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Where to put a few million in cash?

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  • #16
    This probably doesn't need to be said, but plan for what you are going to do if the deal doesn't close.

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    • #17
      Brutus, I'm in your same boat (just not ready to sell), with the understanding of the risk management it takes to support my owned business and commercial real estate ventures, and protect basic cash equivalent reserves.

      I've been heavily criticized here for having a few minion in CD's and high yield savings and that criticism was at Dow 27K, 28K, 29K. They called it a cash drag. Ha - what's the drag now!. That foresight seems to be a character trait found more commonly with business owners, probably because we are constantly adapting versus the more static practice routine of medicine. The cash equivalent position, which I find extremely necessary in hyperextended markets, generally represents about 12-15% of NW so plenty activiely invested elsewhere, in order of valuation: business, CRE, markets, primary residence.

      I think you're playing it smart at least until there's more market direction regarding the birth of a new sustained bull.

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      • #18
        If you are comfortable with your AA, and 70/30 is reasonable, then I’d lump sum half now and DCA the other half over 6-12 mo. Hold the cash in CDARS or multiple FDIC insured accounts. Would never exceed FDIC limit, especially given current liquidity environment. Heck, even treasury market showed stress last week.

        If you are a conservative type, are you sure you can handle 70/30? I’m less aggressive than that, and only in my mid 40s. If you don’t need the risk, why take it?

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        • #19
          Originally posted by Shant View Post
          This probably doesn't need to be said, but plan for what you are going to do if the deal doesn't close.
          That was my first thought too: someone is counting their pickins before they match... or something

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          • #20
            I would put it into a Robo Investor like Betterment or something, and select a fairly conservative stock/bond profile - maybe 50-50?
            Writer at oneshotfinance.com

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            • #21
              Originally posted by Brutus1 View Post
              I currently use Ally bank savings account to hold a lot of cash before taxes are due, where the savings rate is about 1.6%. Would anyone have any concern lumping all your cash with Ally knowing that only $250,000 is insured? And also I know nothing about Ally banks current financial state. Or would you use a larger bank like BOA even though the rates are pitiful.
              Also what about money markets?
              Cash safety is concern but I guess if the banks fail we all fail!
              FWIW, I think FDIC Insurance could cover up to 5x250K = 1.25 million if you have a “payable on death” designation with 5 beneficiaries. I believe Ally Bank has this.

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              • #22
                Originally posted by EntrepreneurMD View Post
                Brutus, I'm in your same boat (just not ready to sell), with the understanding of the risk management it takes to support my owned business and commercial real estate ventures, and protect basic cash equivalent reserves.

                I've been heavily criticized here for having a few minion in CD's and high yield savings and that criticism was at Dow 27K, 28K, 29K. They called it a cash drag. Ha - what's the drag now!. That foresight seems to be a character trait found more commonly with business owners, probably because we are constantly adapting versus the more static practice routine of medicine. The cash equivalent position, which I find extremely necessary in hyperextended markets, generally represents about 12-15% of NW so plenty activiely invested elsewhere, in order of valuation: business, CRE, markets, primary residence.

                I think you're playing it smart at least until there's more market direction regarding the birth of a new sustained bull.
                Great foresight to know that Coronavirus would happen and cause this much disruption in our economy resulting in the DOW falling. That’s a great character trait to have as a business owner.

                If you’re holding on to the funds for 20+ years, then this little blip in the market doesn’t matter.
                however, if your AA includes a large cash position, which is totally fine, then it’s not a cash drag.

                Regarding the OP, huge congrats to you. I would think about what you expect your monthly or yearly expenses would be. Propriety tax, kids education, home, etc. then determine your AA. If you’re this far ahead in the game, then maybe a 70/30 or 60/40 lump sum would make the most sense. And don’t touch it until you’re ready to retire.
                you’re golden! Congrats again!


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                • #23
                  The foresight is in knowing with reasonable accuracy, based on historical market trends, the magnitude and direction of a major market move which of course I had told you was coming in advance, see prior threads. What exactly the catalyst would be is irrelevant and does not impact the necessary actions taken to outperform based on that insight. It could have been Coronavirus, a nuclear attack, an alien invasion, Pacific Rim...doesn't matter. A significant catalyst presenting with a treasury inversion in an 11 year old bull market was screaming, "I'm on my way". Business owners know change is always coming, and preparing for it, rather than reacting after the damage is done.

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                  • #24
                    "Business owners know change is always coming, and preparing for it, rather than reacting after the damage is done."
                    Then why are we having 2T stimulus? You should be president and the FRB and Buffet's boss and ,,,,,,,, did I miss anything?
                    Oh, Charlie must have read your investment plan. By the way, you never shared your IPS. Just a reminder. Post it. Please.

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                    • #25
                      Sorry.

                      Astute business owners know...

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                      • #26
                        Originally posted by EntrepreneurMD View Post
                        The foresight is in knowing with reasonable accuracy, based on historical market trends, the magnitude and direction of a major market move which of course I had told you was coming in advance, see prior threads. What exactly the catalyst would be is irrelevant and does not impact the necessary actions taken to outperform based on that insight. It could have been Coronavirus, a nuclear attack, an alien invasion, Pacific Rim...doesn't matter. A significant catalyst presenting with a treasury inversion in an 11 year old bull market was screaming, "I'm on my way". Business owners know change is always coming, and preparing for it, rather than reacting after the damage is done.
                        Wow! You knew with reasonable accuracy the market would fall?? Truly amazing.
                        Be humble my friend. You don’t know like the rest of us. And if you think you do, well, all I can say is good luck.

                        Comment


                        • #27
                          Originally posted by WorkforFIRE View Post

                          Wow! You knew with reasonable accuracy the market would fall?? Truly amazing.
                          Be humble my friend. You don’t know like the rest of us. And if you think you do, well, all I can say is good luck.
                          You do know that in multiple posts here, before the 2019 melt-up I discussed the coming 2019 melt-up (prior to materialization) and then a bear market recession to a DOW around 15K and gave the very specific timeline for the recession in relation to the treasury inversion (1-2 years). I believe the DOW was still rising around 26K at the time. Melt-ups happen with treasury inversions - it's a well known phenomenon and not a lucky guess. You just needed a catalyst - it doesn't matter what that catalyst is - Coronavirus, mortgage backed securities, an alien invasion, Pacific Rim - it doesn't really matter. The only thing that matters is the ensuing magnitude and timing of the consequences to be prepared for the opportunity it presents. You do know I quit dumping into the markets early 2018 and moved resources to business growth and commercial real estate at the time having seen this coming. It was all spelled out in my posts here well prior to the correction. So I stated what was coming and very specifically acted on it. You can be humble...and a market historian...and forewarn people about the dangers of an aging bull - I don't believe they're mutually exclusive.

                          Call it luck I don't mind... but it was obvious as can be that this was going to be result from a treasury inversion in an 11 year old market. Why was it obvious? Look at the history of bull/bear cycles over the past 100 years in the context of treasury inversion - it would be wise to learn from the past instead of the many who assumed this time it would be different and who will make the same assumptions next time. It's happened over and over in the last 100 years. Obvious to a historian that has been studying the markets for over two decades. I'm sorry but it was obvious as can be and that's why I stated so without mincing words right here on this site, and in my confidence prospectively acted in a way to preserve wealth and to grow wealth with alternate investments knowing it is going to be some time before this market gets back to it's highs - and even then return to just break even is going to take longer with an inflation adjusted chart.

                          You're fairly new here but others know I'm on track for a 15 fold retirement relative to my peers due to my actions over the decades. Many know here I picked a mutual fund with a 50 fold return over the last bull run when the market indices returned about 4 fold. It takes more than good luck. An athlete can be humble, but still has to excel at what they do to accomplish his/her goal.

                          Maybe read my prior posts and you'll see my reasoning "with reasonable accuracy the market would fall" in foresight and based on history, not guesses. The market will come back, the question is to what extent one prepares to benefit from the multiple opportunities it presents. The narrow minded only sees market opportunity. Others saw the outperformance of alternative investments, the advantages of lower labor costs, reduced interest rates for acquisition of the alternate investments, opportunity for risk mitigation strategies, distressed assets of all types on the horizon and all the other things I keep an eye out for.

                          If you think it's all hogwash, I'll just have to keep getting lucky the latter half of my working career.

                          Comment


                          • #28
                            Originally posted by WorkforFIRE View Post

                            Wow! You knew with reasonable accuracy the market would fall?? Truly amazing.
                            Be humble my friend. You don’t know like the rest of us. And if you think you do, well, all I can say is good luck.
                            WorkforFIRE
                            https://www.whitecoatinvestor.com/fo...588#post187588

                            try it out

                            Comment


                            • #29
                              Originally posted by jacoavlu View Post

                              try it out
                              Interesting. How then do you still respond to my direct posts? Keeping 'em honest. Besides, you seem to follow my posts so closely - perhaps a little mesmerized by what I said back in the day and how it all materialized?

                              You know, there are plenty here that want to see perspectives beyond "mob rules". We call it democracy. Not everyone follows a herd. Remember differences should be celebrated, not shunned.

                              Comment


                              • #30
                                Brutus: You mentioned real estate is on the horizon. I don't know your comfort/knowledge level with purchasing and handling directly owned income producing real estate but it is a strategy that could save you big $ in capital gains. I have done and am actively in the process of using cost segregation studies on new apartment buys to avoid having to pay capital gains on sales that failed 1031 exchanges and am now taking IRA distributions to avoid RMDs and using cost segs. to avoid the tax on the income from the distributions. Our previous ones "sheltered" 25% of the purchase price of the apartments so for instance we buy a $1M building and can "shelter" $250K, which is the amount of equity we invest. Just a thought to help you save some of the capital gains. It sounds like yours will be substantial. Congrats on the sale.

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