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  • what to do, extra cash

    First time poster! Enjoy everything about WCI now dabbling in forum.

    35 yo MD

    -Moving jobs, made more money than expected from selling home, bought 800k home under 1.5 mill budget.
    -Now soon to have mini windfall from home sell, less than expected down payment
    -Paid off loans shortly after residency
    -Max out tax protected accounts, back door roth, max HSA, conservative contributions to 529s kids can go to public university, get scholarship or pay up! remainder goes to taxable with avg savings rate around 35-40% of gross income
    -Not interested in direct real estate currently
    -Meeting goals of personal investment plan

    Question: What to do with an approximately 200-300k cash surplus? Lump sum to taxable vs dollar cost averaging? Consider large real estate investment like DLP? Other thoughts?
    - Rate on loan very low so don't feel best interest to put in home

    A first world problem blessed with to be thankful for on Thanksgiving, appreciate any thoughts


  • #2
    What are your goals for the next 5 years? If they are all funded, you might consider s taxable account for long-term goals (I’d go with lump sum). Or frontloading the 529s if you are making annual purchases.

    Welcome to the forum!
    Our passion is protecting clients and others from predatory and ignorant advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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    • #3
      Lump sum today usually wins over DCA, but it doesnt have to be all or none. Lump some half, DCA the other half over a few months if you want.

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      • #4
        I'd just keep it simple and go taxable and lump sum it.

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        • #5
          I’ll catch some flack for this but I would split it 50/50 taxable account/crypto. Taxable I would invest in broadly diversified index funds, crypto I would go 60/40. Don’t look at the crypto account until 2025, you can sell then or hold until 2029 or 2033 or 2037 etc

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          • #6
            If time horizon > 10years, Lump sum.

            Vanguard index funds.

            No crypto or single stocks unless you really understand it and have an significant informational advantage, which is exceedingly unlikely.

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            • #7
              I would just lump sum it in to taxable.

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              • #8
                If you have lump sum into a portfolio for next 15 yrs what would be the choices of the members here ? Please post your pick
                I’ll go first ….golden butterfly modified (portfolio)

                20 % VT
                10 % small cap US
                10% small cap international
                15% VGLT
                15% intermediate bonds / short term bonds
                10% gold or crypto
                10% REITs
                10% TIP

                Not the best performing for sure ( but time horizon is short only 15 yrs)
                but please evaluate based on goal of capital preservation and moderate growth ( 10 percent or so) for the next 15 yrs

                If stocks collapse you will have some ability to sell bonds and invest more
                if inflation spirals out of control the stocks gold and TIPshould cushion that
                Bonds hopefully will provide stability in volatile market
                deflation? How likely is that ? Not sure what would help ? Maybe STB/ LTB
                Stagflation? Maybe TIP/STB / gold/ crypto

                do I need to put REIT in there ? Or just add more to VT / small cap?
                Last edited by nastle; 11-26-2021, 05:08 AM.

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                • #9
                  Thanks for replies, all long term goals (15+ years). Currently mix is below, balanced between all accounts (tax efficiency in mind), simple portfolio. Any thoughts?

                  Crypto, really? is this a WCI forum?


                  Equity/Bond (85%/15%)
                  Total Stock Market (VTSAX, VTI) 35%
                  International (VTIAX, VXUS) 25%
                  REIT (VNQ) 15%
                  Small/Mid Cap (S&P 400/600 in Principal 401k) 10%
                  Bond (VBTLX, BND) 15%

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                  • #10
                    Originally posted by matt.md View Post
                    Thanks for replies, all long term goals (15+ years). Currently mix is below, balanced between all accounts (tax efficiency in mind), simple portfolio. Any thoughts?

                    Crypto, really? is this a WCI forum?
                    Seems reasonable to me. There's really no magic formula. Good enough works in this case.

                    There's a decent amount of crypto talk here. It's for some people and not for others. If it's not for you just ignore it but it would probably be smart to familiarize yourself with it a little bit (doesn't mean you have to invest) because it won't go away any time soon.

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                    • #11
                      I think your plan is very reasonable. Do you like the idea of getting into real estate? If so, this is the perfect time. If I was you that is what I would do to diversify a bit more but nothing wrong with keeping it simple and using boring index funds like you are doing.

                      If you want to keep some play money 5% or maybe 10% and want to dabble in crypto then go ahead. Not for me. But that’s just me.

                      Are you shooting for FIRE?

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                      • #12
                        Originally posted by TXDoc21 View Post
                        I think your plan is very reasonable. Do you like the idea of getting into real estate? If so, this is the perfect time.
                        What makes you say that?

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                        • #13
                          A 200-300K "windfall" should just go into starting a taxable account if you don't already have one. Most people need a taxable account as the traditional retirement accounts do not have enough room to save money.

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                          • #14
                            Get a boatload of VTSAX.

                            If you do not have enough room in your tax deferred for bonds and REITs consider I bonds.

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                            • #15
                              Originally posted by CordMcNally View Post

                              What makes you say that?
                              Good point. I mean good in the sense that OP has some money saved up with the windfall that will allow OP to do it. Home prices seem to be through the roof so not a great time at all in that respect. But a critique of the syndications is the large buy ins. So this is a good time since OP has the windfall.

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