I need advice on investing

[Anonymous]

I am 36 yo and have 180k in retirement funds, 23k in a fidelity brokerage account and 140k in a money market account. I need advice on what to do with that 140k. I know it is so stupid to have it sitting in basically cash, but I feel like the stock market is ripe for a downturn. I've been waiting for a correction to transfer the funds to the brokerage acct, but it has not come. I am married and my husband is in a similar financial situation. We don't mess around with retirement - fully fund and invested appropriately in stocks, but are good savers and the emergency funds just keep growing. Any advice on how to make this money grow despite the fact I am apparently scared of risk!

[Anonymous]

Anonymous wrote: but I feel like the stock market is ripe for a downturn. I've been waiting for a correction to transfer the funds to the brokerage acct, but it has not come.

You are trying to time the market which is never a good strategy. People have been waiting for a correction for some time now. No one know when it will happen. I was doing the same thing until recently.
If you maximize contributions to your IRA and 401k, but your lump sum still leaves you more money you want to spend in retirement, open a taxable brokerage account and invest according to your retirement asset allocation (Or simply choose a target date fund).

Don't forget, even if you are a high earner, you can always do a backdoor ROTH IRA.

Other thing I recently learned is about iBonds https://www.treasurydirect.gov/indiv/research/indepth/ibonds/res_ibonds.htm
You can only buy 10K in a year, but has a better yield than any saving account. I too have a 100K sitting in a saving account which I consider to be a part of my emergency fund. Over the next few years, I plan to move atleast half of it to iBonds.

[Anonymous]

Figure out what asset allocation you are comfortable with. So first decide what you want as an emergency fund (and I agree a great place for that money is to gradually invest in i-bonds). Then of the remaining, you need to think about how much you want in the stock market vs other places. You might try Vanguards asset allocation tool (but take the results with a grain of salt-- maybe vary your answers to see how the results vary, and note that you don't have to stick to 10% bands the way it does).

https://personal.vanguard.com/us/funds/tools/recommendation?WT.srch=1

Once you have an AA that you understand the reasons for it, and you are comfortable with (sleep well at night), I would gradually move things over, say 10% per month, or per 2 months. That way you will smooth the impact of intervening changes in the market for better or worse. (Another way to think about this is, would you feel worse if the market went up while you were doing this, or if the market went down. If you would feel worse if the market went up, then you might want to do larger chunks, or even all at once).

[Anonymous]

I need advice on investing

Buy low and sell high. Warren Buffet's rules are:

1) Don't lose any money, and
2) See rule number 1.

"Don't time the market" is Wall Street speak for "give us all your money RIGHT NOW." If you wan't to make money, timing is implicit in buying low and selling high. Don't buy things that are high in the hope they will go even higher.

[Anonymous]

Anonymous wrote:

I need advice on investing

"Don't time the market" is Wall Street speak for "give us all your money RIGHT NOW." If you wan't to make money, timing is implicit in buying low and selling high. Don't buy things that are high in the hope they will go even higher.

So how long have you been waiting to buy low now???

For people like OP who do not have the time or acumen to beat the market, passive investments over a period of time (dollar cost averaging) is the best advice.
Also, unless you are good at picking individual stocks, Index funds beat Actively managed funds majority of the time.

http://www.forbes.com/sites/rickferri/2012/10/11/indexes-beat-active-funds-again-in-sp-study/

[OTAlexFA]

If you have your brokerage account at a firm with an advisor, they should have tools to determine your risk and model an allocation for you (ours is 10 questions and can be done quickly). The only one that knows how comfortable with your risk is you. At that point, you can figure out how you would like to proceed as you wait on your correction.

[Anonymous]

Read this article. Its a year old but it says to invest now 1/3 of your money and then set up automatic investments for the remaining amount. Then if the market drops you buy more.

http://www.kiplinger.com/article/investing/T052-C000-S002-2013-midyear-investing-update.html?page=2

my suggestion is to figure out an allocation strategy eg
cash bonds - 15%
large cap us stocks (s&p 500) - 35
midsmall cap stocks - 25
intl - 25%

then pick low cost index funds to match each of these.
invest 1/3 in that. then do $2000 a month into large cap fund and adjust over time to other funds (eg intl). Or split it out from the get go.

i am not a fan of bond funds. i would just keep a chunk in cash instead.

[Anonymous]

I'm putting mine in Vanguard's Totsl Retirement Fund. It allocates for you based on your projected year of retirement.

[Anonymous]

Anonymous wrote:

my suggestion is to figure out an allocation strategy eg
cash bonds - 15%
large cap us stocks (s&p 500) - 35
midsmall cap stocks - 25
intl - 25%

While I don't disagree with your personal allocation, being in 50% SMID and Int'l probably isn't going to work for an investor who sounds completely risk-averse.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

my suggestion is to figure out an allocation strategy eg
cash bonds - 15%
large cap us stocks (s&p 500) - 35
midsmall cap stocks - 25
intl - 25%

While I don't disagree with your personal allocation, being in 50% SMID and Int'l probably isn't going to work for an investor who sounds completely risk-averse.

this was an example (eg) of an allocation strategy not what i would specifically recommend.

[Anonymous]

OP, what do you want the money for? Do you need it liquid for emergencies, or is it more medium or long term? If it is all in a pile, you might want to split it up.
Since interest rates suck now, you might want to go total bond market index for emergency fund allocation, or a tax managed fund since this is nonretirement investing.
If you have longer term money after that, evaluate your goals for it. Retirement? Education? House down payment? Where you put it depends on what you want it for.

[Anonymous]

Anonymous wrote:OP, what do you want the money for? Do you need it liquid for emergencies, or is it more medium or long term? If it is all in a pile, you might want to split it up.
Since interest rates suck now, you might want to go total bond market index for emergency fund allocation, or a tax managed fund since this is nonretirement investing.
If you have longer term money after that, evaluate your goals for it. Retirement? Education? House down payment? Where you put it depends on what you want it for.

Not OP, but can someone name a good tax managed fund?

[Anonymous]

Op here. Thanks for all the great ideas. Love the idea of I bonds and need to move all but emergency to the fidelity acct and start working out a plan. Probably along the lines of slowly moving it into index funds. Or choose some dividend paying stocks. To answer a posters question, the money is not earmarked for anything. Already did the 20% down on the house I plan on staying in for a long time, if not forever. I consider my career to be somewhat unstable and stressful so would like to keep saving in case I need or want to retire early or could possibly see myself investing in rental properties - most likely med to long term though. Thanks again. I think for me the bigger take away is that I should be investing in index funds regularly as opposed to squirreling it away in this mma.