$100K Cash/5-10 Yr Investment Horizon--Crash?

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HandsomeJohn
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Joined: Fri Feb 14, 2020 3:30 pm

$100K Cash/5-10 Yr Investment Horizon--Crash?

Post by HandsomeJohn » Fri Feb 14, 2020 4:07 pm

Hi-
First time poster, so apologies if I trip on any rules.

54 yrs old.

Question: How to invest $100,000+/- now with Dow, etc. at all-time highs?

Currently enjoying (!) 1.7% yield at CapOne 360 FDIC savings. Have another $150,000 "cash", but that is periodically committed to hard-money lending at 12-13% yield, and I like a nice $50K cash "cushion"--I'm a child of child of depression and think worst-case scenario all the time. Risk-averse (although retirement funds are in VGI target date, etc. as they should be).

SO---Assuming all the other obvious better uses for the $ are already addressed and in good shape: good income @ $200K, moderate amount of mortgage debt at 3.5%, no car loan debt, no credit card debt, 1 child (17yo) 529 pretty well funded, 401k almost maxed every year, no other debt, etc, etc., where should cash be invested?

Concern is (and same concern it was when Dow was at 23000...go figure), with a say, 5-10 yr. time horizon, where to put $ for moderate return in light of what I am convinced is a long-overdue "correction"? Not looking to kill it, but I have this foreboding feeling of invest now, and watch a 20-40% correction occur right after. Given short-ish investment horizon, thoughts? Would be happy with a nice, relatively "safe" return of 5% over that time frame.

Just looking for thoughts/perspective. I keep sitting on the sidelines, and the markets keep killing it....which makes me even more nervous.
Thanks much-

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CalculatedRisk
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Re: $100K Cash/5-10 Yr Investment Horizon--Crash?

Post by CalculatedRisk » Fri Feb 14, 2020 8:40 pm

Step 1: Decide what asset allocation you’re comfortable with.
Step 2: Decide what funds are for retirement.
Step 3: Invest all retirement funds in accordance with your asset allocation.

You can swap the order of steps 1 and 2, but I suggest doing step 3 only after 1 and 2.

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GMCZ71
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Location: McMinnville, Or

Re: $100K Cash/5-10 Yr Investment Horizon--Crash?

Post by GMCZ71 » Fri Feb 14, 2020 8:53 pm

HandsomeJohn wrote:
Fri Feb 14, 2020 4:07 pm
Given short-ish investment horizon, thoughts? Would be happy with a nice, relatively "safe" return of 5% over that time frame.

I keep sitting on the sidelines, and the markets keep killing it....which makes me even more nervous.
Thanks much-
Most everyone would like 5% safe. Its time for you to read some of the threads and keep your money safe in cash. I recommend Taylor's 3 fund portfolio :happy
John

yogesh
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Joined: Thu Oct 11, 2012 6:20 pm

Re: $100K Cash/5-10 Yr Investment Horizon--Crash?

Post by yogesh » Fri Feb 14, 2020 9:00 pm

+1 for 3 fund portfolio
X % Stocks (70% US, 30% International) and (100-X %) Bonds
X = Number of years to Invest * 5
Emergency: FDIC | Taxable: VTMFX | Retirement: TR2040

22twain
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Re: $100K Cash/5-10 Yr Investment Horizon--Crash?

Post by 22twain » Sat Feb 15, 2020 12:39 am

HandsomeJohn wrote:
Fri Feb 14, 2020 4:07 pm
I'm a child of child of depression
Does that mean you're at least in your 90s? :wink:

[added: Oh never mind... I skipped over one "child of". :oops: ]
My investing princiPLEs do not include absolutely preserving princiPAL.

mega317
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Joined: Tue Apr 19, 2016 10:55 am

Re: $100K Cash/5-10 Yr Investment Horizon--Crash?

Post by mega317 » Sat Feb 15, 2020 1:22 am

Paying extra towards that mortgage will give you a similar effect as a 5% return after taxes. You should put some of the money towards maxing your 401k.

You should invest in current conditions as you would in any other conditions. Which sounds like relatively conservatively. Forget what is happening right now, it's not helpful in determining what will happen in 5-10 years or tomorrow.

BTW what happens in 5-10 years that you need 100k, or whatever sum you're asking about?
https://www.bogleheads.org/forum/viewtopic.php?t=6212

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Wiggums
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Re: $100K Cash/5-10 Yr Investment Horizon--Crash?

Post by Wiggums » Sat Feb 15, 2020 4:55 am

I hold the three fund portfolio. Hold the market and get market returns. If you invest 60/40 or even 50/50, there is not must downside risk.

smectym
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Joined: Thu May 26, 2011 5:07 pm

Re: $100K Cash/5-10 Yr Investment Horizon--Crash?

Post by smectym » Sat Feb 15, 2020 5:24 am

Handsome, you seem comfortable in cash and there is much to be said for cash as an asset right now.

Sure, redeploy some into equities if you insist upon doing do, but I’d take it slow and easy. 2020 looks iffy because of what’s going on in China. In my view, the best approach is never to lurch from one strategy to another.

I don’t disagree with those who have reservations about dollar cost averaging in theory; but in practice, it can be a great way of avoiding making a big mistake, and I would suggest that not making that big mistake is more or less the first rule of investing. It’s related to my favorite short-form investment maxim: “Don’t Lose Money”

S_Track
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Re: $100K Cash/5-10 Yr Investment Horizon--Crash?

Post by S_Track » Sat Feb 15, 2020 6:44 am

yogesh wrote:
Fri Feb 14, 2020 9:00 pm
+1 for 3 fund portfolio
X % Stocks (70% US, 30% International) and (100-X %) Bonds
X = Number of years to Invest * 5
Interesting rule of thumb, do you have a source for that? thanks

yogesh
Posts: 463
Joined: Thu Oct 11, 2012 6:20 pm

Re: $100K Cash/5-10 Yr Investment Horizon--Crash?

Post by yogesh » Sat Feb 15, 2020 6:32 pm

S_Track wrote:
Sat Feb 15, 2020 6:44 am
yogesh wrote:
Fri Feb 14, 2020 9:00 pm
+1 for 3 fund portfolio
X % Stocks (70% US, 30% International) and (100-X %) Bonds
X = Number of years to Invest * 5
Interesting rule of thumb, do you have a source for that? thanks
Sorry I made that up. Use https://investor.vanguard.com/mutual-fu ... estrategy/#/ to guide you.
or
Image
Emergency: FDIC | Taxable: VTMFX | Retirement: TR2040

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