Anyone sitting on some cash they didn't expect to? How are you investing it?

[MrCheapo]

We had set aside $400K for kids' college fund (not in a 529) but due to pay increases we can how fund their college based on our pay checks.

So that leaves us with what to do with $400K we did not intend to have.

In normal times, I'd dollar cost average into VTI or some other broad market ETF. But these times are not normal and reminds me of 2020, 2021 and 2022 when SECTORs were crashing and great opportunities were available. I don't mean here the 10% correction, I refer to that the world seems to be fundamentally changing.

Our pensions and retirement accounts comfortably cover our post-retirement expenses so we are investing long term and don't mind taking risks.

[deltaneutral83]

But these times are not normal

.There is nothing more normal than a 10% correction, they occur every 15 months I believe. Markets go up 66% if the time from any random point in time. You have 9% off highs to work with which probably increases your odds even more IF 20+ years out is the goal. If you're going to invest this lump sum and then be glued to your phone watching every tick of VTI, then by all means, DCA it.

[simplesimon]

In normal times, I'd dollar cost average into VTI or some other broad market ETF. But these times are not normal and reminds me of 2020 when SECTORs were crashing and great opportunities were available.

Market declines are part of normal times. Your DCA plan sounds good.

[Parkinglotracer]

I have 1 portfolio. We are 50/50 stocks and short term treasury ladder. we should invest our portfolios for the long term ignoring short term blips. If you have short term needs from your portfolio try treasury ladder or mm fund.

[MrCheapo]

But these times are not normal

.There is nothing more normal than a 10% correction, they occur every 15 months I believe.

Ah I clarified this in my original post. I didn't mean the recent correction as being the world is not normal. It seems fundamental societal shifts are occurring but locally and internationally.

[deltaneutral83]

.There is nothing more normal than a 10% correction, they occur every 15 months I believe.

Ah I clarified this in my original post. I didn't mean the recent correction as being the world is not normal. It seems fundamental societal shifts are occurring but locally and internationally.

Makes no difference. Let's cut to it. If one is under the impression that "this time it's different" you most assuredly need to DCA a lump sum. Most of us at one point in the beginning had our throats stepped on because we thought "this time is different." I'd give anything to have DCA'd a much smaller amount even over 2-3 years, many, many years ago (let alone lump sum it), definitely lost out on long term gains. Set your schedule for DCA-ing and then move on with your life.

[yzy]

We had set aside $400K for kids' college fund (not in a 529) but due to pay increases we can how fund their college based on our pay checks.

So that leaves us with what to do with $400K we did not intend to have.

In normal times, I'd dollar cost average into VTI or some other broad market ETF. But these times are not normal and reminds me of 2020, 2021 and 2022 when SECTORs were crashing and great opportunities were available. I don't mean here the 10% correction, I refer to that the world seems to be fundamentally changing.

Our pensions and retirement accounts comfortably cover our post-retirement expenses so we are investing long term and don't mind taking risks.

I moved all IRAs to MMF in November. Just stepping to the sideline for a while to let things settle down. If I was in your situation I would put it in a MMF for now and collect the easy 4%. Then move into an index fund later in the year or whenever I feel a little more at ease.

[retired@50]

So that leaves us with what to do with $400K we did not intend to have...

Perhaps you could give the money to your favorite charity.

Regards,

[livesoft]

Perhaps you could give the money to your favorite charity.

Regards,

Or donate appreciated shares with large unrealized LTCG to your DAF and then use the money to replace those shares in an act of "tax-gain harvesting."

[MorgansRun]

When you say 'wasn't normal'...that's normal. 1987 wasn't normal, Y2k wasn't normal, dot com wasn't normal, covid wasn't normal, 2022 wasn't normal.

The only thing that's normal is nothing. What does this mean exactly? I don't know, but I'm still continuing with my Roth contributions.

[MrCheapo]

I moved all IRAs to MMF in November. Just stepping to the sideline for a while to let things settle down. If I was in your situation I would put it in a MMF for now and collect the easy 4%. Then move into an index fund in a year or whenever I feel a little more at ease.

Right. The money is in Vanguard's Prime MM now earning 4.5%. So your plan is still to move it into an index fund?

[retired@50]

Right. The money is in Vanguard's Prime MM now earning 4.5%.

I'd be curious to learn the ticker symbol for the Vanguard money market fund you're referring to above...

The best yield I'm seeing is 4.25%.

Regards,

[investuntilimrich]

No, I don't sit on piles of cash besides an emergency fund. Data shows time in the market is one of the most important metrics for success. No, I don't think now is different nor do I subscribe to end of the world hypothesis - those have a long history of being wrong.

[johnegonpdx]

Me. Did a large IRA rollover just before the dip/correction started. I'm DCA'ing back into my AA targets over the next several months, but also using market % drop (below the rollover) triggers if they happen.

[steadyosmosis]

Yesterday (3/10) looked like a good day to buy stocks, so I did.
Buying more today.

[snic]

We had set aside $400K for kids' college fund (not in a 529) but due to pay increases we can how fund their college based on our pay checks.

So that leaves us with what to do with $400K we did not intend to have.

In normal times, I'd dollar cost average into VTI or some other broad market ETF. But these times are not normal and reminds me of 2020, 2021 and 2022 when SECTORs were crashing and great opportunities were available. I don't mean here the 10% correction, I refer to that the world seems to be fundamentally changing.

Our pensions and retirement accounts comfortably cover our post-retirement expenses so we are investing long term and don't mind taking risks.

Over the long term, US stocks have generally trended up over the last 150 years. There were a lot of instances during that timeframe when "the world fundamentally changed". This time is different no more than all those other times were different.

DCA is an excellent strategy. In fact, I have a similar lump some to invest in stocks - not mine; I took over managing my mother's finances. The rough plan is to invest a portion every week. Yesterday, for the first time I played around with limit orders and set a low maximum price for a stock index fund at 10 am. By 2 pm, it tripped and I got my mom some stocks on sale. Except the price dropped more today. Oh, well, there's always next week.

[Wiggums]

We automated our purchases so we can ignore the market. You can DCA, but I wouldn’t drag it out too long.

[MrCheapo]

Right. The money is in Vanguard's Prime MM now earning 4.5%.

I'd be curious to learn the ticker symbol for the Vanguard money market fund you're referring to above...

The best yield I'm seeing is 4.25%.

Regards,

I'll look it up when I get home. But it's definitely one of the "admiral" ones where you need a larger account balance.

[Cletus Davenport]

I had 529 money we didn’t use. I gave it to kid.

I sold a home last year. All that money is just sitting in the vanguard settlement account. I think I’ll use that to pay my monthly bills for the next 8 years or so.

[hudson]

Our pensions and retirement accounts comfortably cover our post-retirement expenses so we are investing long term and don't mind taking risks.

You qualify to do anything that you want with the $400K.
I'd buy treasuries or CDs.
Why? If there's no need to take risks, don't.

[dknightd]

We had set aside $400K for kids' college fund (not in a 529) but due to pay increases we can how fund their college based on our pay checks.

So that leaves us with what to do with $400K we did not intend to have.

I would think about this differently.
The $400k you have was put aside for kids college. You intended to have those funds for a specific expense. I'd leave it there.

What has changed is your pay went up. So I'd simply DCA those additional funds as they became available.

[swong]

Since January 20th 2025 the market have performed dreadfully however I've seen this coming and positioned myself what I believe is best for us as senior citizens. Last half of 2024 I slowly sold off much of my household's trading account held by Schwab and transitioned over to laddered short term T-Bills. In a nutshell, I am glad I did so as many friends and family have gotten hammered horribly. I don't see this getting any better especially this year and I even fear a recession is on the cusp of coming to fruition. I won't go into politics but suffice it to say this new administration has much to do with how the market has performed 2024 YTD. The prior 2 years has been spectacular for wife and I and it's also because of this we knew some sort of correction was way long overdue. This is just my opinion but when I meet with friends and family who stayed the course keeping their retirement portfolios heavy in stocks ..... they are currently getting killed. All these uncertain times have forced us into staying very liquid. Should something pleasant happen which is welcomed by investors we can at least jump back into the market in 90-days or less with our laddered T-Bills. Hope this helps?

[Harmanic]

I have 1 portfolio. We are 50/50 stocks and short term treasury ladder. we should invest our portfolios for the long term ignoring short term blips. If you have short term needs from your portfolio try treasury ladder or mm fund.

I second this. Do a 10 year ladder and then when each rung matures, invest it in the market. Combines some security with DCA objectives without the risk of a market crash panic. Or at least less risk.

If it were me, I would lump sum it into a diversified portfolio because this is money that was unexpected and therefore is not critical to future plans. If the market crashes and stays down, it might mean what?

[RetireWhen]

We had set aside $400K for kids' college fund (not in a 529) but due to pay increases we can how fund their college based on our pay checks.

So that leaves us with what to do with $400K we did not intend to have.

In normal times, I'd dollar cost average into VTI or some other broad market ETF. But these times are not normal and reminds me of 2020, 2021 and 2022 when SECTORs were crashing and great opportunities were available. I don't mean here the 10% correction, I refer to that the world seems to be fundamentally changing.

Our pensions and retirement accounts comfortably cover our post-retirement expenses so we are investing long term and don't mind taking risks.

Here is a completely different approach compare to all others. Keep the $400k allocated to the college expense. But use the future higher pay when received to either dollar cost average into investments as you go or if you don't need that money to pay additional day to day expenses, college expenses or retirement savings/expenses, then spend it and enjoy it. After all money should have a purpose and if all the expenses and savings requirements are covered, then money should be used - for fun, or helping others. Accumulating money for no defined purpose is crazy to me.

This way you can sleep knowing you have college covered. You don't have to worry, if for some reason your income went down in the future, what you would do for college.

My wife and I are in sort of a similar situation. We are done with college and child expenses and are now in the day to day and funding retirement phase of live. I'm employed by a large corp and wife runs her own business. My income and a portion of her income cover our day to day expenses and retirement funding. Her business income can vary year to year with the after tax income being as much as twice what we need for day to day and retirement funding. At the end of each year we consider any income of her's above the needed income to be a bonus. We then decide what we plan on doing with the bonus for the next year. Sometimes we use it for house improvements, or an extra vacation, or larger Christmas gift to the adult children, some times we put a little more in the savings. This year a portion is going to a bit larger college graduation gift for the youngest than we had planned for. Some is going towards an unexpected trip this summer.

This approach takes care of the needs first and enjoyment with any bonus. If for some reason, like during Covid, the income is not there for the
bonus, we still have our needs covered and we simply do not spend on bonus things or size the bonus things to the amount of the bonus.

[RetireWhen]

We had set aside $400K for kids' college fund (not in a 529) but due to pay increases we can how fund their college based on our pay checks.

So that leaves us with what to do with $400K we did not intend to have.

In normal times, I'd dollar cost average into VTI or some other broad market ETF. But these times are not normal and reminds me of 2020, 2021 and 2022 when SECTORs were crashing and great opportunities were available. I don't mean here the 10% correction, I refer to that the world seems to be fundamentally changing.

Our pensions and retirement accounts comfortably cover our post-retirement expenses so we are investing long term and don't mind taking risks.

Here is a completely different approach compare to all others. Keep the $400k allocated to the college expense. But use the future higher pay when received to either dollar cost average into investments as you go or if you don't need that money to pay additional day to day expenses, college expenses or retirement savings/expenses, then spend it and enjoy it. After all money should have a purpose and if all the expenses and savings requirements are covered, then money should be used - for fun, or helping others. Accumulating money for no defined purpose is crazy to me.

This way you can sleep knowing you have college covered. You don't have to worry, if for some reason your income went down in the future, what you would do for college.

My wife and I are in sort of a similar situation. We are done with college and child expenses and are now in the day to day and funding retirement phase of live. I'm employed by a large corp and wife runs her own business. My income and a portion of her income cover our day to day expenses and retirement funding. Her business income can vary year to year with the after tax income being as much as twice what we need for day to day and retirement funding. At the end of each year we consider any income of her's above the needed income to be a bonus. We then decide what we plan on doing with the bonus for the next year. Sometimes we use it for house improvements, or an extra vacation, or larger Christmas gift to the adult children, some times we put a little more in the savings. This year a portion is going to a bit larger college graduation gift for the youngest than we had planned for. Some is going towards an unexpected trip this summer.

This approach takes care of the needs first and enjoyment with any bonus. If for some reason, like during Covid, the income is not there for the
bonus, we still have our needs covered and we simply do not spend on bonus things or size the bonus things to the amount of the bonus.