Investing quarterly bonus

[Raj]

This may have been covered earlier but how do you all invest your quarterly bonuses?

i have no debt except a 15 yr fixed mortgage that i am planning to pay off in 8 yrs. In addition to retirement accounts, HSA and 529, i have a vanguard brokerage account where i have monthly automatic transfers from my checking account. I have been increasing the automatic transfers lately to use up the extra money however the bonuses have piling up (>100k sitting in a 1% online bank). The quarterly bonuses arent gauranteed either, as i am on RVU productivity.

Would you continue to increase auto-pay with time (and cut it down if no bonuses) for dollar averaging, or put a lump sum in the market in different index funds? any other strategy?

Thanks for your time!

[drpepper]

I wouldn’t overthink this one. Sounds like you already have an investing plan based on your scheduled salary. Just look at your asset allocation when your bonus comes in and then use your bonus to buy funds that get you back to your goal allocations. It’s like you are dollar-cost averaging, but on a quarterly basis.

[Radgeek]

It’s really a personal decision. I would continue your auto pay at the designated amount and assuming you have addressed other items (insurance, emergency fund, tax deferred accounts) and just transfer lump sum over to your brikerage account. Auto pay can be a way of providing a minimal continual investment in your taxable account in lean as well as good times.

[Physicians Capital Management LLC]

Here is what Warren Buffett would tell you what to do:

 

“That professional, however, faces a problem. Can you imagine an investment consultant telling clients, year after year, to keep adding to an index fund replicating the S&P 500? That would be career suicide. Large fees flow to these hyper-helpers, however, if they recommend small managerial shifts every year or so. That advice is often delivered in esoteric gibberish that explains why fashionable investment “styles” or current economic trends make the shift appropriate.”

[Dicast]

Just lump it in to balance your funds to your desired allocation.

[Donnie]

If you have automatic contributions to taxable, why is your cash account ballooning? Just increase the size of the auto contributions and the problem will take care of itself. No need to overthink things.

[cgossage]

I think you might be overthinking this one as well.  I would just put in a lump sum amount at your desired asset allocation and forget about it.  No need to spread it out just for the sake of dollar-cost averaging.  You will be fine with either option.