Sold my Business (2.2 Million)! Where to store proceeds while I think?

Have a question about your personal investments? No matter how simple or complex, you can ask it here.
User avatar
LadyGeek
Site Admin
Posts: 58635
Joined: Sat Dec 20, 2008 5:34 pm
Location: Philadelphia
Contact:

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by LadyGeek » Fri Jan 03, 2020 12:04 pm

Jon_PassiveInvestor - In order to give appropriate advice, it's best to keep all the information in one spot. I merged your two updates back into the original thread. We'll know what was discussed before and have a better idea of your situation.

If you have any questions or updates, post them here. This isn't a big deal, don't worry about it.

(Thanks to the member who reported the post. One of the reasons is "Duplicate thread".)
Jon_PassiveInvestor wrote:
Fri Jan 03, 2020 9:26 am
Business sold!
Congrats! :beer
Wiki To some, the glass is half full. To others, the glass is half empty. To an engineer, it's twice the size it needs to be.

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Fri Jan 03, 2020 1:07 pm

LadyGeek wrote:
Fri Jan 03, 2020 12:04 pm
Jon_PassiveInvestor - In order to give appropriate advice, it's best to keep all the information in one spot. I merged your two updates back into the original thread. We'll know what was discussed before and have a better idea of your situation.

If you have any questions or updates, post them here. This isn't a big deal, don't worry about it.

(Thanks to the member who reported the post. One of the reasons is "Duplicate thread".)
Jon_PassiveInvestor wrote:
Fri Jan 03, 2020 9:26 am
Business sold!
Congrats! :beer
Perfect, thank you!

TimeMan
Posts: 29
Joined: Mon Feb 22, 2016 12:44 am

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by TimeMan » Fri Jan 03, 2020 8:09 pm

A little late to the party, but I sold a business in 2014 and my cut was also 2.2. I had $150k NW in 401k and cash. I sold it to a company that kept me on for the next 4 years at an increased salary so I kept banking income.

I initially put it all in Ally, my long term tax was about $500k ([OT comment removed by admin LadyGeek], it took 13 years to earn that), that was a hard check to write.

In late 2014 I put $750k in Vanguard (TVSAX and Total Bond) and it didn't do much for 2015. I'm now up over $450k on that account, almost made back my tax bill.

I spent $160k on a Porsche GT3, upgraded the wife's wedding ring, moved to a better market, bought my mom a car and downpayment on a modest cabin in CO, $180k downpayment on a house, paid off all my bills, took a celebratory Hawaii vacation, and just this year bought my wife a new Wrangler and my daughter a used CX-5.

After 5 years I am back to a NW of over $2.25M raising 2 teenagers. I overspent but after 13 years of living cheaply I had some catch up to do (not very Boglehead, I know).

Last year I got laid off from the purchasing company and after 6 months of downtime I landed a role at an even better company with better comp (but the 401k match sucks).

At this point my investment accounts are closing in on $1.7M, I still keep over $200k in cash because I'm risk averse.

Keep it slow, think long and hard, and track your accounts!

Edit: I'm in Dallas too, we should start a "former business owner who sold out" club :)

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Sat Jan 04, 2020 6:37 pm

TimeMan wrote:
Fri Jan 03, 2020 8:09 pm
A little late to the party, but I sold a business in 2014 and my cut was also 2.2. I had $150k NW in 401k and cash. I sold it to a company that kept me on for the next 4 years at an increased salary so I kept banking income.

I initially put it all in Ally, my long term tax was about $500k ([OT comment removed by admin LadyGeek], it took 13 years to earn that), that was a hard check to write.

In late 2014 I put $750k in Vanguard (TVSAX and Total Bond) and it didn't do much for 2015. I'm now up over $450k on that account, almost made back my tax bill.

I spent $160k on a Porsche GT3, upgraded the wife's wedding ring, moved to a better market, bought my mom a car and downpayment on a modest cabin in CO, $180k downpayment on a house, paid off all my bills, took a celebratory Hawaii vacation, and just this year bought my wife a new Wrangler and my daughter a used CX-5.

After 5 years I am back to a NW of over $2.25M raising 2 teenagers. I overspent but after 13 years of living cheaply I had some catch up to do (not very Boglehead, I know).

Last year I got laid off from the purchasing company and after 6 months of downtime I landed a role at an even better company with better comp (but the 401k match sucks).

At this point my investment accounts are closing in on $1.7M, I still keep over $200k in cash because I'm risk averse.

Keep it slow, think long and hard, and track your accounts!

Edit: I'm in Dallas too, we should start a "former business owner who sold out" club :)
No way! We definitely need to exchange info. PM me.

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Sat Jan 04, 2020 6:40 pm

TimeMan wrote:
Fri Jan 03, 2020 8:09 pm
A little late to the party, but I sold a business in 2014 and my cut was also 2.2. I had $150k NW in 401k and cash. I sold it to a company that kept me on for the next 4 years at an increased salary so I kept banking income.

I initially put it all in Ally, my long term tax was about $500k ([OT comment removed by admin LadyGeek], it took 13 years to earn that), that was a hard check to write.

In late 2014 I put $750k in Vanguard (TVSAX and Total Bond) and it didn't do much for 2015. I'm now up over $450k on that account, almost made back my tax bill.

I spent $160k on a Porsche GT3, upgraded the wife's wedding ring, moved to a better market, bought my mom a car and downpayment on a modest cabin in CO, $180k downpayment on a house, paid off all my bills, took a celebratory Hawaii vacation, and just this year bought my wife a new Wrangler and my daughter a used CX-5.

After 5 years I am back to a NW of over $2.25M raising 2 teenagers. I overspent but after 13 years of living cheaply I had some catch up to do (not very Boglehead, I know).

Last year I got laid off from the purchasing company and after 6 months of downtime I landed a role at an even better company with better comp (but the 401k match sucks).

At this point my investment accounts are closing in on $1.7M, I still keep over $200k in cash because I'm risk averse.

Keep it slow, think long and hard, and track your accounts!

Edit: I'm in Dallas too, we should start a "former business owner who sold out" club :)
Did you have a seller note or earn out?

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Sat Jan 04, 2020 7:35 pm

Jon_PassiveInvestor wrote:
Sat Jan 04, 2020 6:40 pm
TimeMan wrote:
Fri Jan 03, 2020 8:09 pm
A little late to the party, but I sold a business in 2014 and my cut was also 2.2. I had $150k NW in 401k and cash. I sold it to a company that kept me on for the next 4 years at an increased salary so I kept banking income.

I initially put it all in Ally, my long term tax was about $500k ([OT comment removed by admin LadyGeek], it took 13 years to earn that), that was a hard check to write.

In late 2014 I put $750k in Vanguard (TVSAX and Total Bond) and it didn't do much for 2015. I'm now up over $450k on that account, almost made back my tax bill.

I spent $160k on a Porsche GT3, upgraded the wife's wedding ring, moved to a better market, bought my mom a car and downpayment on a modest cabin in CO, $180k downpayment on a house, paid off all my bills, took a celebratory Hawaii vacation, and just this year bought my wife a new Wrangler and my daughter a used CX-5.

After 5 years I am back to a NW of over $2.25M raising 2 teenagers. I overspent but after 13 years of living cheaply I had some catch up to do (not very Boglehead, I know).

Last year I got laid off from the purchasing company and after 6 months of downtime I landed a role at an even better company with better comp (but the 401k match sucks).

At this point my investment accounts are closing in on $1.7M, I still keep over $200k in cash because I'm risk averse.

Keep it slow, think long and hard, and track your accounts!

Edit: I'm in Dallas too, we should start a "former business owner who sold out" club :)
Did you have a seller note or earn out?
Also, how is the 1.7 mill currently invested? I’m considering a three fund portfolio for most of mine.

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Wed Jan 08, 2020 9:58 am

goodenyou wrote:
Thu Sep 05, 2019 7:00 pm
What you plan to do with the cash in the next 1-2 years is much more interesting. I say that because I am in that boat....
Any update on your plans?

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Update Post Sale of Business! - Pay Off Home or Not?

Post by Jon_PassiveInvestor » Wed Jan 08, 2020 10:00 am

renue74 wrote:
Thu Sep 19, 2019 9:35 am
Your mortgage is pretty big. But it's sorta up to you mentally as to what you want to do.

A few years ago, I sold a business for $1.1M and had a mortgage on my home of about $100K at 3.625%. We ended up not paying off the house and I wished I did now because a big chunk of my proceeds went into my taxable account and I have filled up all my traditional IRAs with bond funds already...so I have bond funds in my taxable that throws off capital gains every year.

If I were you, I would pay off the house...especially since you have some big proceeds coming down the road as well.
I decided to pay it off by 2020. 25% to go! I've been doing a big chunk every 3 months.

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Wed Jan 08, 2020 10:03 am

UPDATE!

Here's what I've done so far:
-250k sitting in high yield Ally MM earning 2.5% over a 18 month period. Rest of cash sitting in Vanguard Treasury Money Market Fund.
-Maxed out Roth IRA accounts, 100% in VTSAX (Total Stock Market). $12,000 sitting here.

I am absolutely scared of investing in individual stock picks and I know myself, I will get stressed, make emotional decisions, and then get even more stressed. Index investing was built for me. I like to keep life simple and not have to tracks the market every day. I'm good with monthly if that. I just have other interests!

I've received a lot of advice recently and many are telling me at my age not to waste my time with bonds or international and to buy VTSAX in my taxable account and then add bonds closer to retirement.

What are your thoughts on this strategy? Should I keep it that simple or start a 3 fund? Or maybe 90% US stocks, 10% international?

My retirement horizon is 20 years away as I'd like to retire around the 50 YO mark.
Last edited by Jon_PassiveInvestor on Wed Jan 08, 2020 10:13 am, edited 2 times in total.

OldBallCoach
Posts: 183
Joined: Mon Dec 10, 2018 5:22 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by OldBallCoach » Wed Jan 08, 2020 10:10 am

AK62 wrote:
Wed Aug 28, 2019 4:03 pm
I’d talk immediately with my financial advisor/tax attorney before doing anything.
This times 100... a few hours and some cash and you will be in a much better place in your head to move forward...and great job on your business hussle. I doubt you stay on the sidelines very long. Spend some time with you family as well...

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Wed Jan 08, 2020 10:11 am

OldBallCoach wrote:
Wed Jan 08, 2020 10:10 am
AK62 wrote:
Wed Aug 28, 2019 4:03 pm
I’d talk immediately with my financial advisor/tax attorney before doing anything.
This times 100... a few hours and some cash and you will be in a much better place in your head to move forward...and great job on your business hussle. I doubt you stay on the sidelines very long. Spend some time with you family as well...
Taxes have been paid! It was tough writing the check let me tell you. Were you advising a tax attorney for my tax payment or just investing in general? I've enjoyed a 4 month break, gearing up to start my new business venture.

OldBallCoach
Posts: 183
Joined: Mon Dec 10, 2018 5:22 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by OldBallCoach » Wed Jan 08, 2020 10:18 am

Jon_PassiveInvestor wrote:
Wed Jan 08, 2020 10:03 am
UPDATE!

Here's what I've done so far:
-Cash sitting in Vanguard Treasury Money Market Fund. 250k sitting in high yield Ally MM earning 2.5% over a 18 month period.
-Maxed out Roth IRA accounts, 100% in VTSAX (Total Stock Market). $12,000 sitting here.

I am absolutely scared of investing in individual stock picks and I know myself, I will get stressed, make emotional decisions, and then get even more stressed. Index investing was built for me. I like to keep life simple and not have to tracks the market every day. I'm good with monthly if that. I just have other interests!

I've received a lot of advice recently and many are telling me at my age not to waste my time with bonds or international and to buy VTSAX in my taxable account and then add bonds closer to retirement.

What are your thoughts on this strategy? Should I keep it that simple or start a 3 fund? Or maybe 90% US stocks, 10% international?
Three fund all day long...or maybe even the two fund..but not at your age, you dont need that yet...but dont pick stocks, The idea here is to reduce risk, stress and taxes. At your age I would do 100% in VTSAX or VTI and not worry about it for a long time...dollar cost in maybe if that makes you feel better but there are charts and wizards for all that..if it was ME...I would do exactly what you have already done...are you working on your golf game at all? Hows your tan? Drink any good beer lately? Watch anyting good on Nexflix? Take a breath man and enjoy a little bit of sunshine.

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Wed Jan 08, 2020 10:23 am

OldBallCoach wrote:
Wed Jan 08, 2020 10:18 am
Jon_PassiveInvestor wrote:
Wed Jan 08, 2020 10:03 am
UPDATE!

Here's what I've done so far:
-Cash sitting in Vanguard Treasury Money Market Fund. 250k sitting in high yield Ally MM earning 2.5% over a 18 month period.
-Maxed out Roth IRA accounts, 100% in VTSAX (Total Stock Market). $12,000 sitting here.

I am absolutely scared of investing in individual stock picks and I know myself, I will get stressed, make emotional decisions, and then get even more stressed. Index investing was built for me. I like to keep life simple and not have to tracks the market every day. I'm good with monthly if that. I just have other interests!

I've received a lot of advice recently and many are telling me at my age not to waste my time with bonds or international and to buy VTSAX in my taxable account and then add bonds closer to retirement.

What are your thoughts on this strategy? Should I keep it that simple or start a 3 fund? Or maybe 90% US stocks, 10% international?
Three fund all day long...or maybe even the two fund..but not at your age, you dont need that yet...but dont pick stocks, The idea here is to reduce risk, stress and taxes. At your age I would do 100% in VTSAX or VTI and not worry about it for a long time...dollar cost in maybe if that makes you feel better but there are charts and wizards for all that..if it was ME...I would do exactly what you have already done...are you working on your golf game at all? Hows your tan? Drink any good beer lately? Watch anyting good on Nexflix? Take a breath man and enjoy a little bit of sunshine.
I'm leaning towards VTSAX in my brokerage account as well for a portion of my funds. I hate picking stocks haha. There's the rush, then anxiety, then joy, then sadness. I just can't handle that! I'd rather invest in VTSAX and start getting into my first rental property soon.

Yes, I've enjoyed a very fine bottle of whiskey, bought some new toys and upgraded some things for my wife :) I've been on a mental break for 4 months now and want to invest some of my money into the market for the future. This money would not be needed short term. My goal is to create some new cash flows to cover monthly family expenses and not touch my nest egg anymore.

bikechuck
Posts: 591
Joined: Sun Aug 16, 2015 9:22 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by bikechuck » Wed Jan 08, 2020 10:25 am

What is your plan for keeping up with inflation? Apologies if you have previously commented on this as I have not read every post in the thread.

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Wed Jan 08, 2020 10:26 am

bikechuck wrote:
Wed Jan 08, 2020 10:25 am
What is your plan for keeping up with inflation? Apologies if you have previously commented on this as I have not read every post in the thread.
I'm ignoring it honestly. With cash flow covering all my monthly expense needs and zero consumer debt, my focus is growing my investments and starting new businesses.

User avatar
goodenyou
Posts: 2073
Joined: Sun Jan 31, 2010 11:57 pm
Location: Skating to Where the Puck is Going to Be..or on the golf course

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by goodenyou » Wed Jan 08, 2020 12:12 pm

Jon_PassiveInvestor wrote:
Wed Jan 08, 2020 9:58 am
goodenyou wrote:
Thu Sep 05, 2019 7:00 pm
What you plan to do with the cash in the next 1-2 years is much more interesting. I say that because I am in that boat....
Any update on your plans?
Funny you should ask. Just discussed this with my wife yesterday. I have deployed a portion of it into my AA, but there is still a lot in cash in Prime MM. My dilemma is whether to pay cash for my new home or not. I don’t have a mortgage on my current home, but the new home with be 2-3x the cost of my current home. I am holding significant cash with plans to build the new home with cash. I don’t want to risk the choice of taking a large loss by selling stocks at the wrong time or foregoing the option of a mortgage-free home. So, I am stymied right now.
"Ignorance more frequently begets confidence than does knowledge" | Do you know how to make a rain dance work? Dance until it rains.

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Wed Jan 08, 2020 2:07 pm

goodenyou wrote:
Wed Jan 08, 2020 12:12 pm
Jon_PassiveInvestor wrote:
Wed Jan 08, 2020 9:58 am
goodenyou wrote:
Thu Sep 05, 2019 7:00 pm
What you plan to do with the cash in the next 1-2 years is much more interesting. I say that because I am in that boat....
Any update on your plans?
Funny you should ask. Just discussed this with my wife yesterday. I have deployed a portion of it into my AA, but there is still a lot in cash in Prime MM. My dilemma is whether to pay cash for my new home or not. I don’t have a mortgage on my current home, but the new home with be 2-3x the cost of my current home. I am holding significant cash with plans to build the new home with cash. I don’t want to risk the choice of taking a large loss by selling stocks at the wrong time or foregoing the option of a mortgage-free home. So, I am stymied right now.
I gotta say, your situation sounds more complicated than mine!

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Wed Jan 08, 2020 4:30 pm

Besides the Roth-IRA accounts and investing in VTSAX in my taxable brokerage account, I'm thinking about real estate. With my home paid off, would you do something like FundRise, physical rental property, or a Vanguard REIT? I've seen responses all over the map on this topic. Would love some insight.

livesoft
Posts: 69572
Joined: Thu Mar 01, 2007 8:00 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by livesoft » Wed Jan 08, 2020 4:45 pm

I wouldn't do any of those. If you want to do real estate, cut out the middlemen and become a landlord. Or maybe use the TIAA Real Estate Account.
Wiki This signature message sponsored by sscritic: Learn to fish.

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Wed Jan 08, 2020 4:50 pm

livesoft wrote:
Wed Jan 08, 2020 4:45 pm
I wouldn't do any of those. If you want to do real estate, cut out the middlemen and become a landlord. Or maybe use the TIAA Real Estate Account.
Yes I’m leaning towards buying a physical rental unit. I don’t have a job anymore so I can handle the work it will take!

renue74
Posts: 1799
Joined: Tue Apr 07, 2015 7:24 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by renue74 » Wed Jan 08, 2020 7:38 pm

Jon_PassiveInvestor wrote:
Wed Jan 08, 2020 4:50 pm
livesoft wrote:
Wed Jan 08, 2020 4:45 pm
I wouldn't do any of those. If you want to do real estate, cut out the middlemen and become a landlord. Or maybe use the TIAA Real Estate Account.
Yes I’m leaning towards buying a physical rental unit. I don’t have a job anymore so I can handle the work it will take!
I sold a mobile app business in 2013 and started investing in rentals.

If you want to do an REI, you should visit your local REIA and talk talk a few landlords locally. They will be able to give you a wealth of info about your certain geographic area.

If you have time on your hands, it may be an option.

EnjoyIt
Posts: 3134
Joined: Sun Dec 29, 2013 8:06 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by EnjoyIt » Thu Jan 09, 2020 9:51 am

Jon_PassiveInvestor wrote:
Wed Jan 08, 2020 10:03 am
UPDATE!

Here's what I've done so far:
-250k sitting in high yield Ally MM earning 2.5% over a 18 month period. Rest of cash sitting in Vanguard Treasury Money Market Fund.
-Maxed out Roth IRA accounts, 100% in VTSAX (Total Stock Market). $12,000 sitting here.

I am absolutely scared of investing in individual stock picks and I know myself, I will get stressed, make emotional decisions, and then get even more stressed. Index investing was built for me. I like to keep life simple and not have to tracks the market every day. I'm good with monthly if that. I just have other interests!

I've received a lot of advice recently and many are telling me at my age not to waste my time with bonds or international and to buy VTSAX in my taxable account and then add bonds closer to retirement.

What are your thoughts on this strategy? Should I keep it that simple or start a 3 fund? Or maybe 90% US stocks, 10% international?

My retirement horizon is 20 years away as I'd like to retire around the 50 YO mark.
Thanks for the update. I really don't like your idea of putting everything left in Vanguard Total Stock. Not because it is a bad idea, but because I don't think you had a good chance to evaluate your own risk profile. There are plenty of good reasons to be in 100% equities and plenty of investors do that.

Please understand that if you do go 100% and the next recession hits next week, there is a chance you will be down 50% and that 50% down can be there for many years before you get to recoup your loses. How will you handle that? Will you need to sell some of those equities to pay for living expenses and therefor be selling at a loss? Will you freak out like sooooooo many other investors and sell everything at a loss? It's very tough to understand what you will do if you never experienced losing $1 million dollars in just a matter of months.

Here is the questions you need to answer:
1) How much risk do you need to take in order to reach your goals?
This may mean that a 25% equities portfolio may eventually get you to your goal and you really don't need to take risk
Or it could mean that you need to be 80% equities to reach said goal
2) What is your ability to take risk?
This has a lot to do with your stability. For example, a physician has plenty of ability to take risk since their work is very secure, on the other hand, someone working in oil and gas as an independent contractor may be in and out of work with little consistency. Or maybe you are so rich like Warren Buffet that even a 50% drop won't adverse affect your life in any way. Where do you fit in?
3) Willingness to take risk?
How willing are you to tolerate a massive loss and not freak out?

Once you can honestly answer these questions to yourself, you can then try and decide what is your risk tolerance and how much equities you should own. It very well may be 100%, though I suspect considering the instability of future income, it very likely should be a lot less.

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Thu Jan 09, 2020 11:23 am

EnjoyIt wrote:
Thu Jan 09, 2020 9:51 am
Jon_PassiveInvestor wrote:
Wed Jan 08, 2020 10:03 am
UPDATE!

Here's what I've done so far:
-250k sitting in high yield Ally MM earning 2.5% over a 18 month period. Rest of cash sitting in Vanguard Treasury Money Market Fund.
-Maxed out Roth IRA accounts, 100% in VTSAX (Total Stock Market). $12,000 sitting here.

I am absolutely scared of investing in individual stock picks and I know myself, I will get stressed, make emotional decisions, and then get even more stressed. Index investing was built for me. I like to keep life simple and not have to tracks the market every day. I'm good with monthly if that. I just have other interests!

I've received a lot of advice recently and many are telling me at my age not to waste my time with bonds or international and to buy VTSAX in my taxable account and then add bonds closer to retirement.

What are your thoughts on this strategy? Should I keep it that simple or start a 3 fund? Or maybe 90% US stocks, 10% international?

My retirement horizon is 20 years away as I'd like to retire around the 50 YO mark.
Thanks for the update. I really don't like your idea of putting everything left in Vanguard Total Stock. Not because it is a bad idea, but because I don't think you had a good chance to evaluate your own risk profile. There are plenty of good reasons to be in 100% equities and plenty of investors do that.

Please understand that if you do go 100% and the next recession hits next week, there is a chance you will be down 50% and that 50% down can be there for many years before you get to recoup your loses. How will you handle that? Will you need to sell some of those equities to pay for living expenses and therefor be selling at a loss? Will you freak out like sooooooo many other investors and sell everything at a loss? It's very tough to understand what you will do if you never experienced losing $1 million dollars in just a matter of months.

Here is the questions you need to answer:
1) How much risk do you need to take in order to reach your goals?
This may mean that a 25% equities portfolio may eventually get you to your goal and you really don't need to take risk
Or it could mean that you need to be 80% equities to reach said goal
2) What is your ability to take risk?
This has a lot to do with your stability. For example, a physician has plenty of ability to take risk since their work is very secure, on the other hand, someone working in oil and gas as an independent contractor may be in and out of work with little consistency. Or maybe you are so rich like Warren Buffet that even a 50% drop won't adverse affect your life in any way. Where do you fit in?
3) Willingness to take risk?
How willing are you to tolerate a massive loss and not freak out?

Once you can honestly answer these questions to yourself, you can then try and decide what is your risk tolerance and how much equities you should own. It very well may be 100%, though I suspect considering the instability of future income, it very likely should be a lot less.
This money from the sale of the business is all my family has. Cash flow has gone to zero. I 100% agree that not all of it should go into equities. My plan is to start a consulting business and possibly buy our first rental property. There is no way I'd go fully into the market! I can't stomach that. I am starting to dollar cost average into the total stock index fund though with a portion of our finances. I'm holding a few hundred thousand back in Vanguard Treasury index that will never be touched due to needing this money for monthly life expenses and the future rental investment.

Anything invested right now I feel comfortable with just the total stock index though. I have no use for bonds at the moment.

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Thu Jan 09, 2020 11:23 am

renue74 wrote:
Wed Jan 08, 2020 7:38 pm
Jon_PassiveInvestor wrote:
Wed Jan 08, 2020 4:50 pm
livesoft wrote:
Wed Jan 08, 2020 4:45 pm
I wouldn't do any of those. If you want to do real estate, cut out the middlemen and become a landlord. Or maybe use the TIAA Real Estate Account.
Yes I’m leaning towards buying a physical rental unit. I don’t have a job anymore so I can handle the work it will take!
I sold a mobile app business in 2013 and started investing in rentals.

If you want to do an REI, you should visit your local REIA and talk talk a few landlords locally. They will be able to give you a wealth of info about your certain geographic area.

If you have time on your hands, it may be an option.
Seems like buying a rental to get my feet wet would be a good option. I have a lot of time on my hands as I no longer have a "day job" And I'm 31...

EnjoyIt
Posts: 3134
Joined: Sun Dec 29, 2013 8:06 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by EnjoyIt » Thu Jan 09, 2020 12:06 pm

Jon_PassiveInvestor wrote:
Thu Jan 09, 2020 11:23 am
EnjoyIt wrote:
Thu Jan 09, 2020 9:51 am
Jon_PassiveInvestor wrote:
Wed Jan 08, 2020 10:03 am
UPDATE!

Here's what I've done so far:
-250k sitting in high yield Ally MM earning 2.5% over a 18 month period. Rest of cash sitting in Vanguard Treasury Money Market Fund.
-Maxed out Roth IRA accounts, 100% in VTSAX (Total Stock Market). $12,000 sitting here.

I am absolutely scared of investing in individual stock picks and I know myself, I will get stressed, make emotional decisions, and then get even more stressed. Index investing was built for me. I like to keep life simple and not have to tracks the market every day. I'm good with monthly if that. I just have other interests!

I've received a lot of advice recently and many are telling me at my age not to waste my time with bonds or international and to buy VTSAX in my taxable account and then add bonds closer to retirement.

What are your thoughts on this strategy? Should I keep it that simple or start a 3 fund? Or maybe 90% US stocks, 10% international?

My retirement horizon is 20 years away as I'd like to retire around the 50 YO mark.
Thanks for the update. I really don't like your idea of putting everything left in Vanguard Total Stock. Not because it is a bad idea, but because I don't think you had a good chance to evaluate your own risk profile. There are plenty of good reasons to be in 100% equities and plenty of investors do that.

Please understand that if you do go 100% and the next recession hits next week, there is a chance you will be down 50% and that 50% down can be there for many years before you get to recoup your loses. How will you handle that? Will you need to sell some of those equities to pay for living expenses and therefor be selling at a loss? Will you freak out like sooooooo many other investors and sell everything at a loss? It's very tough to understand what you will do if you never experienced losing $1 million dollars in just a matter of months.

Here is the questions you need to answer:
1) How much risk do you need to take in order to reach your goals?
This may mean that a 25% equities portfolio may eventually get you to your goal and you really don't need to take risk
Or it could mean that you need to be 80% equities to reach said goal
2) What is your ability to take risk?
This has a lot to do with your stability. For example, a physician has plenty of ability to take risk since their work is very secure, on the other hand, someone working in oil and gas as an independent contractor may be in and out of work with little consistency. Or maybe you are so rich like Warren Buffet that even a 50% drop won't adverse affect your life in any way. Where do you fit in?
3) Willingness to take risk?
How willing are you to tolerate a massive loss and not freak out?

Once you can honestly answer these questions to yourself, you can then try and decide what is your risk tolerance and how much equities you should own. It very well may be 100%, though I suspect considering the instability of future income, it very likely should be a lot less.
This money from the sale of the business is all my family has. Cash flow has gone to zero. I 100% agree that not all of it should go into equities. My plan is to start a consulting business and possibly buy our first rental property. There is no way I'd go fully into the market! I can't stomach that. I am starting to dollar cost average into the total stock index fund though with a portion of our finances. I'm holding a few hundred thousand back in Vanguard Treasury index that will never be touched due to needing this money for monthly life expenses and the future rental investment.

Anything invested right now I feel comfortable with just the total stock index though. I have no use for bonds at the moment.
What do you think vanguard treasury index is? They are bonds. Anyways in this particular market one can easiy consider CDs, cash in a high yield savings account or money market account as “bonds.” This is the anchor to your portfolio, the safety net, the fixed income portion, PRN however you want to look at it.

If what I said above is true, then at this time you have some money in the market and the rest in fixed income. If 10% is in the market now, that makes your Asset allocation 10/90. When you DCA, you will slowly be adjusting from 10% to something higher. So far you know that 10% is not enough risk which is why you plan on buying more equities. And you clearly explained that 100% is too much risk. Have you actually figured out where the right spot is for you? How will DCA help with that? At what point of the DCA will you decide you have a high enough percentage in equities?

I am harassing you about this because I have a strong suspicion that you don’t know the answer to this question. . . Yet . . But I am trying to get you to think about it. DCA will not solve your problem if you don’t know what the final answer needs to be.

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Mon Jan 13, 2020 9:19 am

EnjoyIt wrote:
Thu Jan 09, 2020 12:06 pm
Jon_PassiveInvestor wrote:
Thu Jan 09, 2020 11:23 am
EnjoyIt wrote:
Thu Jan 09, 2020 9:51 am
Jon_PassiveInvestor wrote:
Wed Jan 08, 2020 10:03 am
UPDATE!

Here's what I've done so far:
-250k sitting in high yield Ally MM earning 2.5% over a 18 month period. Rest of cash sitting in Vanguard Treasury Money Market Fund.
-Maxed out Roth IRA accounts, 100% in VTSAX (Total Stock Market). $12,000 sitting here.

I am absolutely scared of investing in individual stock picks and I know myself, I will get stressed, make emotional decisions, and then get even more stressed. Index investing was built for me. I like to keep life simple and not have to tracks the market every day. I'm good with monthly if that. I just have other interests!

I've received a lot of advice recently and many are telling me at my age not to waste my time with bonds or international and to buy VTSAX in my taxable account and then add bonds closer to retirement.

What are your thoughts on this strategy? Should I keep it that simple or start a 3 fund? Or maybe 90% US stocks, 10% international?

My retirement horizon is 20 years away as I'd like to retire around the 50 YO mark.
Thanks for the update. I really don't like your idea of putting everything left in Vanguard Total Stock. Not because it is a bad idea, but because I don't think you had a good chance to evaluate your own risk profile. There are plenty of good reasons to be in 100% equities and plenty of investors do that.

Please understand that if you do go 100% and the next recession hits next week, there is a chance you will be down 50% and that 50% down can be there for many years before you get to recoup your loses. How will you handle that? Will you need to sell some of those equities to pay for living expenses and therefor be selling at a loss? Will you freak out like sooooooo many other investors and sell everything at a loss? It's very tough to understand what you will do if you never experienced losing $1 million dollars in just a matter of months.

Here is the questions you need to answer:
1) How much risk do you need to take in order to reach your goals?
This may mean that a 25% equities portfolio may eventually get you to your goal and you really don't need to take risk
Or it could mean that you need to be 80% equities to reach said goal
2) What is your ability to take risk?
This has a lot to do with your stability. For example, a physician has plenty of ability to take risk since their work is very secure, on the other hand, someone working in oil and gas as an independent contractor may be in and out of work with little consistency. Or maybe you are so rich like Warren Buffet that even a 50% drop won't adverse affect your life in any way. Where do you fit in?
3) Willingness to take risk?
How willing are you to tolerate a massive loss and not freak out?

Once you can honestly answer these questions to yourself, you can then try and decide what is your risk tolerance and how much equities you should own. It very well may be 100%, though I suspect considering the instability of future income, it very likely should be a lot less.
This money from the sale of the business is all my family has. Cash flow has gone to zero. I 100% agree that not all of it should go into equities. My plan is to start a consulting business and possibly buy our first rental property. There is no way I'd go fully into the market! I can't stomach that. I am starting to dollar cost average into the total stock index fund though with a portion of our finances. I'm holding a few hundred thousand back in Vanguard Treasury index that will never be touched due to needing this money for monthly life expenses and the future rental investment.

Anything invested right now I feel comfortable with just the total stock index though. I have no use for bonds at the moment.
What do you think vanguard treasury index is? They are bonds. Anyways in this particular market one can easiy consider CDs, cash in a high yield savings account or money market account as “bonds.” This is the anchor to your portfolio, the safety net, the fixed income portion, PRN however you want to look at it.

If what I said above is true, then at this time you have some money in the market and the rest in fixed income. If 10% is in the market now, that makes your Asset allocation 10/90. When you DCA, you will slowly be adjusting from 10% to something higher. So far you know that 10% is not enough risk which is why you plan on buying more equities. And you clearly explained that 100% is too much risk. Have you actually figured out where the right spot is for you? How will DCA help with that? At what point of the DCA will you decide you have a high enough percentage in equities?

I am harassing you about this because I have a strong suspicion that you don’t know the answer to this question. . . Yet . . But I am trying to get you to think about it. DCA will not solve your problem if you don’t know what the final answer needs to be.
I honestly don''t have an answer for you and I'm not sure there's a good answer haha. My current plans are to start another business, invest into VTSAX for a portion, and use some to buy a rental property. i think, once I start developing cash flows, I will feel more comfortably investing a majority of my funds in the market. Right now, I need to play it safe and keep most of it in the Treasury index fund as I have $0 cash flow right now. It has been zero since September of 2019.

csm
Posts: 316
Joined: Sun Mar 27, 2016 7:52 am

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by csm » Tue Jan 14, 2020 7:46 am

Jon_PassiveInvestor wrote:
Wed Jan 08, 2020 10:03 am
UPDATE!

Here's what I've done so far:
-250k sitting in high yield Ally MM earning 2.5% over a 18 month period.
OP - how are you getting 2.5% on an Ally MM? I'm seeing 0.75% on all balance tiers.

Presintense
Posts: 252
Joined: Thu Nov 06, 2014 1:58 pm
Location: "Somewhere in the middle of America"

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Presintense » Tue Jan 14, 2020 8:20 am

Jon_PassiveInvestor wrote:
Tue Aug 27, 2019 8:42 am
I sold my business a few weeks ago for 2.2 million and I couldn't be more elated. My original plan was to store 250k with Ally but now their saving account interest is only 1.9%. Should I just keep the majority of the funds in VUSXX and a modest amount in Ally Savings for monthly living expenses?

What would you do in this situation? I want safety while I decide on next steps in life. I'm also taking a momentary mental break as my brain from running this business.

I appreciate any advice. Thank you!
At the risk of sounding like I am just repeating the bogleheads mantra mindlessly, I would store them in the three fund portfolio and adjust the allocations based upon risk tolerance. Momentary mental breaks can last a while. Why not have your money working while you’re not?

By the way, congratulations on building and selling your business. Enjoy the next step, whatever it is and for however long it is.
Performance = Potential - Distraction

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Tue Jan 14, 2020 9:20 am

csm wrote:
Tue Jan 14, 2020 7:46 am
Jon_PassiveInvestor wrote:
Wed Jan 08, 2020 10:03 am
UPDATE!

Here's what I've done so far:
-250k sitting in high yield Ally MM earning 2.5% over a 18 month period.
OP - how are you getting 2.5% on an Ally MM? I'm seeing 0.75% on all balance tiers.
Yes sir! I have $250,000 locked into a 2.5% money market account over a 18 month period :)

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Tue Jan 14, 2020 10:32 am

Presintense wrote:
Tue Jan 14, 2020 8:20 am
Jon_PassiveInvestor wrote:
Tue Aug 27, 2019 8:42 am
I sold my business a few weeks ago for 2.2 million and I couldn't be more elated. My original plan was to store 250k with Ally but now their saving account interest is only 1.9%. Should I just keep the majority of the funds in VUSXX and a modest amount in Ally Savings for monthly living expenses?

What would you do in this situation? I want safety while I decide on next steps in life. I'm also taking a momentary mental break as my brain from running this business.

I appreciate any advice. Thank you!
At the risk of sounding like I am just repeating the bogleheads mantra mindlessly, I would store them in the three fund portfolio and adjust the allocations based upon risk tolerance. Momentary mental breaks can last a while. Why not have your money working while you’re not?

By the way, congratulations on building and selling your business. Enjoy the next step, whatever it is and for however long it is.
I'm 31 and don't need a chunk of these funds anytime soon so I'm 100% all in VTSAX!

EnjoyIt
Posts: 3134
Joined: Sun Dec 29, 2013 8:06 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by EnjoyIt » Tue Jan 14, 2020 11:10 am

Jon_PassiveInvestor wrote:
Tue Jan 14, 2020 10:32 am
Presintense wrote:
Tue Jan 14, 2020 8:20 am
Jon_PassiveInvestor wrote:
Tue Aug 27, 2019 8:42 am
I sold my business a few weeks ago for 2.2 million and I couldn't be more elated. My original plan was to store 250k with Ally but now their saving account interest is only 1.9%. Should I just keep the majority of the funds in VUSXX and a modest amount in Ally Savings for monthly living expenses?

What would you do in this situation? I want safety while I decide on next steps in life. I'm also taking a momentary mental break as my brain from running this business.

I appreciate any advice. Thank you!
At the risk of sounding like I am just repeating the bogleheads mantra mindlessly, I would store them in the three fund portfolio and adjust the allocations based upon risk tolerance. Momentary mental breaks can last a while. Why not have your money working while you’re not?

By the way, congratulations on building and selling your business. Enjoy the next step, whatever it is and for however long it is.
I'm 31 and don't need a chunk of these funds anytime soon so I'm 100% all in VTSAX!
May I recommend that you stop thinking in terms of buckets of cash and think of your wealth as one large pile of money. Figure out what asset allocation you desire and invest according to your asset allocation. Buckets may make your brain feel better, but buckets are kind of meaningless. It is all your money to do whatever you want with.

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Wed Jan 15, 2020 8:44 am

EnjoyIt wrote:
Tue Jan 14, 2020 11:10 am
Jon_PassiveInvestor wrote:
Tue Jan 14, 2020 10:32 am
Presintense wrote:
Tue Jan 14, 2020 8:20 am
Jon_PassiveInvestor wrote:
Tue Aug 27, 2019 8:42 am
I sold my business a few weeks ago for 2.2 million and I couldn't be more elated. My original plan was to store 250k with Ally but now their saving account interest is only 1.9%. Should I just keep the majority of the funds in VUSXX and a modest amount in Ally Savings for monthly living expenses?

What would you do in this situation? I want safety while I decide on next steps in life. I'm also taking a momentary mental break as my brain from running this business.

I appreciate any advice. Thank you!
At the risk of sounding like I am just repeating the bogleheads mantra mindlessly, I would store them in the three fund portfolio and adjust the allocations based upon risk tolerance. Momentary mental breaks can last a while. Why not have your money working while you’re not?

By the way, congratulations on building and selling your business. Enjoy the next step, whatever it is and for however long it is.
I'm 31 and don't need a chunk of these funds anytime soon so I'm 100% all in VTSAX!
May I recommend that you stop thinking in terms of buckets of cash and think of your wealth as one large pile of money. Figure out what asset allocation you desire and invest according to your asset allocation. Buckets may make your brain feel better, but buckets are kind of meaningless. It is all your money to do whatever you want with.
I wouldn't say I'm thinking about buckets per se. I'm thinking about risk and diversifying my funds. I need a mix of fixed income, real estate, and stocks.

EnjoyIt
Posts: 3134
Joined: Sun Dec 29, 2013 8:06 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by EnjoyIt » Wed Jan 15, 2020 8:46 am

Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 8:44 am
EnjoyIt wrote:
Tue Jan 14, 2020 11:10 am
Jon_PassiveInvestor wrote:
Tue Jan 14, 2020 10:32 am
Presintense wrote:
Tue Jan 14, 2020 8:20 am
Jon_PassiveInvestor wrote:
Tue Aug 27, 2019 8:42 am
I sold my business a few weeks ago for 2.2 million and I couldn't be more elated. My original plan was to store 250k with Ally but now their saving account interest is only 1.9%. Should I just keep the majority of the funds in VUSXX and a modest amount in Ally Savings for monthly living expenses?

What would you do in this situation? I want safety while I decide on next steps in life. I'm also taking a momentary mental break as my brain from running this business.

I appreciate any advice. Thank you!
At the risk of sounding like I am just repeating the bogleheads mantra mindlessly, I would store them in the three fund portfolio and adjust the allocations based upon risk tolerance. Momentary mental breaks can last a while. Why not have your money working while you’re not?

By the way, congratulations on building and selling your business. Enjoy the next step, whatever it is and for however long it is.
I'm 31 and don't need a chunk of these funds anytime soon so I'm 100% all in VTSAX!
May I recommend that you stop thinking in terms of buckets of cash and think of your wealth as one large pile of money. Figure out what asset allocation you desire and invest according to your asset allocation. Buckets may make your brain feel better, but buckets are kind of meaningless. It is all your money to do whatever you want with.
I wouldn't say I'm thinking about buckets per se. I'm thinking about risk and diversifying my funds. I need a mix of fixed income, real estate, and stocks.
Great. That is what an AA is for. Risk and diversification.

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Wed Jan 15, 2020 9:55 am

EnjoyIt wrote:
Wed Jan 15, 2020 8:46 am
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 8:44 am
EnjoyIt wrote:
Tue Jan 14, 2020 11:10 am
Jon_PassiveInvestor wrote:
Tue Jan 14, 2020 10:32 am
Presintense wrote:
Tue Jan 14, 2020 8:20 am


At the risk of sounding like I am just repeating the bogleheads mantra mindlessly, I would store them in the three fund portfolio and adjust the allocations based upon risk tolerance. Momentary mental breaks can last a while. Why not have your money working while you’re not?

By the way, congratulations on building and selling your business. Enjoy the next step, whatever it is and for however long it is.
I'm 31 and don't need a chunk of these funds anytime soon so I'm 100% all in VTSAX!
May I recommend that you stop thinking in terms of buckets of cash and think of your wealth as one large pile of money. Figure out what asset allocation you desire and invest according to your asset allocation. Buckets may make your brain feel better, but buckets are kind of meaningless. It is all your money to do whatever you want with.
I wouldn't say I'm thinking about buckets per se. I'm thinking about risk and diversifying my funds. I need a mix of fixed income, real estate, and stocks.
Great. That is what an AA is for. Risk and diversification.
I'm 100% VTSAX in my Roth accounts and my taxable account now. I'm keeping 75% in VUSXX until I get new cash flows going again.

EnjoyIt
Posts: 3134
Joined: Sun Dec 29, 2013 8:06 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by EnjoyIt » Wed Jan 15, 2020 10:12 am

Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 9:55 am
EnjoyIt wrote:
Wed Jan 15, 2020 8:46 am
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 8:44 am
EnjoyIt wrote:
Tue Jan 14, 2020 11:10 am
Jon_PassiveInvestor wrote:
Tue Jan 14, 2020 10:32 am


I'm 31 and don't need a chunk of these funds anytime soon so I'm 100% all in VTSAX!
May I recommend that you stop thinking in terms of buckets of cash and think of your wealth as one large pile of money. Figure out what asset allocation you desire and invest according to your asset allocation. Buckets may make your brain feel better, but buckets are kind of meaningless. It is all your money to do whatever you want with.
I wouldn't say I'm thinking about buckets per se. I'm thinking about risk and diversifying my funds. I need a mix of fixed income, real estate, and stocks.
Great. That is what an AA is for. Risk and diversification.
I'm 100% VTSAX in my Roth accounts and my taxable account now. I'm keeping 75% in VUSXX until I get new cash flows going again.
So what is your asset allocation? So far I think you are just putting money here and there with no real plan. Just going by feel. Emotions and feel do not belong in investing.

I urge you to develop a workable plan and an AA. I recommend creating and investment policy statement there is a wiki about that on this forum.

EfficientInvestor
Posts: 260
Joined: Thu Nov 01, 2018 7:02 pm
Location: Alabama

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by EfficientInvestor » Wed Jan 15, 2020 10:51 am

Jon_PassiveInvestor wrote:
Sat Jan 04, 2020 7:35 pm
I’m considering a three fund portfolio for most of mine.
Have you considered a risk-parity approach? I find that a three fund portfolio or even a standard 60/40 portfolio might leave you over-exposed to stock risk. If you want to better balance your risk among other assets, you could implement a risk parity allocation of somewhere around 25% stock, 65% bonds, and 10% gold. If you have a higher risk tolerance than that allocation, you could apply leverage to that allocation via the use of futures contracts or a variety of other sources. This should provide more stable returns than just trading out bonds for more stocks. Notice in the first backtest below how much more stable the returns have been for Portfolio 1 (Risk Parity) vs Portfolio 2 (60/40). The second backtest shows the implementation of a more aggressive version of risk parity by using leverage on short term treasuries. This could be implemented with 2-year treasury futures contracts. Since Nov 1991, this version of a risk parity portfolio would have outperformed the stock market by over 1.5%/year and would have had a lower max drawdown than a 60/40 portfolio.

On a side note...which area of Dallas do you live in? I lived in Plano from 2011-2015 and really enjoyed my time there. I was actually just there this past weekend. Crazy weather with the tornado warnings one day and then snow the next!

Image

source - https://www.portfoliovisualizer.com/bac ... tion3_1=10

Image

source - https://www.portfoliovisualizer.com/bac ... tion5_2=40

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Wed Jan 15, 2020 1:52 pm

EnjoyIt wrote:
Wed Jan 15, 2020 10:12 am
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 9:55 am
EnjoyIt wrote:
Wed Jan 15, 2020 8:46 am
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 8:44 am
EnjoyIt wrote:
Tue Jan 14, 2020 11:10 am


May I recommend that you stop thinking in terms of buckets of cash and think of your wealth as one large pile of money. Figure out what asset allocation you desire and invest according to your asset allocation. Buckets may make your brain feel better, but buckets are kind of meaningless. It is all your money to do whatever you want with.
I wouldn't say I'm thinking about buckets per se. I'm thinking about risk and diversifying my funds. I need a mix of fixed income, real estate, and stocks.
Great. That is what an AA is for. Risk and diversification.
I'm 100% VTSAX in my Roth accounts and my taxable account now. I'm keeping 75% in VUSXX until I get new cash flows going again.
So what is your asset allocation? So far I think you are just putting money here and there with no real plan. Just going by feel. Emotions and feel do not belong in investing.

I urge you to develop a workable plan and an AA. I recommend creating and investment policy statement there is a wiki about that on this forum.
I disagree completely. I'm comfortable investing in 100% stocks until I retire. Goal is the age of 50-55. Both our Roth accounts are 100% stocks as well. I will add bonds as I get closer to retirement.

So, 20-25 years to go. Short term, I am withholding much of my cash until I get my consulting business up and running. Once I get a consistent coverage of my monthly family expenses, I will invest probably 75% of the rest. Some will be for a rental property in cash. A slush fund will be for Bitcoin as well.

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Wed Jan 15, 2020 1:55 pm

EfficientInvestor wrote:
Wed Jan 15, 2020 10:51 am
Jon_PassiveInvestor wrote:
Sat Jan 04, 2020 7:35 pm
I’m considering a three fund portfolio for most of mine.
Have you considered a risk-parity approach? I find that a three fund portfolio or even a standard 60/40 portfolio might leave you over-exposed to stock risk. If you want to better balance your risk among other assets, you could implement a risk parity allocation of somewhere around 25% stock, 65% bonds, and 10% gold. If you have a higher risk tolerance than that allocation, you could apply leverage to that allocation via the use of futures contracts or a variety of other sources. This should provide more stable returns than just trading out bonds for more stocks. Notice in the first backtest below how much more stable the returns have been for Portfolio 1 (Risk Parity) vs Portfolio 2 (60/40). The second backtest shows the implementation of a more aggressive version of risk parity by using leverage on short term treasuries. This could be implemented with 2-year treasury futures contracts. Since Nov 1991, this version of a risk parity portfolio would have outperformed the stock market by over 1.5%/year and would have had a lower max drawdown than a 60/40 portfolio.

On a side note...which area of Dallas do you live in? I lived in Plano from 2011-2015 and really enjoyed my time there. I was actually just there this past weekend. Crazy weather with the tornado warnings one day and then snow the next!

Image

source - https://www.portfoliovisualizer.com/bac ... tion3_1=10

Image

source - https://www.portfoliovisualizer.com/bac ... tion5_2=40
Yes we are in Allen! Yeah, the weather has been nuts lately.

I misspoke earlier. For the foreseeable future, I will be investing any capital into 100% VTSAX until I get closer to retirement. At that point I will add bonds to my portfolio. All our Roth accounts are purely VTSAX as well. Taxable account capital is VTSAX too. Just bought 75k of it yesterday actually. Rest is in VUSXX for safety until I develop cash flows. Right now, my monthly income has gone to nill, dada, ZERO! Roughly 1.5 million in bank though, which is nice. It's a rather strange feeling to see no cash flow though, I'll admit that haha.

EnjoyIt
Posts: 3134
Joined: Sun Dec 29, 2013 8:06 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by EnjoyIt » Wed Jan 15, 2020 2:17 pm

Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 1:52 pm
EnjoyIt wrote:
Wed Jan 15, 2020 10:12 am
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 9:55 am
EnjoyIt wrote:
Wed Jan 15, 2020 8:46 am
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 8:44 am


I wouldn't say I'm thinking about buckets per se. I'm thinking about risk and diversifying my funds. I need a mix of fixed income, real estate, and stocks.
Great. That is what an AA is for. Risk and diversification.
I'm 100% VTSAX in my Roth accounts and my taxable account now. I'm keeping 75% in VUSXX until I get new cash flows going again.
So what is your asset allocation? So far I think you are just putting money here and there with no real plan. Just going by feel. Emotions and feel do not belong in investing.

I urge you to develop a workable plan and an AA. I recommend creating and investment policy statement there is a wiki about that on this forum.
I disagree completely. I'm comfortable investing in 100% stocks until I retire. Goal is the age of 50-55. Both our Roth accounts are 100% stocks as well. I will add bonds as I get closer to retirement.

So, 20-25 years to go. Short term, I am withholding much of my cash until I get my consulting business up and running. Once I get a consistent coverage of my monthly family expenses, I will invest probably 75% of the rest. Some will be for a rental property in cash. A slush fund will be for Bitcoin as well.
You are not 100% in equities. You are sitting on a pile of cash which is what I am trying to tell you that all of your money is part of your portfolio. Today, you are risk averse because you don't have any income coming. It makes sense to have an AA that reflects that. It also makes sense to divert a bunch of that cash to equities when you are in position to do so (meaning you have a steady income and know what your expenses are.)

As I said before, right now you are deciding by feel as opposed to a strict plan such as:
Until you start getting an income you will keep your AA 35% equities 65% in cash/bonds
Once some money starts coming in (let us say $2k/month) increasing your AA to 65/35
Once your consulting business is in full swing (maybe an income of $5k/month) switch again to 95/5 with the 5% being an emergency fund.
This will create a defined set of rules for you to follow instead of using your feeling.

The above is a potential example that you can decide on based on your own experience and needs. I'm sure you will do fine without such strict rules, but having those rules will keep your emotions in check. This way you won't hesitate investing because markets are possibly overvalued, or be too scared to invest because they may have declined a little. This instead gives you a guideline that you will follow because you decided with rational thought behind and not the whim of the markets and some random income stream you may or may not get.

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Wed Jan 15, 2020 2:46 pm

EnjoyIt wrote:
Wed Jan 15, 2020 2:17 pm
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 1:52 pm
EnjoyIt wrote:
Wed Jan 15, 2020 10:12 am
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 9:55 am
EnjoyIt wrote:
Wed Jan 15, 2020 8:46 am


Great. That is what an AA is for. Risk and diversification.
I'm 100% VTSAX in my Roth accounts and my taxable account now. I'm keeping 75% in VUSXX until I get new cash flows going again.
So what is your asset allocation? So far I think you are just putting money here and there with no real plan. Just going by feel. Emotions and feel do not belong in investing.

I urge you to develop a workable plan and an AA. I recommend creating and investment policy statement there is a wiki about that on this forum.
I disagree completely. I'm comfortable investing in 100% stocks until I retire. Goal is the age of 50-55. Both our Roth accounts are 100% stocks as well. I will add bonds as I get closer to retirement.

So, 20-25 years to go. Short term, I am withholding much of my cash until I get my consulting business up and running. Once I get a consistent coverage of my monthly family expenses, I will invest probably 75% of the rest. Some will be for a rental property in cash. A slush fund will be for Bitcoin as well.
You are not 100% in equities. You are sitting on a pile of cash which is what I am trying to tell you that all of your money is part of your portfolio. Today, you are risk averse because you don't have any income coming. It makes sense to have an AA that reflects that. It also makes sense to divert a bunch of that cash to equities when you are in position to do so (meaning you have a steady income and know what your expenses are.)

As I said before, right now you are deciding by feel as opposed to a strict plan such as:
Until you start getting an income you will keep your AA 35% equities 65% in cash/bonds
Once some money starts coming in (let us say $2k/month) increasing your AA to 65/35
Once your consulting business is in full swing (maybe an income of $5k/month) switch again to 95/5 with the 5% being an emergency fund.
This will create a defined set of rules for you to follow instead of using your feeling.

The above is a potential example that you can decide on based on your own experience and needs. I'm sure you will do fine without such strict rules, but having those rules will keep your emotions in check. This way you won't hesitate investing because markets are possibly overvalued, or be too scared to invest because they may have declined a little. This instead gives you a guideline that you will follow because you decided with rational thought behind and not the whim of the markets and some random income stream you may or may not get.
Yes the cash flow is my biggest issue right now. I’m uber conservative right now as I build up a business. I wouldn’t hesitate to go 80% equities at that point. The rich are hoarding cash and I can’t blame them. Waiting for the “big one” to buy up equities on the cheap!

EnjoyIt
Posts: 3134
Joined: Sun Dec 29, 2013 8:06 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by EnjoyIt » Wed Jan 15, 2020 2:51 pm

Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 2:46 pm
EnjoyIt wrote:
Wed Jan 15, 2020 2:17 pm
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 1:52 pm
EnjoyIt wrote:
Wed Jan 15, 2020 10:12 am
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 9:55 am


I'm 100% VTSAX in my Roth accounts and my taxable account now. I'm keeping 75% in VUSXX until I get new cash flows going again.
So what is your asset allocation? So far I think you are just putting money here and there with no real plan. Just going by feel. Emotions and feel do not belong in investing.

I urge you to develop a workable plan and an AA. I recommend creating and investment policy statement there is a wiki about that on this forum.
I disagree completely. I'm comfortable investing in 100% stocks until I retire. Goal is the age of 50-55. Both our Roth accounts are 100% stocks as well. I will add bonds as I get closer to retirement.

So, 20-25 years to go. Short term, I am withholding much of my cash until I get my consulting business up and running. Once I get a consistent coverage of my monthly family expenses, I will invest probably 75% of the rest. Some will be for a rental property in cash. A slush fund will be for Bitcoin as well.
You are not 100% in equities. You are sitting on a pile of cash which is what I am trying to tell you that all of your money is part of your portfolio. Today, you are risk averse because you don't have any income coming. It makes sense to have an AA that reflects that. It also makes sense to divert a bunch of that cash to equities when you are in position to do so (meaning you have a steady income and know what your expenses are.)

As I said before, right now you are deciding by feel as opposed to a strict plan such as:
Until you start getting an income you will keep your AA 35% equities 65% in cash/bonds
Once some money starts coming in (let us say $2k/month) increasing your AA to 65/35
Once your consulting business is in full swing (maybe an income of $5k/month) switch again to 95/5 with the 5% being an emergency fund.
This will create a defined set of rules for you to follow instead of using your feeling.

The above is a potential example that you can decide on based on your own experience and needs. I'm sure you will do fine without such strict rules, but having those rules will keep your emotions in check. This way you won't hesitate investing because markets are possibly overvalued, or be too scared to invest because they may have declined a little. This instead gives you a guideline that you will follow because you decided with rational thought behind and not the whim of the markets and some random income stream you may or may not get.
Yes the cash flow is my biggest issue right now. I’m uber conservative right now as I build up a business. I wouldn’t hesitate to go 80% equities at that point. The rich are hoarding cash and I can’t blame them. Waiting for the “big one” to buy up equities on the cheap!
When is "the big one" coming? Will markets drop 50% again, and will it happen before or after markets go up over 100% and waiting won't be a net loss? If the rich know something, they sure have kept me out of the loop.

EnjoyIt
Posts: 3134
Joined: Sun Dec 29, 2013 8:06 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by EnjoyIt » Wed Jan 15, 2020 2:53 pm

Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 2:46 pm
EnjoyIt wrote:
Wed Jan 15, 2020 2:17 pm
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 1:52 pm
EnjoyIt wrote:
Wed Jan 15, 2020 10:12 am
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 9:55 am


I'm 100% VTSAX in my Roth accounts and my taxable account now. I'm keeping 75% in VUSXX until I get new cash flows going again.
So what is your asset allocation? So far I think you are just putting money here and there with no real plan. Just going by feel. Emotions and feel do not belong in investing.

I urge you to develop a workable plan and an AA. I recommend creating and investment policy statement there is a wiki about that on this forum.
I disagree completely. I'm comfortable investing in 100% stocks until I retire. Goal is the age of 50-55. Both our Roth accounts are 100% stocks as well. I will add bonds as I get closer to retirement.

So, 20-25 years to go. Short term, I am withholding much of my cash until I get my consulting business up and running. Once I get a consistent coverage of my monthly family expenses, I will invest probably 75% of the rest. Some will be for a rental property in cash. A slush fund will be for Bitcoin as well.
You are not 100% in equities. You are sitting on a pile of cash which is what I am trying to tell you that all of your money is part of your portfolio. Today, you are risk averse because you don't have any income coming. It makes sense to have an AA that reflects that. It also makes sense to divert a bunch of that cash to equities when you are in position to do so (meaning you have a steady income and know what your expenses are.)

As I said before, right now you are deciding by feel as opposed to a strict plan such as:
Until you start getting an income you will keep your AA 35% equities 65% in cash/bonds
Once some money starts coming in (let us say $2k/month) increasing your AA to 65/35
Once your consulting business is in full swing (maybe an income of $5k/month) switch again to 95/5 with the 5% being an emergency fund.
This will create a defined set of rules for you to follow instead of using your feeling.

The above is a potential example that you can decide on based on your own experience and needs. I'm sure you will do fine without such strict rules, but having those rules will keep your emotions in check. This way you won't hesitate investing because markets are possibly overvalued, or be too scared to invest because they may have declined a little. This instead gives you a guideline that you will follow because you decided with rational thought behind and not the whim of the markets and some random income stream you may or may not get.
Yes the cash flow is my biggest issue right now. I’m uber conservative right now as I build up a business. I wouldn’t hesitate to go 80% equities at that point. The rich are hoarding cash and I can’t blame them. Waiting for the “big one” to buy up equities on the cheap!
Do you see what I mean about having a defined plan? Based on your last comment, I have a suspicion that you do not, but that is why I ask.

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Wed Jan 15, 2020 2:56 pm

EnjoyIt wrote:
Wed Jan 15, 2020 2:53 pm
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 2:46 pm
EnjoyIt wrote:
Wed Jan 15, 2020 2:17 pm
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 1:52 pm
EnjoyIt wrote:
Wed Jan 15, 2020 10:12 am


So what is your asset allocation? So far I think you are just putting money here and there with no real plan. Just going by feel. Emotions and feel do not belong in investing.

I urge you to develop a workable plan and an AA. I recommend creating and investment policy statement there is a wiki about that on this forum.
I disagree completely. I'm comfortable investing in 100% stocks until I retire. Goal is the age of 50-55. Both our Roth accounts are 100% stocks as well. I will add bonds as I get closer to retirement.

So, 20-25 years to go. Short term, I am withholding much of my cash until I get my consulting business up and running. Once I get a consistent coverage of my monthly family expenses, I will invest probably 75% of the rest. Some will be for a rental property in cash. A slush fund will be for Bitcoin as well.
You are not 100% in equities. You are sitting on a pile of cash which is what I am trying to tell you that all of your money is part of your portfolio. Today, you are risk averse because you don't have any income coming. It makes sense to have an AA that reflects that. It also makes sense to divert a bunch of that cash to equities when you are in position to do so (meaning you have a steady income and know what your expenses are.)

As I said before, right now you are deciding by feel as opposed to a strict plan such as:
Until you start getting an income you will keep your AA 35% equities 65% in cash/bonds
Once some money starts coming in (let us say $2k/month) increasing your AA to 65/35
Once your consulting business is in full swing (maybe an income of $5k/month) switch again to 95/5 with the 5% being an emergency fund.
This will create a defined set of rules for you to follow instead of using your feeling.

The above is a potential example that you can decide on based on your own experience and needs. I'm sure you will do fine without such strict rules, but having those rules will keep your emotions in check. This way you won't hesitate investing because markets are possibly overvalued, or be too scared to invest because they may have declined a little. This instead gives you a guideline that you will follow because you decided with rational thought behind and not the whim of the markets and some random income stream you may or may not get.
Yes the cash flow is my biggest issue right now. I’m uber conservative right now as I build up a business. I wouldn’t hesitate to go 80% equities at that point. The rich are hoarding cash and I can’t blame them. Waiting for the “big one” to buy up equities on the cheap!
Do you see what I mean about having a defined plan? Based on your last comment, I have a suspicion that you do not, but that is why I ask.
You are very suspicious! Yes, there is a plan which I just laid out. For right now, the majority is in cash. When Cash flow comes in, 90% of of capital goes into equities. Other portion into a piece of real estate. I like to keep life as simple as possible.

EnjoyIt
Posts: 3134
Joined: Sun Dec 29, 2013 8:06 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by EnjoyIt » Wed Jan 15, 2020 2:59 pm

Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 2:56 pm
EnjoyIt wrote:
Wed Jan 15, 2020 2:53 pm
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 2:46 pm
EnjoyIt wrote:
Wed Jan 15, 2020 2:17 pm
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 1:52 pm


I disagree completely. I'm comfortable investing in 100% stocks until I retire. Goal is the age of 50-55. Both our Roth accounts are 100% stocks as well. I will add bonds as I get closer to retirement.

So, 20-25 years to go. Short term, I am withholding much of my cash until I get my consulting business up and running. Once I get a consistent coverage of my monthly family expenses, I will invest probably 75% of the rest. Some will be for a rental property in cash. A slush fund will be for Bitcoin as well.
You are not 100% in equities. You are sitting on a pile of cash which is what I am trying to tell you that all of your money is part of your portfolio. Today, you are risk averse because you don't have any income coming. It makes sense to have an AA that reflects that. It also makes sense to divert a bunch of that cash to equities when you are in position to do so (meaning you have a steady income and know what your expenses are.)

As I said before, right now you are deciding by feel as opposed to a strict plan such as:
Until you start getting an income you will keep your AA 35% equities 65% in cash/bonds
Once some money starts coming in (let us say $2k/month) increasing your AA to 65/35
Once your consulting business is in full swing (maybe an income of $5k/month) switch again to 95/5 with the 5% being an emergency fund.
This will create a defined set of rules for you to follow instead of using your feeling.

The above is a potential example that you can decide on based on your own experience and needs. I'm sure you will do fine without such strict rules, but having those rules will keep your emotions in check. This way you won't hesitate investing because markets are possibly overvalued, or be too scared to invest because they may have declined a little. This instead gives you a guideline that you will follow because you decided with rational thought behind and not the whim of the markets and some random income stream you may or may not get.
Yes the cash flow is my biggest issue right now. I’m uber conservative right now as I build up a business. I wouldn’t hesitate to go 80% equities at that point. The rich are hoarding cash and I can’t blame them. Waiting for the “big one” to buy up equities on the cheap!
Do you see what I mean about having a defined plan? Based on your last comment, I have a suspicion that you do not, but that is why I ask.
You are very suspicious! Yes, there is a plan which I just laid out. For right now, the majority is in cash. When Cash flow comes in, 90% of of capital goes into equities. Other portion into a piece of real estate. I like to keep life as simple as possible.
lol
trust, but verify
lol

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Wed Jan 15, 2020 3:01 pm

EnjoyIt wrote:
Wed Jan 15, 2020 2:59 pm
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 2:56 pm
EnjoyIt wrote:
Wed Jan 15, 2020 2:53 pm
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 2:46 pm
EnjoyIt wrote:
Wed Jan 15, 2020 2:17 pm


You are not 100% in equities. You are sitting on a pile of cash which is what I am trying to tell you that all of your money is part of your portfolio. Today, you are risk averse because you don't have any income coming. It makes sense to have an AA that reflects that. It also makes sense to divert a bunch of that cash to equities when you are in position to do so (meaning you have a steady income and know what your expenses are.)

As I said before, right now you are deciding by feel as opposed to a strict plan such as:
Until you start getting an income you will keep your AA 35% equities 65% in cash/bonds
Once some money starts coming in (let us say $2k/month) increasing your AA to 65/35
Once your consulting business is in full swing (maybe an income of $5k/month) switch again to 95/5 with the 5% being an emergency fund.
This will create a defined set of rules for you to follow instead of using your feeling.

The above is a potential example that you can decide on based on your own experience and needs. I'm sure you will do fine without such strict rules, but having those rules will keep your emotions in check. This way you won't hesitate investing because markets are possibly overvalued, or be too scared to invest because they may have declined a little. This instead gives you a guideline that you will follow because you decided with rational thought behind and not the whim of the markets and some random income stream you may or may not get.
Yes the cash flow is my biggest issue right now. I’m uber conservative right now as I build up a business. I wouldn’t hesitate to go 80% equities at that point. The rich are hoarding cash and I can’t blame them. Waiting for the “big one” to buy up equities on the cheap!
Do you see what I mean about having a defined plan? Based on your last comment, I have a suspicion that you do not, but that is why I ask.
You are very suspicious! Yes, there is a plan which I just laid out. For right now, the majority is in cash. When Cash flow comes in, 90% of of capital goes into equities. Other portion into a piece of real estate. I like to keep life as simple as possible.
lol
trust, but verify
lol
My favorite Reagan quote. Tomorrow, .5% of my assets are going into bitcoin. I enjoy rollercoasters :)

EfficientInvestor
Posts: 260
Joined: Thu Nov 01, 2018 7:02 pm
Location: Alabama

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by EfficientInvestor » Wed Jan 15, 2020 3:45 pm

Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 2:56 pm
For right now, the majority is in cash. When Cash flow comes in, 90% of of capital goes into equities. Other portion into a piece of real estate. I like to keep life as simple as possible.
Correct me if I'm wrong, but it sounds like once you get your cash flows, you will move 90% of your $1.5 million into stocks and the other 10% into real estate. If that's the case, do you have the risk tolerance to endure a drawdown that would cause you to lose half of that? If you have that kind of risk tolerance, you could consider more aggressive forms of risk parity that have outperformed equity-heavy portfolios while maintaining lower downturns. See the comparison below that starts with $1.5 million in Nov 1991.

Image
Source - https://www.portfoliovisualizer.com/bac ... on5_2=-400

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Wed Jan 15, 2020 3:57 pm

EfficientInvestor wrote:
Wed Jan 15, 2020 3:45 pm
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 2:56 pm
For right now, the majority is in cash. When Cash flow comes in, 90% of of capital goes into equities. Other portion into a piece of real estate. I like to keep life as simple as possible.
Correct me if I'm wrong, but it sounds like once you get your cash flows, you will move 90% of your $1.5 million into stocks and the other 10% into real estate. If that's the case, do you have the risk tolerance to endure a drawdown that would cause you to lose half of that? If you have that kind of risk tolerance, you could consider more aggressive forms of risk parity that have outperformed equity-heavy portfolios while maintaining lower downturns. See the comparison below that starts with $1.5 million in Nov 1991.

Image
Source - https://www.portfoliovisualizer.com/bac ... on5_2=-400
This Trump economy is just the beginning. I expect 30k Dow to be the new bottom. And yes I can handle the ups and downs as the money is for retirement 20 years from now. I will add bonds closer to 55. I’m 31 now.

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Wed Jan 15, 2020 4:02 pm

EfficientInvestor wrote:
Wed Jan 15, 2020 3:45 pm
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 2:56 pm
For right now, the majority is in cash. When Cash flow comes in, 90% of of capital goes into equities. Other portion into a piece of real estate. I like to keep life as simple as possible.
Correct me if I'm wrong, but it sounds like once you get your cash flows, you will move 90% of your $1.5 million into stocks and the other 10% into real estate. If that's the case, do you have the risk tolerance to endure a drawdown that would cause you to lose half of that? If you have that kind of risk tolerance, you could consider more aggressive forms of risk parity that have outperformed equity-heavy portfolios while maintaining lower downturns. See the comparison below that starts with $1.5 million in Nov 1991.

Image
Source - https://www.portfoliovisualizer.com/bac ... on5_2=-400
Also, the real estate investment will be a physical property purchased with cash, not a REIT which I consider rather useless.

EfficientInvestor
Posts: 260
Joined: Thu Nov 01, 2018 7:02 pm
Location: Alabama

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by EfficientInvestor » Wed Jan 15, 2020 4:03 pm

Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 3:57 pm
EfficientInvestor wrote:
Wed Jan 15, 2020 3:45 pm
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 2:56 pm
For right now, the majority is in cash. When Cash flow comes in, 90% of of capital goes into equities. Other portion into a piece of real estate. I like to keep life as simple as possible.
Correct me if I'm wrong, but it sounds like once you get your cash flows, you will move 90% of your $1.5 million into stocks and the other 10% into real estate. If that's the case, do you have the risk tolerance to endure a drawdown that would cause you to lose half of that? If you have that kind of risk tolerance, you could consider more aggressive forms of risk parity that have outperformed equity-heavy portfolios while maintaining lower downturns. See the comparison below that starts with $1.5 million in Nov 1991.

Image
Source - https://www.portfoliovisualizer.com/bac ... on5_2=-400
This Trump economy is just the beginning. I expect 30k Dow to be the new bottom. And yes I can handle the ups and downs as the money is for retirement 20 years from now. I will add bonds closer to 55. I’m 31 now.
So if you have the risk tolerance for that kind of drawdown, why not go with something like what is shown in Portfolio 2?

Topic Author
Jon_PassiveInvestor
Posts: 210
Joined: Sat Mar 12, 2011 10:23 pm

Re: Sold my Business (2.2 Million)! Where to store proceeds while I think?

Post by Jon_PassiveInvestor » Wed Jan 15, 2020 4:18 pm

EfficientInvestor wrote:
Wed Jan 15, 2020 4:03 pm
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 3:57 pm
EfficientInvestor wrote:
Wed Jan 15, 2020 3:45 pm
Jon_PassiveInvestor wrote:
Wed Jan 15, 2020 2:56 pm
For right now, the majority is in cash. When Cash flow comes in, 90% of of capital goes into equities. Other portion into a piece of real estate. I like to keep life as simple as possible.
Correct me if I'm wrong, but it sounds like once you get your cash flows, you will move 90% of your $1.5 million into stocks and the other 10% into real estate. If that's the case, do you have the risk tolerance to endure a drawdown that would cause you to lose half of that? If you have that kind of risk tolerance, you could consider more aggressive forms of risk parity that have outperformed equity-heavy portfolios while maintaining lower downturns. See the comparison below that starts with $1.5 million in Nov 1991.

Image
Source - https://www.portfoliovisualizer.com/bac ... on5_2=-400
This Trump economy is just the beginning. I expect 30k Dow to be the new bottom. And yes I can handle the ups and downs as the money is for retirement 20 years from now. I will add bonds closer to 55. I’m 31 now.
So if you have the risk tolerance for that kind of drawdown, why not go with something like what is shown in Portfolio 2?
I’m more confident in VTSAX outperforming it over the next two decades. Many on this forum say the same thing. You can always rebalance years down the road and buy into the total bond fund.

Post Reply