Am I doing this right?
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- Posts: 38
- Joined: Mon Jan 29, 2018 10:21 am
Am I doing this right?
Cash Instruments:
$105K in Whole Life Policy cash value
$185K in CDs and Savings
Invested:
$270K in Vanguard Target 2025 in 401K, IRA, and Roth
No debts
No Mortgage (don't plan to buy a house for forseeable future)
Tax Filing Status: Single
Tax Rate: 28%?
State of Residence: FL
Age: 58
Contributions:
2018: $24.5K to 401K and $6.5K to Roth to Vanguard Target 2025
Desired Allocation:
Rebalance to keep 25% in cash instruments and remaining in Vanguard Target 2030 (about 70-30 stock-bond split)
Other info:
1. Though I was unemployed for long years during the recession, I believe I am now employable and will be able to work even in a down economy for an income of 100k, until 62 or 65.
2. Health is good
3. Yearly expenses of 50k - 60k
Questions:
1. I know I have far too much in cash instruments. I am moving $130k from cash instruments into Vanguard Target 2030. My questions is about how to move this money.
2. I am thinking of moving 65k (half) in DCA of $2500 every two weeks for a year
3. And moving the other half in two or three lump sums when the market is down
Does that make sense?
$105K in Whole Life Policy cash value
$185K in CDs and Savings
Invested:
$270K in Vanguard Target 2025 in 401K, IRA, and Roth
No debts
No Mortgage (don't plan to buy a house for forseeable future)
Tax Filing Status: Single
Tax Rate: 28%?
State of Residence: FL
Age: 58
Contributions:
2018: $24.5K to 401K and $6.5K to Roth to Vanguard Target 2025
Desired Allocation:
Rebalance to keep 25% in cash instruments and remaining in Vanguard Target 2030 (about 70-30 stock-bond split)
Other info:
1. Though I was unemployed for long years during the recession, I believe I am now employable and will be able to work even in a down economy for an income of 100k, until 62 or 65.
2. Health is good
3. Yearly expenses of 50k - 60k
Questions:
1. I know I have far too much in cash instruments. I am moving $130k from cash instruments into Vanguard Target 2030. My questions is about how to move this money.
2. I am thinking of moving 65k (half) in DCA of $2500 every two weeks for a year
3. And moving the other half in two or three lump sums when the market is down
Does that make sense?
Re: Am I doing this right?
There are plenty of issues to address and you would be helped by posting according to "asking portfolio questions".
Your plan is fine but not optimal. Two issues. First, the market has generally gone up over time and we expect it will continue to do so. So mathematically it's better to invest any money as early as possible. That is difficult for many people to stomach and so any old DCA plan is better than nothing.
The problem with "when the market is down" is that is totally nebulous and you can't know it anyway. We are currently "down" from the recent all time high, but up compared to every moment in history up until December. Is this a good time to buy? Or are we headed lower? No one knows.
Your plan is fine but not optimal. Two issues. First, the market has generally gone up over time and we expect it will continue to do so. So mathematically it's better to invest any money as early as possible. That is difficult for many people to stomach and so any old DCA plan is better than nothing.
The problem with "when the market is down" is that is totally nebulous and you can't know it anyway. We are currently "down" from the recent all time high, but up compared to every moment in history up until December. Is this a good time to buy? Or are we headed lower? No one knows.
Re: Am I doing this right?
In general you look like you are on the right track.
You should read: https://www.bogleheads.org/wiki/Tax-eff ... _placement
Why do you have a life insurance policy since you are single?
Whole life insurance is usually not very desirable.
You should read: https://www.bogleheads.org/wiki/Tax-eff ... _placement
Why do you have a life insurance policy since you are single?
Whole life insurance is usually not very desirable.
52% TSM, 23% TISM, 24.5% TBM, 0.5% cash
- quantAndHold
- Posts: 10141
- Joined: Thu Sep 17, 2015 10:39 pm
- Location: West Coast
Re: Am I doing this right?
A couple of questions.
Does yearly income of $100k and expenses of $50-60k mean that you’re actually saving $40-50k per year? That would mean 401k and IRA, plus about $10-20k in taxable.
How much Social Security do you expect? Do you expect any pension?
Does yearly income of $100k and expenses of $50-60k mean that you’re actually saving $40-50k per year? That would mean 401k and IRA, plus about $10-20k in taxable.
How much Social Security do you expect? Do you expect any pension?
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Re: Am I doing this right?
Exactly. Someone last November-just three months ago-who decided to wait for the market to go down before investing might see this 10% decline as a great opportunity....and would still be buying at a higher price than in November. Waiting for a drop only works if the drop comes right after that decision, and nobody can tell when that will occur.mega317 wrote: ↑Tue Feb 13, 2018 10:51 am The problem with "when the market is down" is that is totally nebulous and you can't know it anyway. We are currently "down" from the recent all time high, but up compared to every moment in history up until December. Is this a good time to buy? Or are we headed lower? No one knows.
To ease your mind, maybe lump sum half now and then DCA the rest in scheduled dates over the next few months. But waiting for a drop is a bad idea. A drop that satisfies you might only come after an even bigger run-up.
Re: Am I doing this right?
I'm very curious on this bit...it's oddly specific. Given you were admittedly unemployed during the recession and you are now older (no offense, but agism is a real thing), what exactly gives you the confidence in this statement? Why 100k? Why 62 or 65? How does this "knowledge" factor into your decision making?Karma Skimmer wrote: ↑Tue Feb 13, 2018 10:40 am Other info:
1. Though I was unemployed for long years during the recession, I believe I am now employable and will be able to work even in a down economy for an income of 100k, until 62 or 65.
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Re: Am I doing this right?
I have two adult daughters and three grandchildren. But still the whole life policy is not desirable because I can do better in the long run if I invest the cash value and premiums. But for now I see is as a cash instrument. I will consider dissolving it next year. Thanks.
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Re: Am I doing this right?
I didn't work for a while so I had some extraordinary expenses to catch up, but in 2018 I expect to save 10k or more in addition to 401k and Roth.quantAndHold wrote: ↑Tue Feb 13, 2018 11:29 am Does yearly income of $100k and expenses of $50-60k mean that you’re actually saving $40-50k per year? That would mean 401k and IRA, plus about $10-20k in taxable.
About $23800/year at 62; $25k at 65. I want to be fin. independent as soon as I can, so I can work on things other than making a salary.How much Social Security do you expect? Do you expect any pension?
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- Posts: 38
- Joined: Mon Jan 29, 2018 10:21 am
Re: Am I doing this right?
For a long time I was in management in small tech companies in Florida. During the years 2005 to 2015, it was difficult to find and keep a job and I burned through a lot of cash. In 2012 I invested in a bootcamp to become (again) a software developer (specifically, .net developer). For two years after that I tried a start up, and then in early 2015 took a job as developer. Today, with three years of hands-on experience (and many years of questionable wisdom) I feel confident about earning 100k for the next 5 - 10 years. At least until AI takes over.software wrote: ↑Tue Feb 13, 2018 11:52 amI'm very curious on this bit...it's oddly specific. Given you were admittedly unemployed during the recession and you are now older (no offense, but agism is a real thing), what exactly gives you the confidence in this statement? Why 100k? Why 62 or 65? How does this "knowledge" factor into your decision making?Karma Skimmer wrote: ↑Tue Feb 13, 2018 10:40 am Other info:
1. Though I was unemployed for long years during the recession, I believe I am now employable and will be able to work even in a down economy for an income of 100k, until 62 or 65.
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- Posts: 38
- Joined: Mon Jan 29, 2018 10:21 am
Re: Am I doing this right?
That's what I'm doing. I have half in a settlement fund waiting to pounce if the market does go down significantly, and if it doesn't, by the end of the year, I'll go in anyway. And, the other half, I'm DCA'ing in over a period of one year.FoolMeOnce wrote: ↑Tue Feb 13, 2018 11:37 amTo ease your mind, maybe lump sum half now and then DCA the rest in scheduled dates over the next few months...
The question is whether moving in over one year is too slow for me. I'm 58.
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Re: Am I doing this right?
That is a bit different. Instead of the lump sum now, you are waiting for a decline, which raises the concerns discussed above.Karma Skimmer wrote: ↑Tue Feb 13, 2018 12:28 pmThat's what I'm doing. I have half in a settlement fund waiting to pounce if the market does go down significantly, and if it doesn't, by the end of the year, I'll go in anyway. And, the other half, I'm DCA'ing in over a period of one year.FoolMeOnce wrote: ↑Tue Feb 13, 2018 11:37 amTo ease your mind, maybe lump sum half now and then DCA the rest in scheduled dates over the next few months...
The question is whether moving in over one year is too slow for me. I'm 58.
Also, the market just dropped 10%! What more are you waiting for? Do you have a specific number that will trigger you to invest?
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Re: Am I doing this right?
I guess what plays in my mind is the thought that some people think the market will go through a correction this year and then rally towards the end of the year.Also, the market just dropped 10%! What more are you waiting for? Do you have a specific number that will trigger you to invest?
I've heard this a lot. I know, I know, to try to time the market is foolish. But nevertheless, this is what plays in my mind.
If the market went down 15% from 1/1/2018 I would put the lump sum portion in. If it doesn't go down I will put it in anyway in six months or so.
- quantAndHold
- Posts: 10141
- Joined: Thu Sep 17, 2015 10:39 pm
- Location: West Coast
Re: Am I doing this right?
So if you’re able to live on $50k/year, and are expecting $25k in SS, then you need your investments to supply roughly $25k per year. In rough, round numbers, you’ll need $7-800k invested at retirement. At your current savings rate, you’re on track. If you can keep health insurance through work until you qualify for Medicare, so much the better.Karma Skimmer wrote: ↑Tue Feb 13, 2018 12:15 pmI didn't work for a while so I had some extraordinary expenses to catch up, but in 2018 I expect to save 10k or more in addition to 401k and Roth.quantAndHold wrote: ↑Tue Feb 13, 2018 11:29 am Does yearly income of $100k and expenses of $50-60k mean that you’re actually saving $40-50k per year? That would mean 401k and IRA, plus about $10-20k in taxable.
About $23800/year at 62; $25k at 65. I want to be fin. independent as soon as I can, so I can work on things other than making a salary.How much Social Security do you expect? Do you expect any pension?
As far as moving the money from cash into the market, as long as you’re still working and investing new money, I would just lump sum it in. You can still recover from a market downturn if you’re investing new money. If you’re not comfortable with that, then DCA it in monthly over the next year.