Help needed to invest cash

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Topic Author
shesaves
Posts: 2
Joined: Wed Jun 09, 2021 1:56 pm

Help needed to invest cash

Post by shesaves »

Hello Bogleheads community. I have been reading the forums for quite some time and I appreciate all the useful information and advice here. So my issue is because of our recent move and selling house in previous Location, we have too much cash parked in cash and Fixed Income IRA. We have close to 200,000 in high saving bank account and similar amount in IRA due to roll over, which is parked into fixed income fund. Now we want to move these amounts for investment, but stocks being at all time highs make me really nervous. We can rollover IRA funds to new employee 401K as well, which would enable us to use backdoor roth in future. should we just roll over to 100% all at once or like 20K monthly? How should we deal with saving account? we would probably leave around 50K as emergency fund.

Thank you for all your help.
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Duckie
Posts: 8213
Joined: Thu Mar 08, 2007 2:55 pm

Re: Help needed to invest cash

Post by Duckie »

shesaves, welcome to the forum.
shesaves wrote: Wed Jun 09, 2021 2:13 pm So my issue is because of our recent move and selling house in previous Location, we have too much cash parked in cash and Fixed Income IRA. We have close to 200,000 in high saving bank account and similar amount in IRA due to roll over, which is parked into fixed income fund.
Have you any plans to purchase another house in your new location?
Topic Author
shesaves
Posts: 2
Joined: Wed Jun 09, 2021 1:56 pm

Re: Help needed to invest cash

Post by shesaves »

We already bought house in the new location. So this one needs investing only. Thank you
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Duckie
Posts: 8213
Joined: Thu Mar 08, 2007 2:55 pm

Re: Help needed to invest cash

Post by Duckie »

shesaves wrote: Wed Jun 09, 2021 2:13 pm We have close to 200,000 in high saving bank account and similar amount in IRA due to roll over, which is parked into fixed income fund. Now we want to move these amounts for investment, but stocks being at all time highs make me really nervous.
Stocks are frequently at all-time highs.
We can rollover IRA funds to new employee 401K as well, which would enable us to use backdoor roth in future. should we just roll over to 100% all at once or like 20K monthly?
Roll 100% of the IRA to your new 401k plan all at once.
How should we deal with saving account? we would probably leave around 50K as emergency fund.
That means roughly $150,000 in taxable and $200,000 in your new 401k. In general you want just stocks in the taxable portion and all your fixed income (excluding emergency funds) in your 401k. Do you know what your 401k options are?

Do you have a preferred brokerage? We usually recommend Vanguard, Fidelity, or Schwab.

Do you have a desired Asset allocation for your portfolio?

Do you have any other assets earmarked for retirement?
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retired@50
Posts: 5798
Joined: Tue Oct 01, 2019 2:36 pm
Location: Living in the U.S.A.

Re: Help needed to invest cash

Post by retired@50 »

shesaves wrote: Wed Jun 09, 2021 2:13 pm Hello Bogleheads community. I have been reading the forums for quite some time and I appreciate all the useful information and advice here. So my issue is because of our recent move and selling house in previous Location, we have too much cash parked in cash and Fixed Income IRA. We have close to 200,000 in high saving bank account and similar amount in IRA due to roll over, which is parked into fixed income fund. Now we want to move these amounts for investment, but stocks being at all time highs make me really nervous. We can rollover IRA funds to new employee 401K as well, which would enable us to use backdoor roth in future. should we just roll over to 100% all at once or like 20K monthly? How should we deal with saving account? we would probably leave around 50K as emergency fund.

Thank you for all your help.
It sounds like you need to settle on a long term plan and an asset allocation that suits your personal risk tolerance.

To help decide about your personal risk tolerance... Have you taken the quiz at Vanguard?
Link: https://retirementplans.vanguard.com/VG ... Step=start

To give you a rough idea of how various portfolio mixtures perform over the long term see this webpage.
Link: https://investor.vanguard.com/investing ... allocation

Also, maybe some reading about the general idea of asset allocation would be helpful.
Link: https://www.bogleheads.org/wiki/Asset_allocation

As far as whether or not to put all your money to work in the stock and bond markets at once, or spaced out over time, the general preference is to lump sum the money in all at once since this has typically worked out better about 2/3rds of the time. If you can't stomach that idea, then put it to work over the span of 12 months or less in equal parts.

Post back if you have additional questions.

Regards,
This is one person's opinion. Nothing more.
Grt2bOutdoors
Posts: 23758
Joined: Thu Apr 05, 2007 8:20 pm
Location: New York

Re: Help needed to invest cash

Post by Grt2bOutdoors »

You should invest according to your time horizon, preferred risk tolerance and then develop an asset allocation to match those requirements. As stated by Duckie, markets are frequently at all time highs. Were you to look at the level of the Dow Jones Industrial Average on September 19, 1928 and compared it to today’s closing prices you’ll notice that in that time span prices have risen considerably, in essence there were many new highs reached over the last 92 years or so, with more than a few gut wrenching declines. If you have at least a 20-30 year horizon, some level of equities is preferable to stay ahead of inflation.
"One should invest based on their need, ability and willingness to take risk - Larry Swedroe" Asking Portfolio Questions
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