What to do with 100k at this moment in time

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JonnyTX
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Joined: Sat Jul 13, 2019 12:38 pm

What to do with 100k at this moment in time

Post by JonnyTX » Sat Jul 13, 2019 1:43 pm

I'm new here. I've heard many times that trying to time the market is bad and maybe you've seen this question many times. I've saved up $100k in cash :moneybag but have only been getting bank interest due to market fears. This late in the market cycle, I'm worried that I invest it and the market cuts it in half within a year. Would you adjust your asset allocation if you are going to invest a large chunk now and think the market might dive soon?

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David Jay
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Location: Michigan

Re: What to do with 100k at this moment in time

Post by David Jay » Sat Jul 13, 2019 2:39 pm

Welcome to the forum. Yes we get that question a lot because the market spends more than 60% of the time at or near all time highs.

I would not adjust my asset allocation(AA). If I was being paralyzed by fear of a market pullback, I would dollar cost average (DCA) into my AA. I would put $15,000 a month into my selected AA, getting it done in 7 months.
Last edited by David Jay on Sat Jul 13, 2019 5:02 pm, edited 2 times in total.
Prediction is very difficult, especially about the future - Niels Bohr | To get the "risk premium", you really do have to take the risk - nisiprius

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LiveSimple
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Re: What to do with 100k at this moment in time

Post by LiveSimple » Sat Jul 13, 2019 2:41 pm

Just invest in the next day as possible.
No one knows what the market will do in the future.

yitzchakdov
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Joined: Sun Nov 17, 2013 7:02 am

Re: What to do with 100k at this moment in time

Post by yitzchakdov » Sat Jul 13, 2019 3:42 pm

No one can predict the market's next move. DCA is nice when the market keeps rising, not so nice when it keeps falling, unless it turns up again quickly and you bought low. That being said it's important to have PATIENCE and liquid money to take advantage of the inevitable correction tomorrow, next week or month, next year or three years from now, who knows. Since you're new and feeling anxious and I know how this feels, put the money in a Vanguard money market account, earn the 2.3-2.4, for now relax, do some reading/listen to investment podcasts, and be PATIENT. I put on my readers on when the indices drop close to 2%, more than 2% gets me interested, 5-10 I'm buying, more than 10 I'm buying lots. At Vanguard I just exchange MMA funds for the S&P 500 or Total Stock Market. VOO and VTI work as long as you're disciplined and don't trade ( you'll need the money in your brokerage account, the funds allow for a simple exchange). Be patient, don't rush, no need for the 100K to burn a hole in your pocket. If you want, buy a small position in either of the above to get the buying bit off your mind, let some interest accumulate, be patient. If the market tanks like it did in 2007, you need money to take advantage of this enormous opportunity. Fully invested doesn't work all the time. As they say- Dry Powder! Good luck.

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Toons
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Re: What to do with 100k at this moment in time

Post by Toons » Sat Jul 13, 2019 4:29 pm

" due to market fears."
My suggestion is to better manage your emotions.
You have to accept the fact that volatility is an inherent part of investing.
You have exactly zero control over what the market does on a daily basis.
Until you can accept that fact and ignore all the daily financial market "noise",
Do not invest in the stock market.
Invest when you are "Ready"
:happy
"One does not accumulate but eliminate. It is not daily increase but daily decrease. The height of cultivation always runs to simplicity" –Bruce Lee

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LinusP
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Re: What to do with 100k at this moment in time

Post by LinusP » Sat Jul 13, 2019 4:49 pm

yitzchakdov wrote:
Sat Jul 13, 2019 3:42 pm
No one can predict the market's next move. DCA is nice when the market keeps rising, not so nice when it keeps falling, unless it turns up again quickly and you bought low.
When you have a choice between investing a lump sum and dollar cost averaging, lump sum is better if the market continues to rise and dollar cost averaging is better if it drops.

Here's what the wiki has to say about this choice: Dollar cost averaging versus lump sum

KlangFool
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Joined: Sat Oct 11, 2008 12:35 pm

Re: What to do with 100k at this moment in time

Post by KlangFool » Sat Jul 13, 2019 4:51 pm

OP,

Unless you are 100% stock, just invest as per your AA.

KlangFool

denali98
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Joined: Mon Apr 01, 2019 3:57 pm

Re: What to do with 100k at this moment in time

Post by denali98 » Sun Jul 14, 2019 7:05 am

Here’s a suggestion:

Double your pre-tax savings. Max out both 401s/403s. If you have access, max out both government 457s. Save an additional $50,000 in each of three years. This will naturally silt in slowly over the whole year (DCA), guarding you against "the drop.".

Each year, use $33,333 of the $100,000 to live on. So, seemingly tighten your budget $16,667 ($33,333 minus $50,000).

By saving an additional $150,000 over three years, you save about $45,000 in taxes. $15,000 a year. The savings essentially even up your $16,667 shortfall.

You turn your $100,000 into $150,000, still with DCA protection. Presto.

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BeBH65
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Re: What to do with 100k at this moment in time

Post by BeBH65 » Sun Jul 14, 2019 7:14 am

JonnyTX wrote:
Sat Jul 13, 2019 1:43 pm
I'm new here. I've heard many times that trying to time the market is bad and maybe you've seen this question many times. I've saved up $100k in cash :moneybag but have only been getting bank interest due to market fears. This late in the market cycle, I'm worried that I invest it and the market cuts it in half within a year. Would you adjust your asset allocation if you are going to invest a large chunk now and think the market might dive soon?
Nobody knows what the future will bring.
Choose an AA that suits you knowing that the market can go down strongly any day in the future.
Your AA includes 100k cash now, analyse if you could move that to bonds/equity taking into account your need, willingness, and ability to take risk.
BeBH65. (only an investment enthusiast, not a financial adviser, perform your due diligence). | Have a look at https://www.bogleheads.org/wiki/Outline_of_Non-US_domiciles

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