Gurus,
I am posting after a long time. Need your help! I have had the good fortune of a long due (non stock) investment cash out finally! I am trying to figure out if now is a good time to invest it in the market, especially given that this bull is already 4 years in the running. Here is my situation:
1. Age: 40
2. Tolerance for risk: High (weathered the 2001 and 2008 crashes as buying opportunities)
3. Overall current portfolio: well diversified with approx 10 funds.
4. New money: About 2X than current portfolio.
The options I am considering are:
1. DCA in the current portfolio over next 18 months. However, this can be risky as the bull is getting old so if we do have a major correction in 6 months, I would get creamed on a large part of my investment.
2. Sit on cash till a major correction (15%+) and then put 50% of the new monies in. DCA the remaining over next 12 months.
3. Get a good investment newsletter and start following it to the tee (any suggestions?).
What would you do in my situation? Any good newsletters that you live by?
Would really appreciate your counsel.
- Bhopali
Comments
--- What are the 10 funds you now have and what percentage of each, for your total holdings?
---Are all of your current fund holdings in tax sheltered accts (IRA's, etc.)?
---Will all of this new money have to be invested in non-tax sheltered accts; or are you able to invest some of the monies into a Roth IRA?
---Do you currently invest monies into a 401k, 403b, etc.?
There are those here who frown upon any advisement being given by strangers via a discussion board on the internet.
For all practical purposes, consider whatever advisement you may be provided; to constitute.............suggestions for consideration.
Regards,
Catch
Congratulations on your windfall. I had an inheritance to invest a few years ago and I decided to use the portfolio suggestions at Maxfunds (www.maxfunds.com), click on the PowerFund Portfolios link. They have a more aggressive one and a more conservative one. They seem to have a good sense for when to make changes to the portfolio (maybe once a year), though sometimes are a bit early. Then I sometimes tweak a bit by using Mutual Fund Observer to find a better fund in some of the categories -- this gives me another couple of percent of return.
Good luck.
lrwilliams
Good to see you around again.. Here are the answers. I am looking for ideas/suggestions on the three strategies I mentioned (or any other strategy for that matter) - DCA the whole amount over 18 months, wait for a correction and then start DCAing in, or follow a newsletter. Looking forward to your and other's opinions.
-B
'get creamed'? do you care? does it matter?
if you don't need to touch it for many years, put it all now into SCHD, PKW, FSCRX, FLVCX, and some global thing you like, say VEU. 15/15/25/15/30. If that feels worrisome, then a third now, a third Oct 1, and the rest New Year's, same proportions.
With that, my opinion would be to DCA the new money into a diversified portfolio based on your age and risk tolerance. This bull is long in the tooth, so putting all the $ to work now could be a mistake.
If you have an urge to follow a news letter, set aside maybe 10% of the money for that purpose. It might be fun to play the game, but don't risk a lot of money on a stranger.
If it is a substantial windfall, it might not be a bad idea to talk with a 'fee only' financial advisor. They should give you more of the detail catch22 referred to (important considerations). It could be just for a one-time assessment and plan outline with no further obligations. I actually found that this type of assessment and financial advice is offered free through some of the big investment houses like Schwab and Fidelity. I'm in the process of rolling over my 401k to an IRA at Charles Schwab. I went to my local branch to speak with an advisor there. I was very happy and impressed at the personalized retirement and investment overview I received - for free.
Bhopali, just my 2 cents with a grain of salt. Congratulations on your windfall and good luck on your plans.
Regards,
Ted
Really appreciate everyone's feedback.
Some on MFO have spoken very highly of James Stack, who publishes the InvesTech newsletter and apparently has a good performance record. I believe his newsletter is on the Hulbert Financial Digest Honor Roll.
If you want to get an objective third party audit of the performance records of many newsletters, the Hulbert Financial Digest does that. I believe you can also order an in-depth analysis of an individual newsletter from Hulbert.
We have both a Schwab checking account, with Schwab Bank, which is FDIC insured, and also accounts on the Schwab Brokerage side, which of course are not FDIC insured. But here's the deal: While the current incentive offer is valid if you transfer $100k to a money-market account on the brokerage side, they will give you $300. BUT: if you don't want to leave it there for a long time, you can, after a few weeks, transfer a large amount (say maybe $90k) back over to the bank account side, and still keep the $300. The only requirement is that once you make the transfer, you must keep the $100k somewhere (anywhere) within the Schwab operation for one year. I frequently move funds back and forth between the bank side and the brokerage side in any case, so this is no big deal.
I found this out by accident last week, when I got tired of having large amounts of cash sitting in an American Funds money-market account, at 0% interest. I figured I might as well move 100k over to Schwab Bank, just to get the FDIC coverage if nothing else. When they told me about the $300 offer, I put the money into the brokerage account instead, which leaves me right back where I was at American Funds, except we now have $300 more than we did a few days ago.
If I don't use all or part of it for investment on the brokerage side, in a few weeks I'll transfer it to the bank side, and keep the $300.
OJ