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Thoughts for windfall

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  • Avatar mtbwalt 
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    A low 7-figure windfall this month will go into a taxable account.

    Typical wisdom says stick with disciplined approach, do what you would do at any other time, its time in the market not timing the market, yadda yadda yadda.

    That said… the market feels hot right now just like it did in March 2000.  We are overdue from an economic cycle point of view for a downturn.  Possible trade issues with China.  I’m supposed to sell in May and go away.

    It’s hard not to at least consider adopting a more defensive, wait-and-see posture for this pot of money.  Like many of you, my ordinary tax rate is top marginal.

    So what say you, in a similar situation would you just plug this money into the old low cost index fund formula and go for it right away, or wait things out for a while in a lower risk mix?

    #213036 Reply
    Liked by Craigy
    CordMcNally CordMcNally 
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    Typical wisdom says stick with disciplined approach, do what you would do at any other time, its time in the market not timing the market, yadda yadda yadda.

    Click to expand…

    This shows you know the right answer.

    That said… the market feels hot right now just like it did in March 2000. We are overdue from an economic cycle point of view for a downturn

    Click to expand…

    That’s called market timing

     

    I would lump sum into my desired allocation. If you don’t feel comfortable with that, you could always dollar cost average it in over a 6 or 12 month period.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #213038 Reply
    Liked by Hank
    Avatar pierre 
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    It’s either lump sum or DCA. If you’re worried go for DCA, but make a plan then stick to it. Wait and see is not a plan.

    #213039 Reply
    Liked by FIREshrink
    Avatar mtbwalt 
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    Conceded.

    I just find it harder to be disciplined with lump sums as compared to regular contributions.

    #213045 Reply
    Avatar pierre 
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    #213046 Reply
    Liked by Peds
    Lithium Lithium 
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    These threads are all the same. If you are asking these questions, it means one of a few things:

    – you do not really believe in the “disciplined approach” you have been reading about and following until now.

    – your risk tolerance has been exceeded.

    – or closely related, now that you are over a million dollars richer, a more conservative asset allocation is now more appropriate for your goals.

    #213047 Reply
    CordMcNally CordMcNally 
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    If you find it hard to be disciplined with a lump sum approach, then DCA over the next 6 to 12 months. That seems like a happy middle ground for you.

    “But investing isn’t about beating others at their game. It’s about controlling yourself at your own game.”
    ― Benjamin Graham, The Intelligent Investor

    #213048 Reply
    Liked by FIREshrink
    Lordosis Lordosis 
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    What is stopping you from moving your current portfolio to a more conservative position?  You have a AA for a reason.  A large windfall like this can be a big enough reason to make a change to your AA.  Your hesitation suggests this is the right course.

    “Never let your sense of morals prevent you from doing what is right.”

    #213050 Reply
    Avatar mtbwalt 
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    Thanks for ideas and encouragement.

    #213054 Reply
    Avatar wideopenspaces 
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    Granted we know virtually nothing about your background but with a million dollar windfall, you could just stick it in the bank and call it a day. Or at least let it hang out there until you figure out what you want to do over whatever period of time. Unless there are some serious extenuating circumstances and this is all the money you will ever have and need to be able to live off it for 50 years or something like that.

    #213055 Reply
    Avatar jhwkr542 
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    We really need to know more of your overall financial picture to make recommendations as to what to do with it. If it were me, I’d probably invest a little in the beginning as I figure out what to do with the whole sum. Maybe spend a little and see how it goes, invest a little, etc. I always think the biggest thing to do with windfalls is nothing, at least at first. So in effect, I’d dollar cost average, but not because I was worried about the market tanking.

    #213060 Reply
    Avatar Tim 
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    By the time you get the funds invested with your AA, is it market timing? Look at that! Not only do you get the windfall, but the market takes a dive just for you.

    Sometimes luck is more important than skill. Keep up the strong work.

    #213067 Reply
    Avatar Peds 
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    Make up something then.
    Half now, half over the next 6 months

    Since you didn’t tell us how or why or a plan, we all just made up stuff too….

    #213090 Reply
    Liked by FIREshrink, Tim
    Avatar FIREshrink 
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    People are naturally intimidated by large windfalls. There’s nothing wrong with admitting anxiety, but don’t let that cause analysis paralysis. I like half now, half DCA over a defined period of time. Consider value averaging. I am DCAing a windfall over three years and feel fine with it.

    #213120 Reply
    Liked by Tim
    Avatar Kamban 
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    Conceded.

    I just find it harder to be disciplined with lump sums as compared to regular contributions.

    Click to expand…

    I am not disciplined with even regular contributions. So I have set up automatic reinvestment for all my stocks and mutual funds that pay quarterly dividends.

    If I get  a lump sum I might do a lump investment if I plan to not touch it for 10+ years.

    #213171 Reply
    Liked by Tim

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