6185 Short term and $1.8721 Long term):

$32,349 dividends
$11,506 Short term cap gains
$33,815 Long term cap gains

something to be aware of and the tax implications of distributions.
All this money is from old 401K accounts via past employers. I plan on reinvesting all cap gains and distribution. Just taking a monthly direct deposit into my checking account.
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arcticpineapplecorp.
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Re: Retirement investment question

Post by arcticpineapplecorp. »

Houdini563 wrote: Fri Jan 14, 2022 8:09 pm
arcticpineapplecorp. wrote: Fri Jan 14, 2022 12:27 pm
Houdini563 wrote: Tue Jan 11, 2022 9:03 pm Definitely overthinking. I moved today $210,000 to VWIAX. Felt a strong sense of relief!

Expecting another $520,000 will be available to invest next week.

In the end I should have:

$1,250,000 in VWIAX which I’ll take $50,000 annually.
$200,000 in my IRA paying 4.5% which I’ll take $12,000 annually.
Social security which should be $31,000 annually.

$93,000 pre tax. About $6500 after tax per month. A bit more than my current take home pay.
assuming this is a taxable acct.

are you aware that all in one funds tend to distribute dividends and capital gains (source: https://investor.vanguard.com/mutual-fu ... ions/vwiax)? there was a topic about this regarding target date retirement funds which are also all in one funds (the reason for that large distribution in TD funds in 2021 may have been a one off) but have you looked at the distribution page of VWIAX to determine how much in dividends and cap gains you likely may receive and if you are planning on reinvesting those dividends/cap gains or if you are going to distribute to cash settlement and what the difference taxwise might be?

Based on $1,250,000 in vwiax (18,063 shares at $69.20/share using amount on distributions page) and using dividends ($1.7909 total) and cap gains for 2021 ($0.6185 Short term and $1.8721 Long term):

$32,349 dividends
$11,506 Short term cap gains
$33,815 Long term cap gains

something to be aware of and the tax implications of distributions.
All this money is from old 401K accounts via past employers. I plan on reinvesting all cap gains and distribution. Just taking a monthly direct deposit into my checking account.
So is this money from 401k accts being rolled into an IRA?

If so that's good. In that case then the cap gains and divs are irrelevant.
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