I have 500k to invest but keep procrastinating

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toomanysidehustles
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Re: I have 500k to invest but keep procrastinating

Post by toomanysidehustles »

250k in index funds
250k in investment real estate
Topic Author
Reuben1980
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Re: I have 500k to invest but keep procrastinating

Post by Reuben1980 »

toomanysidehustles wrote: Thu Aug 04, 2022 1:11 pm 250k in index funds
250k in investment real estate
Would you leverage on RE or pay cash? Especially with current interest rate
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Wiggums
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Re: I have 500k to invest but keep procrastinating

Post by Wiggums »

Consider this alternate approach. Hold onto the 500k. Schedule auto purchases into a target date, balanced index, or lifestrategy fund. The monthly amount can be the size of a “mortgage” payment. I think you would benefit from building a new account that you can set up and then ignore. If the stock market is not for your family, you should look for the best fixed income options to minimize your loss to inflation.

This is a great time to buy stocks. We are retired and we still schedule purchases with “extra” cash. We logon infrequently and see equity purchases as a long term investment. We ignore short term price fluctuations.

Good luck to you.
Investors need to be better informed about the costs they pay. “High fund fees can be hazardous to your wealth in the same way that high calories can be hazardous for your health.”
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Wiggums
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Re: I have 500k to invest but keep procrastinating

Post by Wiggums »

Reuben1980 wrote: Thu Aug 04, 2022 1:19 pm
toomanysidehustles wrote: Thu Aug 04, 2022 1:11 pm 250k in index funds
250k in investment real estate
Would you leverage on RE or pay cash? Especially with current interest rate
Mortgage rates are high, and real estate is in short supply where we live. I’m curious. Have you had a rental property before?
Investors need to be better informed about the costs they pay. “High fund fees can be hazardous to your wealth in the same way that high calories can be hazardous for your health.”
pkcrafter
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Re: I have 500k to invest but keep procrastinating

Post by pkcrafter »

Ruben, here is a good lower risk fund for you. It's a goldilocks fund -- Not too risky, not to mild. :happy

Vanguard tax-managed balanced

https://www.morningstar.com/funds/xnas/ ... erformance

moderate risk
auto rebalancing
decent returns
no maintenance/rebalancing
low cost
tax-efficient


Paul
When times are good, investors tend to forget about risk and focus on opportunity. When times are bad, investors tend to forget about opportunity and focus on risk.
Topic Author
Reuben1980
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Re: I have 500k to invest but keep procrastinating

Post by Reuben1980 »

Wiggums wrote: Thu Aug 04, 2022 4:38 pm
Reuben1980 wrote: Thu Aug 04, 2022 1:19 pm
toomanysidehustles wrote: Thu Aug 04, 2022 1:11 pm 250k in index funds
250k in investment real estate
Would you leverage on RE or pay cash? Especially with current interest rate
Mortgage rates are high, and real estate is in short supply where we live. I’m curious. Have you had a rental property before?
I have not, and being a landlord isn’t that easy I’m guessing
an_asker
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Re: I have 500k to invest but keep procrastinating

Post by an_asker »

GoldenFinch wrote: Wed Aug 03, 2022 8:38 pm
an_asker wrote: Wed Aug 03, 2022 8:07 pm
7eight9 wrote: Wed Aug 03, 2022 8:39 am [...]
My wife and I bought a total of $120,000 of I Bonds this year. You can too.
How did you manage that with the annual limit of $10,000 per person?
You can buy them for future years and as gifts for your spouse. There is a lot of information about how to do this in the IBond mega thread.
Thanks for the info.

I have asked a few questions on the mega thread. But the following is what I read just now on the Finance Buff's website. It appears to say that you cannot buy $10k in gifts for your spouse if your spouse has already purchased $10k worth of Ibonds this year. See below:
The principal amount of delivered gifts counts toward the $10,000 annual purchase limit of the recipient in the year of delivery. You can still buy gifts for others even if you already bought the maximum for yourself.
[...]
If the recipient already received $10,000 in principal amount as gifts this year, buying additional I Bonds on their own will put them over their annual purchase limit. They’ll have to wait until they’re not receiving the maximum gifts.
Here's another article that pretty much says the same thing.
lws
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Re: I have 500k to invest but keep procrastinating

Post by lws »

To start, please think about the following:
What are the family's short, medium, and long term financial goals?
What is the family's tolerance for risk?

This may help you to decide what to do with the money.
ModifiedDuration
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Re: I have 500k to invest but keep procrastinating

Post by ModifiedDuration »

an_asker wrote: Fri Aug 05, 2022 11:24 am
GoldenFinch wrote: Wed Aug 03, 2022 8:38 pm
an_asker wrote: Wed Aug 03, 2022 8:07 pm
7eight9 wrote: Wed Aug 03, 2022 8:39 am [...]
My wife and I bought a total of $120,000 of I Bonds this year. You can too.
How did you manage that with the annual limit of $10,000 per person?
You can buy them for future years and as gifts for your spouse. There is a lot of information about how to do this in the IBond mega thread.
Thanks for the info.

I have asked a few questions on the mega thread. But the following is what I read just now on the Finance Buff's website. It appears to say that you cannot buy $10k in gifts for your spouse if your spouse has already purchased $10k worth of Ibonds this year. See below:
The principal amount of delivered gifts counts toward the $10,000 annual purchase limit of the recipient in the year of delivery. You can still buy gifts for others even if you already bought the maximum for yourself.
[...]
If the recipient already received $10,000 in principal amount as gifts this year, buying additional I Bonds on their own will put them over their annual purchase limit. They’ll have to wait until they’re not receiving the maximum gifts.
Here's another article that pretty much says the same thing.
You can buy the gifts now, you just cannot deliver them until a future year.

My spouse has bought herself $10k for this year.

I have purchased several $10k gifts this year for her for delivery in future years (and she has purchased the same for me for delivery to me in future years).
Last edited by ModifiedDuration on Fri Aug 05, 2022 12:04 pm, edited 3 times in total.
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AnnetteLouisan
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Re: I have 500k to invest but keep procrastinating

Post by AnnetteLouisan »

an_asker wrote: Fri Aug 05, 2022 11:24 am
GoldenFinch wrote: Wed Aug 03, 2022 8:38 pm
an_asker wrote: Wed Aug 03, 2022 8:07 pm
7eight9 wrote: Wed Aug 03, 2022 8:39 am [...]
My wife and I bought a total of $120,000 of I Bonds this year. You can too.
How did you manage that with the annual limit of $10,000 per person?
You can buy them for future years and as gifts for your spouse. There is a lot of information about how to do this in the IBond mega thread.
Thanks for the info.

I have asked a few questions on the mega thread. But the following is what I read just now on the Finance Buff's website. It appears to say that you cannot buy $10k in gifts for your spouse if your spouse has already purchased $10k worth of Ibonds this year. See below:
The principal amount of delivered gifts counts toward the $10,000 annual purchase limit of the recipient in the year of delivery. You can still buy gifts for others even if you already bought the maximum for yourself.
[...]
If the recipient already received $10,000 in principal amount as gifts this year, buying additional I Bonds on their own will put them over their annual purchase limit. They’ll have to wait until they’re not receiving the maximum gifts.
Here's another article that pretty much says the same thing.
Gifting is a two step process. Buying (and putting them in a gift box) and delivering. They accrue interest from the time you buy and you can deliver 10 k per year per recipient in future years when the recipient doesn’t buy.

As an example, OP, I bought $10k for myself this year and $10k for family. They bought $10k for me. We will keep buying I bonds for ourselves and then gift in a year (2024?) when inflation is down and it doesn’t make sense to buy them. In the meantime we have $20k each accruing 9 + percent interest. The five year clock starts to run from the date of purchase, not from the date of delivery.
Last edited by AnnetteLouisan on Fri Aug 05, 2022 1:40 pm, edited 1 time in total.
Flyer24
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Re: I have 500k to invest but keep procrastinating

Post by Flyer24 »

The thread is getting derailed into a side discussion. Let's get back focused on helping the OP.
Topic Author
Reuben1980
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Re: I have 500k to invest but keep procrastinating

Post by Reuben1980 »

Wiggums wrote: Thu Aug 04, 2022 4:35 pm Consider this alternate approach. Hold onto the 500k. Schedule auto purchases into a target date, balanced index, or lifestrategy fund. The monthly amount can be the size of a “mortgage” payment. I think you would benefit from building a new account that you can set up and then ignore. If the stock market is not for your family, you should look for the best fixed income options to minimize your loss to inflation.

This is a great time to buy stocks. We are retired and we still schedule purchases with “extra” cash. We logon infrequently and see equity purchases as a long term investment. We ignore short term price fluctuations.

Good luck to you.

Thx much. Ur right but I’ve also been guilty of market timing a bit but I also have been reading a lot. I feel much better I feel like and prepared to take actions if market drops big. I’m probably going to hold on this year and only invest in my Roth and 401k, I bonds, and 529 as normal . But this 500k is a big commitment . I’ll wait this year to just learn more and hopefully take action next year
HomeStretch
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Re: I have 500k to invest but keep procrastinating

Post by HomeStretch »

Reuben1980 wrote: Thu Aug 11, 2022 1:21 am Thx much. Ur right but I’ve also been guilty of market timing a bit but I also have been reading a lot. I feel much better I feel like and prepared to take actions if market drops big. I’m probably going to hold on this year and only invest in my Roth and 401k, I bonds, and 529 as normal . But this 500k is a big commitment . I’ll wait this year to just learn more and hopefully take action next yea
As Wiggums posted, now is a great time to buy stocks. Keep in mind that the market has already dropped significantly but you haven’t acted to invest the $500k.

Consider the following:
(1) include as part of your reading a book about behavioral investing,
(2) reflect on what you really want your asset allocation to be
(3) as suggested by Wiggums either direct cost average the $500k into equity/bonds over time or at least find the best fixed income investments now to minimize your portfolio’s loss to inflation.
Katietsu
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Re: I have 500k to invest but keep procrastinating

Post by Katietsu »

Reuben1980 wrote: Thu Aug 11, 2022 1:21 am
Wiggums wrote: Thu Aug 04, 2022 4:35 pm Consider this alternate approach. Hold onto the 500k. Schedule auto purchases into a target date, balanced index, or lifestrategy fund. The monthly amount can be the size of a “mortgage” payment. I think you would benefit from building a new account that you can set up and then ignore. If the stock market is not for your family, you should look for the best fixed income options to minimize your loss to inflation.

This is a great time to buy stocks. We are retired and we still schedule purchases with “extra” cash. We logon infrequently and see equity purchases as a long term investment. We ignore short term price fluctuations.

Good luck to you.

Thx much. Ur right but I’ve also been guilty of market timing a bit but I also have been reading a lot. I feel much better I feel like and prepared to take actions if market drops big. I’m probably going to hold on this year and only invest in my Roth and 401k, I bonds, and 529 as normal . But this 500k is a big commitment . I’ll wait this year to just learn more and hopefully take action next year
The market dropped 20% the first half of this year. If that was not enough to even move a little of the $500k then waiting for a market drop is probably not the best plan.

So, let’s start with baby steps. Are you putting the max into the 401k? If not, increase your contribution. Set your contribution from each paycheck to a number that it can stay at through next year, eg the equivalent of about $1600 a month. Use some of the $500k for household expenses if you need to do so. And since you will be saving on taxes, the difference will not be as great as you might expect.

Next, will your wife open a Roth IRA for her? She can just open it at a bank and put it in a savings account or CD for now. Also, it is not stuck in the IRA. If you really needed it, you can take it out. The earnings would be subject to tax and penalty but that would be a very small number. Later this money could be invested if she changes her mind or if you get that big market decline.

Could you start with these small steps?
Starfish
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Re: I have 500k to invest but keep procrastinating

Post by Starfish »

Having 500k$ cash now is exactly like having 500k$ in stock, They are equivalent. I can sell all my stocks with 2-3 mouse clicks.
So there is no difference between cash and stocks.
I don't sell my stocks in the hope that I can rebuy later at a lower price because it's dangerous. Why do you?
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AnnetteLouisan
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Re: I have 500k to invest but keep procrastinating

Post by AnnetteLouisan »

Not just for OP, but in addition to the Bogleheads wiki and other information on this forum, the FINRA.org website has a good, free, interactive online course called Learning to Invest. It has a few short but not simplistic modules on different subjects, like investing vocabulary, different types of risk, diversification and different types of costs and fees (interestingly, they characterize the price of the investment itself as a cost). It’s pretty useful!

FINRA is the self regulatory organization for securities brokers and exercises quasi governmental functions.

Since you are the primary breadwinner and have two young children, you may want to look into long term disability insurance (income replacement) and umbrella insurance coverage as well if you don’t have these already. Good luck OP!
Last edited by AnnetteLouisan on Fri Aug 12, 2022 3:51 am, edited 4 times in total.
Topic Author
Reuben1980
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Re: I have 500k to invest but keep procrastinating

Post by Reuben1980 »

Starfish wrote: Thu Aug 11, 2022 7:35 pm Having 500k$ cash now is exactly like having 500k$ in stock, They are equivalent. I can sell all my stocks with 2-3 mouse clicks.
So there is no difference between cash and stocks.
I don't sell my stocks in the hope that I can rebuy later at a lower price because it's dangerous. Why do you?
I’m not sure if agree with u on that. Yes the compounding, the appreciation, the tax efficient in dividends etc are great but ur 500k stocks could go down to 300k and it might take a while to get back to 500k. For instance the 2000 to 2007.
Starfish
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Re: I have 500k to invest but keep procrastinating

Post by Starfish »

Reuben1980 wrote: Fri Aug 12, 2022 12:54 am
Starfish wrote: Thu Aug 11, 2022 7:35 pm Having 500k$ cash now is exactly like having 500k$ in stock, They are equivalent. I can sell all my stocks with 2-3 mouse clicks.
So there is no difference between cash and stocks.
I don't sell my stocks in the hope that I can rebuy later at a lower price because it's dangerous. Why do you?
I’m not sure if agree with u on that. Yes the compounding, the appreciation, the tax efficient in dividends etc are great but ur 500k stocks could go down to 300k and it might take a while to get back to 500k. For instance the 2000 to 2007.
So you propose I sell my 500k$ worth of stock right now? In 20 seconds I can convert all the stock in 500k$. My point is that stock and $ are completely equivalent in this second, you can convert one in the other.
gma
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Re: I have 500k to invest but keep procrastinating

Post by gma »

I think everyone has already encouraged you to start investing it, so don't need to add on there, but I would suggest that you should consider finding somewhere that will give you a nice bonus. Two current examples:
https://us.etrade.com/what-we-offer/how-it-works/promo
https://www.merrilledge.com/offers/me750

These are just two I've seen recently, the offers do change every once in awhile, so I'd recommend you do a little research on your own (i.e. google 'brokerage account bonus'). Might as well start out with some free money.

Personally, I haven't used etrade in a long time, but I think they are a solid platform, I am a current Merrill Edge customer and their platform is fine. Everyone is in the no commission game now, so all the big names (Etrade, Merrill Edge, Schwab, Ameritrade, etc) are pretty equal in my eyes. Depositing $100K+ to Merrill Edge would also qualify you for Bank of America platinum honors which has its own extra perks if you weren't aware of those (most notably access to some nice credit cards that can earn cash back that's higher than other cards).
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Reuben1980
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Re: I have 500k to invest but keep procrastinating

Post by Reuben1980 »

gma wrote: Fri Aug 12, 2022 1:51 am I think everyone has already encouraged you to start investing it, so don't need to add on there, but I would suggest that you should consider finding somewhere that will give you a nice bonus. Two current examples:
https://us.etrade.com/what-we-offer/how-it-works/promo
https://www.merrilledge.com/offers/me750

These are just two I've seen recently, the offers do change every once in awhile, so I'd recommend you do a little research on your own (i.e. google 'brokerage account bonus'). Might as well start out with some free money.

Personally, I haven't used etrade in a long time, but I think they are a solid platform, I am a current Merrill Edge customer and their platform is fine. Everyone is in the no commission game now, so all the big names (Etrade, Merrill Edge, Schwab, Ameritrade, etc) are pretty equal in my eyes. Depositing $100K+ to Merrill Edge would also qualify you for Bank of America platinum honors which has its own extra perks if you weren't aware of those (most notably access to some nice credit cards that can earn cash back that's higher than other cards).
Appreciate the info. I use vanguard and Wouldn’t mind using fidelity. I do know about BOA and have their credit card. I mostly prefer keeping everything with vanguard or fidelity or both if I take action hopefully. There r so much out there I’m trying to be as educated as possible before doing anything. I’ll look into the above. Thx
heyyou
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Re: I have 500k to invest but keep procrastinating

Post by heyyou »

Open a Roth IRA for you, then add to it each year, investing only in stock index funds in it.

Start an annual contribution into a separate traditional IRA for her (tax deductible), that is purchased with money each year from the $500K. Invest in bond funds in her IRA so she can see that the money is mostly still there, just separate from the $500K, while your IRA will vary in value as the stock market goes up and down.

Considering the $500K as your bond allocation, so all of your future savings will be going into stock funds that will go up and down every day. Tell her about those fluctuations, but always show her how the almost $500K is still where it is stored.

On rental property, only buy very near where you live, so you can drive by it often. Consider a multifamily rental where you also live there. Are you good at dealing with people and repairing your own home? There are YouTube videos on any home repairs. I did not ever have a renter who was as careful as I was, at taking care of my property.
Topic Author
Reuben1980
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Re: I have 500k to invest but keep procrastinating

Post by Reuben1980 »

heyyou wrote: Fri Aug 12, 2022 2:08 am Open a Roth IRA for you, then add to it each year, investing only in stock index funds in it.

Start an annual contribution into a separate traditional IRA for her (tax deductible), that is purchased with money each year from the $500K. Invest in bond funds in her IRA so she can see that the money is mostly still there, just separate from the $500K, while your IRA will vary in value as the stock market goes up and down.

Considering the $500K as your bond allocation, so all of your future savings will be going into stock funds that will go up and down every day. Tell her about those fluctuations, but always show her how the almost $500K is still where it is stored.

On rental property, only buy very near where you live, so you can drive by it often. Consider a multifamily rental where you also live there. Are you good at dealing with people and repairing your own home? There are YouTube videos on any home repairs. I did not ever have a renter who was as careful as I was, at taking care of my property.
I don’t know how to fix anything. I updated my kitchen a few years ago and had to pay a contractor to do it . I know leverage is the way to go but if I purchase a multifamily I have to pay it off immediately bcs I don’t feel comfortable having debt. Future contributions to indexing is a great idea. Thx
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