Investing $140k in cash at 1k per week

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anoop
Posts: 1055
Joined: Tue Mar 04, 2014 1:33 am

Re: Investing $140k in cash at 1k per week

Post by anoop » Sat Nov 16, 2019 7:10 pm

MotoTrojan wrote:
Sat Nov 16, 2019 5:38 pm
anoop wrote:
Sat Nov 16, 2019 5:16 pm
When I read the question I knew what the consensus answer was going to be.

You have to do what you’re comfortable with because only you will live with the consequences.

I’m close to 100% cash and short term and have been that way since early 2008. I’m living with the consequences of missing out and I’ve thought of your strategy but I decided against it. I just don’t think one should be forced to invest in equities to attain one’s financial goals, so I’m just saving a bit more than I need to. My average return on all balances, retirement and non has been < 1%, so all the growth has come from adding to the account.
Yikes. Did you start investing in 2008 or sell at the bottom?

Genuinely curious, have you run the math to see what your balance would be?

You plan to continue at 0/100 through retirement?

Good luck.
Sold in Feb 2008 before the crash.

I don’t know what I will do going to retirement. I’m somewhat conflicted about the stock market not just in terms of risks but in terms of what I’m supporting by being a part of it, especially when taken as a whole.

401k balance is currently 2x what it was back the because of my contributions. I switched employers to one with a better match and since the last 2 years that plan has been offering after tax contributions.

If my 401k offered a TIPS fund, that is what I’d have invested in. But with bond funds I have the same internal conflict that I have with stocks. I have asked the benefits department to get the custodian to offer such a fund but no luck so far.

Pepper11
Posts: 50
Joined: Fri Jun 13, 2014 9:22 pm

Re: Investing $140k in cash at 1k per week

Post by Pepper11 » Sat Nov 16, 2019 7:19 pm

mike152 wrote:
Mon Nov 11, 2019 2:48 pm
Question: If you had 140k already invested today, would you withdraw all of it in cash now, and slowly reinvest? Or, just leave it?
Wouldn't you have to pay capital gains taxes?

Its apples to oranges.

DinkinFlicka
Posts: 34
Joined: Mon Apr 17, 2017 11:10 pm

Re: Investing $140k in cash at 1k per week

Post by DinkinFlicka » Sat Nov 16, 2019 7:27 pm

Pepper11 wrote:
Sat Nov 16, 2019 7:19 pm
mike152 wrote:
Mon Nov 11, 2019 2:48 pm
Question: If you had 140k already invested today, would you withdraw all of it in cash now, and slowly reinvest? Or, just leave it?
Wouldn't you have to pay capital gains taxes?

Its apples to oranges.
I interpreted this as if you had a 140K invested at a cost basis of 140K (eg windfall of gifted shares). Then you would have no capital gains tax to pay when you convert to cash and slowly re-invest.

Topic Author
timetraveler
Posts: 34
Joined: Mon Nov 11, 2019 1:13 pm

Re: Investing $140k in cash at 1k per week

Post by timetraveler » Sun Nov 17, 2019 1:23 pm

dogagility wrote:
Sat Nov 16, 2019 4:37 pm
timetraveler wrote:
Sat Nov 16, 2019 1:20 pm
Can you give me a historical example of why buying more stocks when the market is down (let's set the threshold at -30%) is not good? I don't care about semantics/names such as "market timing".
https://www.bogleheads.org/wiki/Boglehe ... the_market
Here is what in the link you provided:
There is a large amount of research showing that typical mutual fund investors actually perform far worse than the mutual funds they invest in because they tend to buy after a fund has done well and tend to sell what they own when it has done poorly. Studies on timing using returns data show no evidence of positive timing. The vast majority of investors earn less than the market due to two common timing mistakes: buying yesterday's top performers, and letting your emotions cause you to attempt to predict the direction of the stock market. This behavior of buy high, sell low is guaranteed to produce poor results.
Where in my question did I suggest buying high & selling low? It was about doing totally the opposite: buying low and selling high..
Can you give me a historical example of why buying more stocks when the market is down (let's set the threshold at -30%) is not good? I don't care about semantics/names such as "market timing".

EnjoyIt
Posts: 2879
Joined: Sun Dec 29, 2013 8:06 pm

Re: Investing $140k in cash at 1k per week

Post by EnjoyIt » Sun Nov 17, 2019 2:04 pm

timetraveler wrote:
Sun Nov 17, 2019 1:23 pm
dogagility wrote:
Sat Nov 16, 2019 4:37 pm
timetraveler wrote:
Sat Nov 16, 2019 1:20 pm
Can you give me a historical example of why buying more stocks when the market is down (let's set the threshold at -30%) is not good? I don't care about semantics/names such as "market timing".
https://www.bogleheads.org/wiki/Boglehe ... the_market
Here is what in the link you provided:
There is a large amount of research showing that typical mutual fund investors actually perform far worse than the mutual funds they invest in because they tend to buy after a fund has done well and tend to sell what they own when it has done poorly. Studies on timing using returns data show no evidence of positive timing. The vast majority of investors earn less than the market due to two common timing mistakes: buying yesterday's top performers, and letting your emotions cause you to attempt to predict the direction of the stock market. This behavior of buy high, sell low is guaranteed to produce poor results.
Where in my question did I suggest buying high & selling low? It was about doing totally the opposite: buying low and selling high..
Can you give me a historical example of why buying more stocks when the market is down (let's set the threshold at -30%) is not good? I don't care about semantics/names such as "market timing".
I believe you missed the line discussing your emotions are trying to predict the market will go down some time in the future where VTI can be bought for $120/share.

Topic Author
timetraveler
Posts: 34
Joined: Mon Nov 11, 2019 1:13 pm

Re: Investing $140k in cash at 1k per week

Post by timetraveler » Sun Nov 17, 2019 2:30 pm

EnjoyIt wrote:
Sun Nov 17, 2019 2:04 pm
timetraveler wrote:
Sun Nov 17, 2019 1:23 pm
dogagility wrote:
Sat Nov 16, 2019 4:37 pm
timetraveler wrote:
Sat Nov 16, 2019 1:20 pm
Can you give me a historical example of why buying more stocks when the market is down (let's set the threshold at -30%) is not good? I don't care about semantics/names such as "market timing".
https://www.bogleheads.org/wiki/Boglehe ... the_market
Here is what in the link you provided:
There is a large amount of research showing that typical mutual fund investors actually perform far worse than the mutual funds they invest in because they tend to buy after a fund has done well and tend to sell what they own when it has done poorly. Studies on timing using returns data show no evidence of positive timing. The vast majority of investors earn less than the market due to two common timing mistakes: buying yesterday's top performers, and letting your emotions cause you to attempt to predict the direction of the stock market. This behavior of buy high, sell low is guaranteed to produce poor results.
Where in my question did I suggest buying high & selling low? It was about doing totally the opposite: buying low and selling high..
Can you give me a historical example of why buying more stocks when the market is down (let's set the threshold at -30%) is not good? I don't care about semantics/names such as "market timing".
I believe you missed the line discussing your emotions are trying to predict the market will go down some time in the future where VTI can be bought for $120/share.
Buying large amount of VTI at $120 is more like a conditional investment, a bonus per say. If it happens, it happens. But I am not waiting on it, or predicting it. If VTI goes down to $120.01, then goes back up to todays value, and my limit order has not been triggered, I am ok with that.

I changed my DCA position to lump sum because the analysis I did showed me that I would get more return most of the time.
However, I have not seen one counter example that shows changing from (60% VTI, 40% BND) portfolio to 100% or 90% VTI portfolio at a preset low value (e.g. $120) would yield lower return in the long run. I like numbers. Semantics such as "emotions", "market timing" etc, don't persuade me much.

User avatar
dogagility
Posts: 635
Joined: Fri Feb 24, 2017 6:41 am

Re: Investing $140k in cash at 1k per week

Post by dogagility » Sun Nov 17, 2019 2:47 pm

timetraveler wrote:
Sun Nov 17, 2019 2:30 pm
However, I have not seen one counter example that shows changing from (60% VTI, 40% BND) portfolio to 100% or 90% VTI portfolio at a preset low value (e.g. $120) would yield lower return in the long run. I like numbers. Semantics such as "emotions", "market timing" etc, don't persuade me much.
This is all probabilities. Sure, you could market time by waiting on the sidelines as your post indicates you are considering. This may even give you a larger return over time. However, since the market goes up over time on average, the more likely result is that your "preset low value" will not be seen again.

At some point, you will invest all your money that you intend to invest in VTI; more likely than not, the lowest price you will see is the current price.
Taking "risk" since 1995.

prioritarian
Posts: 71
Joined: Tue Jul 16, 2019 6:00 pm

Re: Investing $140k in cash at 1k per week

Post by prioritarian » Sun Nov 17, 2019 3:41 pm

magicrat wrote:
Mon Nov 11, 2019 2:51 pm
The expected return on stocks is always positive. If you believe that, then you should invest it all now. If you don't, why would you invest in stocks at all?
In the long run we all have zero returns.

PS: Risk is real.

magicrat
Posts: 782
Joined: Sat Nov 29, 2014 7:04 pm

Re: Investing $140k in cash at 1k per week

Post by magicrat » Sun Nov 17, 2019 3:42 pm

prioritarian wrote:
Sun Nov 17, 2019 3:41 pm
magicrat wrote:
Mon Nov 11, 2019 2:51 pm
The expected return on stocks is always positive. If you believe that, then you should invest it all now. If you don't, why would you invest in stocks at all?
In the long run we all have zero returns.

PS: Risk is real.
Huh?

EnjoyIt
Posts: 2879
Joined: Sun Dec 29, 2013 8:06 pm

Re: Investing $140k in cash at 1k per week

Post by EnjoyIt » Sun Nov 17, 2019 11:38 pm

timetraveler wrote:
Sun Nov 17, 2019 2:30 pm
EnjoyIt wrote:
Sun Nov 17, 2019 2:04 pm
timetraveler wrote:
Sun Nov 17, 2019 1:23 pm
dogagility wrote:
Sat Nov 16, 2019 4:37 pm
timetraveler wrote:
Sat Nov 16, 2019 1:20 pm
Can you give me a historical example of why buying more stocks when the market is down (let's set the threshold at -30%) is not good? I don't care about semantics/names such as "market timing".
https://www.bogleheads.org/wiki/Boglehe ... the_market
Here is what in the link you provided:
There is a large amount of research showing that typical mutual fund investors actually perform far worse than the mutual funds they invest in because they tend to buy after a fund has done well and tend to sell what they own when it has done poorly. Studies on timing using returns data show no evidence of positive timing. The vast majority of investors earn less than the market due to two common timing mistakes: buying yesterday's top performers, and letting your emotions cause you to attempt to predict the direction of the stock market. This behavior of buy high, sell low is guaranteed to produce poor results.
Where in my question did I suggest buying high & selling low? It was about doing totally the opposite: buying low and selling high..
Can you give me a historical example of why buying more stocks when the market is down (let's set the threshold at -30%) is not good? I don't care about semantics/names such as "market timing".
I believe you missed the line discussing your emotions are trying to predict the market will go down some time in the future where VTI can be bought for $120/share.
Buying large amount of VTI at $120 is more like a conditional investment, a bonus per say. If it happens, it happens. But I am not waiting on it, or predicting it. If VTI goes down to $120.01, then goes back up to todays value, and my limit order has not been triggered, I am ok with that.

I changed my DCA position to lump sum because the analysis I did showed me that I would get more return most of the time.
However, I have not seen one counter example that shows changing from (60% VTI, 40% BND) portfolio to 100% or 90% VTI portfolio at a preset low value (e.g. $120) would yield lower return in the long run. I like numbers. Semantics such as "emotions", "market timing" etc, don't persuade me much.
I think it is very reasonable to have an investment policy statement that states if VTI gets to 120 then at that point you are willing to take on more risk as expected returns should be higher and therefor adjust to an 80/20 asset allocation.

Another way to say it can be if the average price to earnings gets to a particular point then your expected returns are higher and you will have more willingness to take on the addition risk of an 80/20 AA.

May I offer an alternative? We have agreed that you are currently not willing to take on 100% equities risk and that 60/40 is a good place for you, but instead the current plan of waiting for a drop in the market to a particular level and then increasing to an 80/20 portfolio,

Split the difference and go to a 70/30 portfolio and if VTI goes down, you will drift from 70/30 and need to rebalance by buying more equities. This is very similar to what you originally planned but now you have a higher upside potential if markets keep going up, still have plenty of cash to buy equities if they go down, but now you don’t have to guess for a specific arbitrary price of 120 VTI. You can instead set rebalancing bands and do this with no guessing and no emotion involved.

Honestly, I think we found your ideal asset allocation. It is 70/30.

Topic Author
timetraveler
Posts: 34
Joined: Mon Nov 11, 2019 1:13 pm

Re: Investing $140k in cash at 1k per week

Post by timetraveler » Mon Nov 18, 2019 12:09 am

EnjoyIt wrote:
Sun Nov 17, 2019 11:38 pm
timetraveler wrote:
Sun Nov 17, 2019 2:30 pm
EnjoyIt wrote:
Sun Nov 17, 2019 2:04 pm
timetraveler wrote:
Sun Nov 17, 2019 1:23 pm
Here is what in the link you provided:
There is a large amount of research showing that typical mutual fund investors actually perform far worse than the mutual funds they invest in because they tend to buy after a fund has done well and tend to sell what they own when it has done poorly. Studies on timing using returns data show no evidence of positive timing. The vast majority of investors earn less than the market due to two common timing mistakes: buying yesterday's top performers, and letting your emotions cause you to attempt to predict the direction of the stock market. This behavior of buy high, sell low is guaranteed to produce poor results.
Where in my question did I suggest buying high & selling low? It was about doing totally the opposite: buying low and selling high..
Can you give me a historical example of why buying more stocks when the market is down (let's set the threshold at -30%) is not good? I don't care about semantics/names such as "market timing".
I believe you missed the line discussing your emotions are trying to predict the market will go down some time in the future where VTI can be bought for $120/share.
Buying large amount of VTI at $120 is more like a conditional investment, a bonus per say. If it happens, it happens. But I am not waiting on it, or predicting it. If VTI goes down to $120.01, then goes back up to todays value, and my limit order has not been triggered, I am ok with that.

I changed my DCA position to lump sum because the analysis I did showed me that I would get more return most of the time.
However, I have not seen one counter example that shows changing from (60% VTI, 40% BND) portfolio to 100% or 90% VTI portfolio at a preset low value (e.g. $120) would yield lower return in the long run. I like numbers. Semantics such as "emotions", "market timing" etc, don't persuade me much.
I think it is very reasonable to have an investment policy statement that states if VTI gets to 120 then at that point you are willing to take on more risk as expected returns should be higher and therefor adjust to an 80/20 asset allocation.

Another way to say it can be if the average price to earnings gets to a particular point then your expected returns are higher and you will have more willingness to take on the addition risk of an 80/20 AA.

May I offer an alternative? We have agreed that you are currently not willing to take on 100% equities risk and that 60/40 is a good place for you, but instead the current plan of waiting for a drop in the market to a particular level and then increasing to an 80/20 portfolio,

Split the difference and go to a 70/30 portfolio and if VTI goes down, you will drift from 70/30 and need to rebalance by buying more equities. This is very similar to what you originally planned but now you have a higher upside potential if markets keep going up, still have plenty of cash to buy equities if they go down, but now you don’t have to guess for a specific arbitrary price of 120 VTI. You can instead set rebalancing bands and do this with no guessing and no emotion involved.

Honestly, I think we found your ideal asset allocation. It is 70/30.
Sounds like a good plan. How important is it to stick with an 70/30 AA in the long run?

EnjoyIt
Posts: 2879
Joined: Sun Dec 29, 2013 8:06 pm

Re: Investing $140k in cash at 1k per week

Post by EnjoyIt » Mon Nov 18, 2019 3:28 am

timetraveler wrote:
Mon Nov 18, 2019 12:09 am
EnjoyIt wrote:
Sun Nov 17, 2019 11:38 pm
timetraveler wrote:
Sun Nov 17, 2019 2:30 pm
EnjoyIt wrote:
Sun Nov 17, 2019 2:04 pm
timetraveler wrote:
Sun Nov 17, 2019 1:23 pm


Here is what in the link you provided:


Where in my question did I suggest buying high & selling low? It was about doing totally the opposite: buying low and selling high..
I believe you missed the line discussing your emotions are trying to predict the market will go down some time in the future where VTI can be bought for $120/share.
Buying large amount of VTI at $120 is more like a conditional investment, a bonus per say. If it happens, it happens. But I am not waiting on it, or predicting it. If VTI goes down to $120.01, then goes back up to todays value, and my limit order has not been triggered, I am ok with that.

I changed my DCA position to lump sum because the analysis I did showed me that I would get more return most of the time.
However, I have not seen one counter example that shows changing from (60% VTI, 40% BND) portfolio to 100% or 90% VTI portfolio at a preset low value (e.g. $120) would yield lower return in the long run. I like numbers. Semantics such as "emotions", "market timing" etc, don't persuade me much.
I think it is very reasonable to have an investment policy statement that states if VTI gets to 120 then at that point you are willing to take on more risk as expected returns should be higher and therefor adjust to an 80/20 asset allocation.

Another way to say it can be if the average price to earnings gets to a particular point then your expected returns are higher and you will have more willingness to take on the addition risk of an 80/20 AA.

May I offer an alternative? We have agreed that you are currently not willing to take on 100% equities risk and that 60/40 is a good place for you, but instead the current plan of waiting for a drop in the market to a particular level and then increasing to an 80/20 portfolio,

Split the difference and go to a 70/30 portfolio and if VTI goes down, you will drift from 70/30 and need to rebalance by buying more equities. This is very similar to what you originally planned but now you have a higher upside potential if markets keep going up, still have plenty of cash to buy equities if they go down, but now you don’t have to guess for a specific arbitrary price of 120 VTI. You can instead set rebalancing bands and do this with no guessing and no emotion involved.

Honestly, I think we found your ideal asset allocation. It is 70/30.
Sounds like a good plan. How important is it to stick with an 70/30 AA in the long run?
What is lost important is to stick to a plan. A written plan that makes sense without any speculation or market timing in it. As you get older for example it may make sense that your risk tolerance goes down in which case it would equally make sense to glide into a lower equities position. This is how target dates fund work.

For us for example we are at 70/30. We are semi retired transitioning to 60/40. When we retire early we will go to 50/50 and then when we start collecting social security we will go to 60/40. As you can see each change in asset allocation is based on our risk tolerance during that phase in our life and has nothing to do with what the market is doing.

I believe the key in your case is to get to an asset allocation that makes sense to you, stick with it for a while. Understand how you behave with market fluctuations. Build wealth and then adjust based on risk tolerance and not what the market may or may not be doing.

Topic Author
timetraveler
Posts: 34
Joined: Mon Nov 11, 2019 1:13 pm

Re: Investing $140k in cash at 1k per week

Post by timetraveler » Mon Nov 18, 2019 3:02 pm

Thank you all for your inputs..
EnjoyIt wrote:
Mon Nov 18, 2019 3:28 am
What is lost important is to stick to a plan. A written plan that makes sense without any speculation or market timing in it. As you get older for example it may make sense that your risk tolerance goes down in which case it would equally make sense to glide into a lower equities position. This is how target dates fund work.

For us for example we are at 70/30. We are semi retired transitioning to 60/40. When we retire early we will go to 50/50 and then when we start collecting social security we will go to 60/40. As you can see each change in asset allocation is based on our risk tolerance during that phase in our life and has nothing to do with what the market is doing.

I believe the key in your case is to get to an asset allocation that makes sense to you, stick with it for a while. Understand how you behave with market fluctuations. Build wealth and then adjust based on risk tolerance and not what the market may or may not be doing.
After thinking about it, it is probably better for my risk tolerance to not put all the equity eggs in a one basket of S&P500, but perhaps diversify the equity portion a little bit into 80% S&P500 and 20% international market. I am not a fan of international market due to its historical performance. This is how my AA would look like:

75% stocks - 25% bonds:
BND : 25%
VTI : 60%
VXUS : 15%

What do you all think?

MotoTrojan
Posts: 6871
Joined: Wed Feb 01, 2017 8:39 pm

Re: Investing $140k in cash at 1k per week

Post by MotoTrojan » Mon Nov 18, 2019 3:12 pm

timetraveler wrote:
Sun Nov 17, 2019 2:30 pm


Buying large amount of VTI at $120 is more like a conditional investment, a bonus per say. If it happens, it happens. But I am not waiting on it, or predicting it. If VTI goes down to $120.01, then goes back up to todays value, and my limit order has not been triggered, I am ok with that.

I changed my DCA position to lump sum because the analysis I did showed me that I would get more return most of the time.
However, I have not seen one counter example that shows changing from (60% VTI, 40% BND) portfolio to 100% or 90% VTI portfolio at a preset low value (e.g. $120) would yield lower return in the long run. I like numbers. Semantics such as "emotions", "market timing" etc, don't persuade me much.
If you are willing to accept the risk of being 90-100% equity after VTI drops below $120, then why not just hold that from the get-go? In order for this plan to work, you at-least need VTI to come back to $120 for you to be able to revert back to 60/40, otherwise you lock-in a loss since VTI could have continued downward past $120 at your 90-100% equity allocation. Thus, once this trade occurs, you are now stuck at a higher risk portfolio for quite some time. And as VTI goes above $120, how do you know when to move back to 60/40? After it comes back to it's prior all-time high?

In principal I do agree with you that this isn't a crazy thing to do in a diversified portfolio, but if your investment hit a Japan type scenario you'd just further your losses and still to this day be worse off than having stuck with 60/40. In the history of the US though, if held long enough, your plan does come out ahead. Better to just rebalance, which is in effect buying discounted stocks too. This is IMHO much less risky plan than sitting out and waiting for a decline to $120 that may never happen.

I am glad you decided to lump-sum your equity. Do you have a plan for tax-loss harvesting?

EnjoyIt
Posts: 2879
Joined: Sun Dec 29, 2013 8:06 pm

Re: Investing $140k in cash at 1k per week

Post by EnjoyIt » Mon Nov 18, 2019 4:51 pm

timetraveler wrote:
Mon Nov 18, 2019 3:02 pm
Thank you all for your inputs..
EnjoyIt wrote:
Mon Nov 18, 2019 3:28 am
What is lost important is to stick to a plan. A written plan that makes sense without any speculation or market timing in it. As you get older for example it may make sense that your risk tolerance goes down in which case it would equally make sense to glide into a lower equities position. This is how target dates fund work.

For us for example we are at 70/30. We are semi retired transitioning to 60/40. When we retire early we will go to 50/50 and then when we start collecting social security we will go to 60/40. As you can see each change in asset allocation is based on our risk tolerance during that phase in our life and has nothing to do with what the market is doing.

I believe the key in your case is to get to an asset allocation that makes sense to you, stick with it for a while. Understand how you behave with market fluctuations. Build wealth and then adjust based on risk tolerance and not what the market may or may not be doing.
After thinking about it, it is probably better for my risk tolerance to not put all the equity eggs in a one basket of S&P500, but perhaps diversify the equity portion a little bit into 80% S&P500 and 20% international market. I am not a fan of international market due to its historical performance. This is how my AA would look like:

75% stocks - 25% bonds:
BND : 25%
VTI : 60%
VXUS : 15%

What do you all think?
That is a gorgeous 3 fund portfolio with age minus 10 (or so) in bonds and 20% international. I love it.

All you have to do now is implement it and stick to your asset allocation.

User avatar
dogagility
Posts: 635
Joined: Fri Feb 24, 2017 6:41 am

Re: Investing $140k in cash at 1k per week

Post by dogagility » Mon Nov 18, 2019 5:26 pm

EnjoyIt wrote:
Mon Nov 18, 2019 4:51 pm
timetraveler wrote:
Mon Nov 18, 2019 3:02 pm
After thinking about it, it is probably better for my risk tolerance to not put all the equity eggs in a one basket of S&P500, but perhaps diversify the equity portion a little bit into 80% S&P500 and 20% international market. I am not a fan of international market due to its historical performance. This is how my AA would look like:

75% stocks - 25% bonds:
BND : 25%
VTI : 60%
VXUS : 15%

What do you all think?
That is a gorgeous 3 fund portfolio with age minus 10 (or so) in bonds and 20% international. I love it.

All you have to do now is implement it and stick to your asset allocation.
+1. Nice choice!
Taking "risk" since 1995.

Topic Author
timetraveler
Posts: 34
Joined: Mon Nov 11, 2019 1:13 pm

Re: Investing $140k in cash at 1k per week

Post by timetraveler » Mon Nov 18, 2019 7:02 pm

MotoTrojan wrote:
Mon Nov 18, 2019 3:12 pm
I am glad you decided to lump-sum your equity. Do you have a plan for tax-loss harvesting?
I am currently in a low tax bracket (usually owes around $1k in federal tax). So I am not sure if tax-loss harvesting is worth it if S&P rises and ends up costing me additional $1k+ to buy it again after 30 days.

EnjoyIt
Posts: 2879
Joined: Sun Dec 29, 2013 8:06 pm

Re: Investing $140k in cash at 1k per week

Post by EnjoyIt » Mon Nov 18, 2019 7:11 pm

timetraveler wrote:
Mon Nov 18, 2019 7:02 pm
MotoTrojan wrote:
Mon Nov 18, 2019 3:12 pm
I am glad you decided to lump-sum your equity. Do you have a plan for tax-loss harvesting?
I am currently in a low tax bracket (usually owes around $1k in federal tax). So I am not sure if tax-loss harvesting is worth it if S&P rises and ends up costing me additional $1k+ to buy it again after 30 days.
Look up tax loss harvesting in the wiki here. The idea is you sell in your case VTI (Vanguard Total US Stock ETF) and immediately buy VOO (Vanguard S&P 500 ETF.) They are pretty much very similar, but different enough that you don't have to wait 30 days.

MotoTrojan
Posts: 6871
Joined: Wed Feb 01, 2017 8:39 pm

Re: Investing $140k in cash at 1k per week

Post by MotoTrojan » Mon Nov 18, 2019 8:08 pm

timetraveler wrote:
Mon Nov 18, 2019 7:02 pm
MotoTrojan wrote:
Mon Nov 18, 2019 3:12 pm
I am glad you decided to lump-sum your equity. Do you have a plan for tax-loss harvesting?
I am currently in a low tax bracket (usually owes around $1k in federal tax). So I am not sure if tax-loss harvesting is worth it if S&P rises and ends up costing me additional $1k+ to buy it again after 30 days.
I see. Perhaps you should actually be looking at tax-gain harvesting then. As shown above though you shouldn't worry about being out of the market.

prioritarian
Posts: 71
Joined: Tue Jul 16, 2019 6:00 pm

Re: Investing $140k in cash at 1k per week

Post by prioritarian » Tue Nov 19, 2019 12:02 am

magicrat wrote:
Sun Nov 17, 2019 3:42 pm
prioritarian wrote:
Sun Nov 17, 2019 3:41 pm
magicrat wrote:
Mon Nov 11, 2019 2:51 pm
The expected return on stocks is always positive. If you believe that, then you should invest it all now. If you don't, why would you invest in stocks at all?
In the long run we all have zero returns.

PS: Risk is real.
Huh?
In the long run we are all dead. Economists set themselves too easy, too useless a task, if in tempestuous seasons they can only tell us, that when the storm is long past, the ocean is flat again. -- Keynes

cheesepep
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Joined: Wed Feb 17, 2010 10:58 pm

Re: Investing $140k in cash at 1k per week

Post by cheesepep » Tue Nov 19, 2019 12:26 am

Nothing wrong with the plan. With the market at all time highs, investing all at once is risky. Sure it is market timing, but nothing wrong with that. Be cautious. Invest a bit slowly. I would personally do 2K every month instead. More so if the market sours.

NYCwriter
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Joined: Thu Sep 17, 2015 12:46 am

Re: Investing $140k in cash at 1k per week

Post by NYCwriter » Tue Nov 19, 2019 12:52 am

timetraveler wrote:
Mon Nov 11, 2019 1:44 pm
Hello :happy

I have $140k in high yield saving accounts (FDIC insured) that pays me %2 - %2.20 in annual interest. My plan is to is transfer $1000 from my saving account to my brokerage account and buy $1000 worth of VTI every week. At this rate, it would take a bit more than 2.5 years to invest all this money into VTI. The reason I am choosing this low buy rate of $1000/week is because if the market crashes within the next 2.5 years I could buy low with most of the remaining cash. What do you think about this strategy?

As for which day of the week to invest the $1000 in VTI, should I just throw a dice and choose the weekday based on that? Or is there better strategy than random to pickup the weekday?
My only advice is to do what you're comfortable with doing. I DCA'd in a small inheritance over a period of 6 months in 2015. In retrospect, I might have just lump sum'd it all. Are you retiring in the next 10 years? Do you have near-term cash needs?

I'd go with more than a DCA of 1K only because you'd get more with a typical portfolio than you would with cash holdings over time. Nobody knows what the market will do. Most advocate moving all available cash into the market, save what one needs for a liquid emergency cash account. In retrospect, I wish I had done that.

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tadamsmar
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Re: Investing $140k in cash at 1k per week

Post by tadamsmar » Tue Nov 19, 2019 7:27 am

MathIsMyWayr wrote:
Mon Nov 11, 2019 3:20 pm
mike152 wrote:
Mon Nov 11, 2019 2:48 pm
Question: If you had 140k already invested today, would you withdraw all of it in cash now, and slowly reinvest? Or, just leave it?
I often run into this analogy regarding lump sum vs. DCA investment.
"withdraw all of it in cash now, and slowly reinvest" is lump sum out and DCA in. If you truly believe in lump sum in a consistent way, then you should practice lump sum out and lump sum in, not lump sum out and DCA in. On the other hand, you should DCA out and DCA in if you are a true DCA believer.

I am not arguing whether lump sum investing is better than DCA or the other way around, but the logic has to be consistent. Logic should make an argument clearer rather than murkier.
I don't think you understand the logical argument.

Assume Moe has N dollars as his nest egg.

Assume Larry has N-140k and just got a 140k cash windfall.

Moe can become identical to Larry by selling 140k.

Logically they should both do the same thing.

This is not about a belief in lump sums or DCA. The logic is about 2 people with exactly the same future prospects for both sides of a binary decision.

sharukh
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Re: Investing $140k in cash at 1k per week

Post by sharukh » Tue Nov 19, 2019 7:31 am

retiredjg wrote:
Mon Nov 11, 2019 2:46 pm
This is market timing. It might work. It might not. No way to know. But what we do know is that most of your money will be sitting on the sidelines for months. This is usually not a good practice.

Investing $140k should take about 2.5 minutes, not 2.5 years. If you simply cannot do it at one time, invest 40K now and then $5k a week until done. If you find this is difficult, you may be investing too aggressively for your temperament.

Welcome to the forum. :happy
+1

magicrat
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Re: Investing $140k in cash at 1k per week

Post by magicrat » Tue Nov 19, 2019 7:37 am

prioritarian wrote:
Tue Nov 19, 2019 12:02 am
magicrat wrote:
Sun Nov 17, 2019 3:42 pm
prioritarian wrote:
Sun Nov 17, 2019 3:41 pm
magicrat wrote:
Mon Nov 11, 2019 2:51 pm
The expected return on stocks is always positive. If you believe that, then you should invest it all now. If you don't, why would you invest in stocks at all?
In the long run we all have zero returns.

PS: Risk is real.
Huh?
In the long run we are all dead. Economists set themselves too easy, too useless a task, if in tempestuous seasons they can only tell us, that when the storm is long past, the ocean is flat again. -- Keynes
That is completely irrelevant to my point.

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