150K to invest

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Midlifeperspectives
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Joined: Sat Jan 13, 2018 6:14 pm

150K to invest

Post by Midlifeperspectives » Sat Jan 13, 2018 8:22 pm

Some background: I am 53, disabled, collect SS and work very part time. My total income, between SS and work, is approximately $2,000/month. Not very much but my living expenses are pretty low as my mortgage is only $368/month. I live a very simple lifestyle since I do not travel nor do I leave my home very much. My greatest expenses are medical and dental which at times take up to a quarter of my monthly income. Still I tend to be able to save a couple hundred dollars most months---I know pretty miraculous. I consider myself very fortunate despite the on-going uncertainty of having had MS since my 20s. I do need to factor this uncertainty into my prospective investment allocation and relative need for liquidity.

So...about six months ago I sold a rental house I had had for about 13 years which I was forced to hold through the real estate bubble and recession. Very grateful to be out of it as it was an old house requiring attention and energy that I do not have. After the sale of this property and including some small savings I have about 150K to invest. It feels momentous and a bit scary given my age and inability to be highly productive work wise.

I have considered buying a smaller rental such as a condo that might require less attention/energy/upkeep. In my area this might yield 5-6% per year plus or minus any appreciation and upkeep expenses. I could buy something between 100-125K and still have some cash left over. But I am also reticent to get into real estate again feeling exhausted by the interminable wait I had to get rid of this prior rental property. This may be an irrational fear given that a condo could be much easier. I could also hire a rental manager but of course that would reduce income on the rental.

What brings me to BHs of course is the option to invest in mutual funds/ETFs. I have considered starting by investing perhaps just a third of my cash on hand (50K) into a 3-4 fund portfolio (Total Stock Market/Total Intl Stock Market/Total bond/Total Intl Bond) perhaps with a 40/60 equities/bond AA, OR possibly just buying VWINX (Wellesley Income Fund) and VTINX (Target Retirement Income fund) 50% each. The latter would give me about 33.5/66.5 equities/stock AA. The rest of my cash I'd keep in high yield savings watching for higher rate CDs later and/or possibly add to my mutual fund portfolio if I feel more capable of risk.

In general I am struggling with "timing the market" which I know is something NOT to do if one is in it for long term. I should have invested back over the summer but I have been pretty concerned about the possibility that we are near a correction. Currently many seem optimistic for at least the first half of 2018 given the new tax law's effect on the market. So I continue to contemplate but feel I should do something soon if I am not going to use this money for a real estate rental purchase.

Any thoughts or input would be much appreciated on the above approach from seasoned people who would consider my risk averse nature at moment and long term need for security all the while I am hoping for some small ability to grow my assets---I know that is a lot! I really like VWINX/VTINX and feel good about their low ER and the ease of not needing to rebalance but am concerned with rising interest rates and major market correction. I suppose no one has a crystal ball but it would be nice to hear from people who have done this for a while. Thanks!

Lou354
Posts: 557
Joined: Sun Apr 03, 2016 10:51 pm

Re: 150K to invest

Post by Lou354 » Sat Jan 13, 2018 10:27 pm

If you invest in a fund that holds stocks you have to be prepared for it to go up and for it to go down, repeatedly. If you can’t or don’t want to live with that, you should find someplace else to invest your money. If you can, then Wellesley, target income, Lifestrategy conservative growth, or a combination of two of them, could be a good choice for you.

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Tyler Aspect
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Re: 150K to invest

Post by Tyler Aspect » Sat Jan 13, 2018 10:32 pm

One nice combination is Vanguard LifeStrategy Conservative Growth and Vanguard Balanced Index in equal portions. You will get an over-all allocation of 50% stock / 50% bond. Very little re-balancing required.
Past result does not predict future performance. Mentioned investments may lose money. Contents are presented "AS IS" and any implied suitability for a particular purpose are disclaimed.

deltaneutral83
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Re: 150K to invest

Post by deltaneutral83 » Sat Jan 13, 2018 10:41 pm

Tyler Aspect wrote:
Sat Jan 13, 2018 10:32 pm
One nice combination is Vanguard LifeStrategy Conservative Growth and Vanguard Balanced Index in equal portions. You will get an over-all allocation of 50% stock / 50% bond. Very little re-balancing required.
I'm curious, would the Moderate LS and Conservative LS not equal the same thing?

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Tyler Aspect
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Re: 150K to invest

Post by Tyler Aspect » Sat Jan 13, 2018 10:53 pm

deltaneutral83 wrote:
Sat Jan 13, 2018 10:41 pm
Tyler Aspect wrote:
Sat Jan 13, 2018 10:32 pm
One nice combination is Vanguard LifeStrategy Conservative Growth and Vanguard Balanced Index in equal portions. You will get an over-all allocation of 50% stock / 50% bond. Very little re-balancing required.
I'm curious, would the Moderate LS and Conservative LS not equal the same thing?
Sure, but the Balanced Index has a lower expense ratio. Bogleheads are penny pinchers !
Past result does not predict future performance. Mentioned investments may lose money. Contents are presented "AS IS" and any implied suitability for a particular purpose are disclaimed.

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