Reply to Investing a windfall in the stock market now? Dollar cost averaging? Lump sum? Wait?

Forum Index » Money and Finances

Reply to "Investing a windfall in the stock market now? Dollar cost averaging? Lump sum? Wait?"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous]Why are piles of cash risky?[/quote]

Their long-term value erodes due to inflation.  The market is very often "at an all time high" because it tends to go up each year.

If your time horizon for using this money is 30 years, I wouldn't worry too much.
I would just put it in the market in line with your overall asset allocation (e.g., 70% stocks/30% bonds/cash equivalents--or whatever you have for the rest of your portfolio).  The only difference is that with the RMD you'll be drawing it down.  But you could just take the RMD each year and use it to contribute to your own IRA so if you have to sell low, you're also immediately buying low too.  If you plan on using the RMD rather than re-investing it, then you could tilt the asset allocation a bit more to cash--e.g., have the next 3 years of RMD in cash equivalents and if the market is down tap those.

As for whether you should dump it in or dollar cost average, it's really just psychological.  The most sense is just to put it in since no one can know the future but history tells us the market trends up in a wide variety of conditions.

[/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics