Hang on to cash until correction?
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Anonymous
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We've accumulated a lot of cash over the last few years due to stock option exercises and other distributions. Our holdings right now are around $15M. Of that, $1.3M is in a high yielding money market. Over the last year, we've been investing in strong companies when their stocks dip significantly (Google, Amazon). That's worked out for us, but we still have too much cash. We spend about $300K a year and have a hefty tax bill. We take a deferred comp distribution annually of about $500K before taxes in the spring.
With the market so high right now, would it be best to wait to invest this money? Any other ideas of where to park it? |
Anonymous
| If you have $15M don’t you have an adviser telling you what to do? |
Anonymous
| Relative to the size of your overall portfolio, your cash position isn’t too large. I agree with you the market is near a top but I’ve been saying that for over a year. 10 yr and 30 yr treasury yields just topped 4.5% and 5% respectively. Another place you could park it is in SGOV until the inevitable correction. Dividends are state tax free. |
Anonymous
| What do you have the other $13.7M invested in? |
Anonymous
Plenty don’t. Most advisors don’t beat the s&P, and you’re helping them support a SAHM and kids private. No thanks. |
Anonymous
+1 Agree 100%. I’ve done very well for myself not having a FA. AI is going to decimate that profession anyway. |
Anonymous
| We probably have more cash and less NW. I think that ratio is fine. Are you just trying to accumulate as much NW as possible? |
Anonymous
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We've also been accumulating cash. However our portfolio outside of cash is mostly equities and real estate, so not nearly as liquid. Bond funds used to be a diversifying option but those seem like not great options anymore.
Our bank offers bespoke CD options for $1MM and up that aren't on their website. We right now got a 5% 9 month CD...maybe that's a thought? |
Anonymous
Which bank is offering 5% 9 month CD? |
Anonymous
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You should split out the cash into multiple money market accounts, due to FDIC insurance limits.
Otherwise, I have no opinion, other than to suggest that investing a portion of it over time at pre-determined intervals is probably safer than investing it all in the same thing at once. |
Anonymous
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I did ask my AI this question, as I have a pile of cash (a fraction of yours). The respose was that you can't beat the market this way. Even the best experienced investors can't time the market. The boom could go on longer than expected. And you also can't time the bottom and risk missing the biggest gains, which typically are in the early rebounds. The advice was to keep investing in the market and ride out the swings, and gave me all the statistics to back it up.
I agree we're due for a correction and I'd rather have it sooner than later. But I don't think it will be catastrophic. And will recover and it's on and onward, as all recoveries are. |
Anonymous
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Yea, it's a great idea to have that much money yet seek financial advice from a bunch of anonymous amateurs and idiots on a mommy website.
Well done, OP. |
Anonymous
Clearly you are one of the losers I should ignore then. |
Anonymous
US Treasury |
Anonymous
Junk bonds? |