Where Do I Go From Here - Asset Location [2022 Update]

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SnowBog
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

ETA: Below was specific to the still uninvested money in your Roth IRA.

I'll repeat my advice from earlier. The best thing you can do is decide when to get your money in, schedule it, and quit stressing about it.

If it were me, I'd lump sum today and be invested. Clearly that doesn't work for you, and that's completely OK.

If you are more comfortable DCA, then schedule it.

Pick your time horizon (let's say 6 months) and your interval (who knows, maybe you'd feel better doing daily investments so you are guaranteed to get all the days at the lowest price possible). Divide the amount you have left to invest by the above, and schedule the investment(s) accordingly.

You want this to become a routine, non-emotional, and non-thought provoking activity. You invest because you must.*

*Arguably with your existing assets, high income and low expenses, plus very strong pensions/social security, and potentially a sizable inheritance, you may not actually "need" to invest... You'll likely be set for life under most scenarios. But you still arguably should invest as inflation is going to erode your existing assets, you can't bank on an inheritance, and while you won't ever be "poor" with your pension and social security, without being invested in the market you could see a marked decrease in your quality of life (aka disposable income).
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

AnnetteLouisan wrote: Wed Jan 19, 2022 6:38 pm I didn’t even know what FSKAX was in January 2021, not did I have an IRA or taxable to invest. So I made no judgments on its price at that time. I opened my TD account in April and Fidelity in October. But I see your point.

So since I’m wading into this w my IRA and taxable, what would you suggest for my $650k in cash? I need 5 yrs of expenses (say $50kx5=$250k to be generous) to sleep well at night, so arguably I could invest $400k this very year.

I mean, I’m not going to, but maybe 50-75k I could realistically do. Plus my maxed 401k & catch upandRoth IRA andcatch up and match and ibonds…

26k 401
10k ibonds
7k Roth IRA
Match
86k savings
50-75k taxable

Might work out well!
I'd work backwards...

If your target AA is 30/70, and once you get your Roth, 401k, etc. invested, how much of your "cash" needs to be invested in stocks to reach your target AA?

Presumably, your 30/70 is already more than your 5 years expense.
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AnnetteLouisan
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

SnowBog wrote: Wed Jan 19, 2022 6:45 pm
AnnetteLouisan wrote: Wed Jan 19, 2022 6:38 pm I didn’t even know what FSKAX was in January 2021, not did I have an IRA or taxable to invest. So I made no judgments on its price at that time. I opened my TD account in April and Fidelity in October. But I see your point.

So since I’m wading into this w my IRA and taxable, what would you suggest for my $650k in cash? I need 5 yrs of expenses (say $50kx5=$250k to be generous) to sleep well at night, so arguably I could invest $400k this very year.

I mean, I’m not going to, but maybe 50-75k I could realistically do. Plus my maxed 401k & catch upandRoth IRA andcatch up and match and ibonds…

26k 401
10k ibonds
7k Roth IRA
Match
86k savings
50-75k taxable

Might work out well!
I'd work backwards...

If your target AA is 30/70, and once you get your Roth, 401k, etc. invested, how much of your "cash" needs to be invested in stocks to reach your target AA?

Presumably, your 30/70 is already more than your 5 years expense.
I have to check my totals on 1/31 and see what’s left to do. So far I’ve just tinkered. I’ll post my 1/31 numbers but yeah probably more like 200k would have to go in.
Marseille07
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by Marseille07 »

AnnetteLouisan wrote: Wed Jan 19, 2022 6:48 pm
SnowBog wrote: Wed Jan 19, 2022 6:45 pm
AnnetteLouisan wrote: Wed Jan 19, 2022 6:38 pm I didn’t even know what FSKAX was in January 2021, not did I have an IRA or taxable to invest. So I made no judgments on its price at that time. I opened my TD account in April and Fidelity in October. But I see your point.

So since I’m wading into this w my IRA and taxable, what would you suggest for my $650k in cash? I need 5 yrs of expenses (say $50kx5=$250k to be generous) to sleep well at night, so arguably I could invest $400k this very year.

I mean, I’m not going to, but maybe 50-75k I could realistically do. Plus my maxed 401k & catch upandRoth IRA andcatch up and match and ibonds…

26k 401
10k ibonds
7k Roth IRA
Match
86k savings
50-75k taxable

Might work out well!
I'd work backwards...

If your target AA is 30/70, and once you get your Roth, 401k, etc. invested, how much of your "cash" needs to be invested in stocks to reach your target AA?

Presumably, your 30/70 is already more than your 5 years expense.
I have to check my totals on 1/31 and see what’s left to do. So far I’ve just tinkered. I’ll post my 1/31 numbers but yeah probably more like 200k would have to go in.
That doesn't make sense.

You said your AA is 1.2M give or take (1.8M NW minus 1/3 being your property).

Going 30/70 means 360K (equities) / 840K (fixed income, *including* cash).

You should really double check if you have 200K cash to invest in here.
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AnnetteLouisan
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

I need my current numbers but my equity position in my 401k is approximately only 120k, plus now 5k in FSKAX. The rest is 650 cash, plus bonds etc.

So 200k is about right that I would need to add.

I can’t imagine putting in more than 50-75 this year from my cash, over and above my IRA and 401k which are going partly into equities.
Marseille07
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by Marseille07 »

AnnetteLouisan wrote: Wed Jan 19, 2022 7:01 pm I need my current numbers but my equity position in my 401k is approximately only 120k, plus now 5k in FSKAX. The rest is 650 cash, plus bonds etc.

So 200k is about right that I would need to add.

I can’t imagine putting in more than 50-75 this year from my cash, over and above my IRA and 401k which are going partly into equities.
Gotcha, in that case then yeah, 200K sounds about right.

It is recommended to deploy within 6~12 months. My recommendation is 20K/mo *regardless* of market conditions.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Marseille07 wrote: Wed Jan 19, 2022 7:07 pm
AnnetteLouisan wrote: Wed Jan 19, 2022 7:01 pm I need my current numbers but my equity position in my 401k is approximately only 120k, plus now 5k in FSKAX. The rest is 650 cash, plus bonds etc.

So 200k is about right that I would need to add.

I can’t imagine putting in more than 50-75 this year from my cash, over and above my IRA and 401k which are going partly into equities.
Gotcha, in that case then yeah, 200K sounds about right.

It is recommended to deploy within 6~12 months. My recommendation is 20K/mo *regardless* of market conditions.
Wow, if I ever get to the point where I’m comfortable investing 20k a month… I’ll really know I’m not in Kansas anymore. This place continues to expand my view of what is possible. 🤯🤯 Which of course is why I’m here, making an effort to learn.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by Marseille07 »

AnnetteLouisan wrote: Wed Jan 19, 2022 7:18 pm Wow, if I ever get to the point where I’m comfortable investing 20k a month… I’ll really know I’m not in Kansas anymore. This place continues to expand my view of what is possible. 🤯🤯 Which of course is why I’m here, making an effort to learn.
That's the math though. I mean...if you see upthread, SnowBog is actually suggesting lump sum, i.e. 200K all at once tomorrow. 20K/mo is actually on the slower side, but an acceptable pace for DCAing.
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AnnetteLouisan
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Marseille07 wrote: Wed Jan 19, 2022 7:28 pm
AnnetteLouisan wrote: Wed Jan 19, 2022 7:18 pm Wow, if I ever get to the point where I’m comfortable investing 20k a month… I’ll really know I’m not in Kansas anymore. This place continues to expand my view of what is possible. 🤯🤯 Which of course is why I’m here, making an effort to learn.
That's the math though. I mean...if you see upthread, SnowBog is actually suggesting lump sum, i.e. 200K all at once tomorrow. 20K/mo is actually on the slower side, but an acceptable pace for DCAing.
I’m not going to do $200k tomorrow - or 20k a month - although I see your reasoning, but just out of curiosity, is that even allowed? To do that online in a Fidelity account in one day? There are no safeguards built in to protect someone from themselves? I mean obviously one would have to fund it, but no one would step in and say, “hey grandma, how’s it going? Everything ok?”

I’m over the income and net worth limits for an accredited investor but what if I weren’t? My grandkid could come over and “help” me invest my life savings in Tesla in a single day?
Last edited by AnnetteLouisan on Wed Jan 19, 2022 7:41 pm, edited 1 time in total.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by retired@50 »

AnnetteLouisan wrote: Wed Jan 19, 2022 7:37 pm I’m not going to do $200k tomorrow - or 20k a month - although I see your reasoning, but just out of curiosity, is that even allowed? To do that online in a Fidelity account in one day? There are no safeguards built in to protect someone from themselves? I mean obviously one would have to fund it, but no one would step and say, “hey grandma, how’s it going? Everything ok?”
Of course it's allowed. I've moved over $500,000 in a single day for my father in law at Vanguard. It's your money after all.

Regards,
Last edited by retired@50 on Wed Jan 19, 2022 7:43 pm, edited 1 time in total.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by Marseille07 »

AnnetteLouisan wrote: Wed Jan 19, 2022 7:37 pm I’m not going to do $200k tomorrow - or 20k a month - although I see your reasoning, but just out of curiosity, is that even allowed? To do that online in a Fidelity account in one day? There are no safeguards built in to protect someone from themselves? I mean obviously one would have to fund it, but no one would step and say, “hey grandma, how’s it going? Everything ok?”

I’m over the income and net worth limits for an accredited investor but what if I weren’t? My grandkid could come over and “help” me invest my life savings in Tesla in a single day?
Imo if you struggle to invest 20K/mo for 10 months, 30/70 is probably too aggressive. And that's OK, people have different levels of risk tolerance.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Marseille07 wrote: Wed Jan 19, 2022 7:42 pm
AnnetteLouisan wrote: Wed Jan 19, 2022 7:37 pm I’m not going to do $200k tomorrow - or 20k a month - although I see your reasoning, but just out of curiosity, is that even allowed? To do that online in a Fidelity account in one day? There are no safeguards built in to protect someone from themselves? I mean obviously one would have to fund it, but no one would step and say, “hey grandma, how’s it going? Everything ok?”

I’m over the income and net worth limits for an accredited investor but what if I weren’t? My grandkid could come over and “help” me invest my life savings in Tesla in a single day?
Imo if you struggle to invest 20K/mo for 10 months, 30/70 is probably too aggressive. And that's OK, people have different levels of risk tolerance.
Well, 30/70 is a target. My thought was to mosey on toward it gradually.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by Marseille07 »

AnnetteLouisan wrote: Wed Jan 19, 2022 7:43 pm
Marseille07 wrote: Wed Jan 19, 2022 7:42 pm
AnnetteLouisan wrote: Wed Jan 19, 2022 7:37 pm I’m not going to do $200k tomorrow - or 20k a month - although I see your reasoning, but just out of curiosity, is that even allowed? To do that online in a Fidelity account in one day? There are no safeguards built in to protect someone from themselves? I mean obviously one would have to fund it, but no one would step and say, “hey grandma, how’s it going? Everything ok?”

I’m over the income and net worth limits for an accredited investor but what if I weren’t? My grandkid could come over and “help” me invest my life savings in Tesla in a single day?
Imo if you struggle to invest 20K/mo for 10 months, 30/70 is probably too aggressive. And that's OK, people have different levels of risk tolerance.
Well, 30/70 is a target. My thought was to mosey on toward it gradually.
As SnowBog said, the standard here is to lump sum. DCAing over 6~12 months is on the slower side, but it is acceptable if it makes you feel comfortable.

Anything longer isn't recommended because your cash is sitting on the sidelines for too long.

Some people suggest a hybrid approach where you invest 100K tomorrow then another 100K over 6~12 months.
SnowBog
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

Marseille07 wrote: Wed Jan 19, 2022 7:28 pm
AnnetteLouisan wrote: Wed Jan 19, 2022 7:18 pm Wow, if I ever get to the point where I’m comfortable investing 20k a month… I’ll really know I’m not in Kansas anymore. This place continues to expand my view of what is possible. 🤯🤯 Which of course is why I’m here, making an effort to learn.
That's the math though. I mean...if you see upthread, SnowBog is actually suggesting lump sum, i.e. 200K all at once tomorrow. 20K/mo is actually on the slower side, but an acceptable pace for DCAing.
For clarity, my lump sum comment was on whatever balance remains of the $10,500 sitting in Roth to be invested. Of which, $3,500 has been sitting there in cash since the account was funded late last year.

I believe OP has already decided to go 100% in the Roth with FSKAX. So it's simply a matter of pulling the trigger.

Frankly, I'd be happy for them regardless of what trigger they pull, be it lump sum or DCA (ideally with a scheduled investment so they don't forget, delay, etc. further).

But I'm 100% supportive of your general recommendation to set a schedule, no longer than by end of year, to DCA the rest of whatever investments are required to reach AA. If they aren't comfortable doing that, then they need to rethink their AA.
AnnetteLouisan wrote: Wed Jan 19, 2022 7:18 pm Wow, if I ever get to the point where I’m comfortable investing 20k a month…
Respectfully, while I understand, I think you are looking at this wrong... This isn't about "investing $20k a month"...

If your target AA is 30/70, then you take the steps necessary to get to your target AA. And you should do so ASAP. If it takes you years to get to your AA, then your AA wasn't set correctly. Ultimately, if you aren't comfortable - or comfortable yet - at 30/70, then be honest with yourself (and us).

If you are comfortable with 30/70, but you'd rather DCA, then set a time line to get there. Personally I think 6 - 12 months is a reasonable time frame. The rest is simple math and execution. If you have $200k in cash that needs to be invested to reach your AA, and you do so over 10 months, then yep that's $20k/month. But that's not permanent, you aren't going to do that going forward. That's simply your one-time path to get to your AA.

Going forward, you'll likely maintain your AA via how you invest future money. Assuming stocks grow quicker than bonds, with a 30/70 AA the bulk of future investments will stay in fixed income. (My AA is 60/40, but my bonds get far more than 40% of "new money" to keep up.)
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

So you’re saying it’s really just repositioning the funds more advantageously in a sense, not entirely like investing. Just moving things I already own into a better framework.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

AnnetteLouisan wrote: Wed Jan 19, 2022 9:05 pm So you’re saying it’s really just repositioning the funds more advantageously in a sense, not entirely like investing. Just moving things I already own into a better framework.
Exactly!

And to expand...

If 30/70 is the right AA for you, and these are long term investments, and you believe that over the long term the market will go up (even if it's a bumpy ride along the way), then there is no cheaper time than right now to buy.

Sure, we could have a crash tomorrow, or next month, or in a year... But no one can predict when, how big, etc. And in the long term, the crash will be a blip anyway. You are investing for the future.
Last edited by SnowBog on Wed Jan 19, 2022 9:10 pm, edited 1 time in total.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

My brother calls investing similar to adjusting the sails on a big Spanish galleon. The more sails you have out, the more wind you catch… he has no qualms about investing and got started in 2009.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

AnnetteLouisan wrote: Wed Jan 19, 2022 9:10 pm My brother calls investing similar to adjusting the sails on a big Spanish galleon. The more sails you have out, the more wind you catch… he has no qualms about investing and got started in 2009.
Not sure what to do with this...

If he's using low cost index funds, I'd agree with him. By owning the entire market, I'm betting on people (and businesses) to do what's in their nature. Over the long term, that's a comfortable place to be. (And why I'm not overly price sensitive for long term investing.)

But if he's picking individual stocks, and the analogy is picking more individual stocks... Well, then I'd be very worried about what happens when the wind stops...
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

About half of what he has are low cost index funds. The rest are individual stocks in well known sectors. No crypto or NFTs. He does pretty well with it.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Just got my trade confirmation from Fidelity- my order executed at 126.3! Even better than the 127 I thought I was buying at! Kind of nice! My last purchase was at 133.

I get that in the scheme of things price shouldn’t matter much but there is a small satisfaction in getting more fund shares than one would have two weeks ago for the same price. In most other contexts of life price is a critical factor.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

AnnetteLouisan wrote: Thu Jan 20, 2022 6:41 am ... there is a small satisfaction in getting more fund shares than one would have two weeks ago for the same price. In most other contexts of life price is a critical factor.
It's always nice to buy at a lower price!

But over time, it's more likely waiting will result in a higher price far more often that a lower price. (This is why mathematically lump sum typically comes out ahead.)

So the discipline of investing as the money is available is the default way of buying at the lowest price possible (on average, over the long term).
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Got it! Makes total sense. Thank you.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by clip651 »

AnnetteLouisan wrote: Wed Jan 19, 2022 7:43 pm
Well, 30/70 is a target. My thought was to mosey on toward it gradually.
I agree with the points SnowBog has been making.

It might be helpful to regularly track what your current asset allocation actually is.

For example, what is you actual AA right now? (% stocks/bonds/cash)

If the market didn't move in six months (we know it will, but since we don't know which way or how much, pretend for a moment that it won't), what will your AA be if you follow your current plan, including 401k contributions, IRA, more cash accumulating, etc?

Basically, take a look at where you really are now, and how long your plan will take you to mosey gradually to 30/70. I haven't been following your posts closely enough to do the math, but I suspect you are nowhere near 30/70 yet and your moseying will take you quite a while to get close to it. (Though if the market increases a bunch, that may help you get closer a little bit faster.) That's OK if slowly is really what you want, but be sure you've run the math to know how slowly (or quickly) you are actually moseying towards your target.

best wishes,
cj
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

It depends how you calculate it. Very generally if you just count my 401k I’m at around 23/77percent going to 30/70, not so bad. I readjusted my future allocation to 30/70.

If you also include my bank cash, ibonds and IRA (ie, total portfolio), I’m at around 15/85. This will become “worse” as the year goes on (absent a major crash) since cash is still “accumulating” (being earned, although perhaps not in the salt mines) and my expenditures are minimal.

I’m going to post on 2/2 with complete 1/31 numbers and new 2022 projected total comp to set the course. I’ve been busy this month maxing my ibonds and my IRA, now investing the IRA, developing nerves of steel w the volatility and getting more familiar with the fidelity website.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

CurlyDave wrote: Wed Jan 19, 2022 11:23 am
AnnetteLouisan wrote: Tue Jan 18, 2022 9:14 pm
...At 55, coming from kinda maybe close to poverty for US standards (which is likely where my optimism deficiency comes from), with maybe 5 more salary earning years if I’m lucky...I only have $1.86 million to my name, 1/3 of which is in my house, plus a tiny pension and SS, neither guaranteed. I thought 1.86 million was freaking amazing but yikes no it isn’t...
Only? ONLY !!??? :oops:

https://dqydj.com/average-median-top-n ... centiles/

Look at the link. Not the best one, just the first one I could find. Coming from close to poverty to solidly in the 90+ percentile of household wealth as a single person is a very solid accomplishment.

Could it be better, of course it could -- we all can do better. But the fact that you got to where you are and are going to do better in the future is a great success story.

Find those same net worth brackets for the entire world instead of the US and you are in the 99th percentile.

The people on this board are self-selected "Prodigious Accumulators of Wealth", a tough group to compare your accomplishments against.
Thanks for this. Meant to say that earlier. Thanks for the supportiveness.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by retire2022 »

AnnetteLouisan wrote: Tue Jan 18, 2022 9:14 pm I’m not challenging the philosophy, just explaining where Im coming from. I get that I’m wrong, and I expect with time I’ll feel more comfortable. I’ve made a LOT of positive changes this year and market timing seems like the last balustrade or whatever. That and maybe cash back cards. I earned 36k in my 401k this year because you all stopped me from selling my equity stake.

At 55, coming from kinda maybe close to poverty for US standards (which is likely where my optimism deficiency comes from), with maybe 5 more salary earning years if I’m lucky, and having pretty much wrecked my first 40 years by being too conservative, and really not having anything else to a certainty as a Plan B, I’d be destroyed financially and emotionally if I lump summed my cash into total market (which Morningstar rates as a fairly high risk investment) and it went down on a prolonged basis. I turned so many needy friends away at the door in 2001 and 2008 - it was awful and I’ll never forget them.

I always look at the 5 year performance charts to get some perspective on the price trajectory. And in light of its history, I think FSKAX is more likely to go down from here than up for various reasons, including geopolitical risks. I don’t mind losing the $500 or so gains by delaying. I did put 3500 into FSKAX in autumn 2021 and it’s down so far. I’m more concerned about staying financially comfortable and preserving what I’ve earned so far.

I described the fear to my brother as being like standing on top of Niagara Falls, about to throw money down. I could lose it… don’t want to lose it. I get that I am losing to inflation. I hedge against the likelihood of being wrong, so I will lump sum some amount in soon, if only to test it.

I only have $1.86 million to my name, 1/3 of which is in my house, plus a tiny pension and SS, neither guaranteed. I thought 1.86 million was freaking amazing but yikes no it isn’t, I’ve learned. Plus yes I want to brag at cocktail parties if I ever attend one again that I bought the dip [OT comment removed by admin LadyGeek].
You win some and you loose some, buy and sell more "Random Walk" heads or tails will come, your time in the market will work in your favor ascending market.

You are upper middle class professional, don't get hung up on loses it is a mind set you need to learn to shift.

Crash- glass half full? or future discount?
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by Marseille07 »

AnnetteLouisan wrote: Thu Jan 20, 2022 1:07 pm It depends how you calculate it. Very generally if you just count my 401k I’m at around 23/77percent going to 30/70, not so bad. I readjusted my future allocation to 30/70.

If you also include my bank cash, ibonds and IRA (ie, total portfolio), I’m at around 15/85. This will become “worse” as the year goes on (absent a major crash) since cash is still “accumulating” (being earned, although perhaps not in the salt mines) and my expenditures are minimal.

I’m going to post on 2/2 with complete 1/31 numbers and new 2022 projected total comp to set the course. I’ve been busy this month maxing my ibonds and my IRA, now investing the IRA, developing nerves of steel w the volatility and getting more familiar with the fidelity website.
All financial assets should be included. 15/85 is your current AA based on what you're saying.

If 15/85 is getting "worse," we see that the pace of your DCA isn't fast enough. SnowBog and I mentioned 20K/mo; this isn't a joke, this is the kind of pace we're really talking about.
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AnnetteLouisan
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Investing $20,000 in a single month seemed quite unrealistic to me until I realized that I’ve already invested $18,500 this month alone so far (actually over 20k if you count my 401k!):

2022 $10k into ibonds
2022 $7k Roth - into a Fidelity core fund awaiting further investment into FSKAX
1.5k from my 2021 Roth IRA into FSKAX

Naturally this is bond heavy (making things “worse” from an AA perspective) but on 2/2 it will be good to see my 1/31 specific numbers. Maybe there will be a little positive news in those numbers to give me more confidence about bolder steps ahead.

I do have practice now with the ibonds and IRA investing around 10k per month. So perhaps it’s achievable after all…
SnowBog
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

+1 With the assumption that your AA should be 30/70. [Your AA is your entire investment portfolio, which is made up of whatever parts that includes with however they are invested.]

And again, it's not "investing $20k a month" (or similar) as much as it is "I need to transfer these funds from my right pocket to my left pocket to make sure the weight is distributed as I want".

You aren't going to get to an AA of 30/70 with a starting point of 15/85 with $1.8M, with the 85% growing ever bigger, by going slowly...
Marseille07
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by Marseille07 »

SnowBog wrote: Thu Jan 20, 2022 2:56 pm +1 With the assumption that your AA should be 30/70. [Your AA is your entire investment portfolio, which is made up of whatever parts that includes with however they are invested.]

And again, it's not "investing $20k a month" (or similar) as much as it is "I need to transfer these funds from my right pocket to my left pocket to make sure the weight is distributed as I want".

You aren't going to get to an AA of 30/70 with a starting point of 15/85 with $1.8M, with the 85% growing ever bigger, by going slowly...
I'm sensing the OP needs to evaluate their ability, need or willingness to take risk. I struggle to see all 3 checkboxes checked.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

To OP's credit, especially if you've followed this thread, and some of their other ones, they are at the start of a journey.

I think they've been rationale, thoughtful, and disciplined in figuring out how to start on that journey. IIRC they even acknowledged earlier that it was going to take some changes on their side to get to an AA of 30/70.

But assuming that OP is now:
  • Comfortable with their 30/70 AA
  • Confident in their fund selection and placement (such as FSKAX in Roth)
  • Ideally, has created an Investor Policy Statement, so they are clear about their own goals, objectives, etc.
Then it's time to "execute the plan".

For myself, when I found BH a few years ago, my first steps were really scary. Ignoring employer stock and a few random purchases, I'd never "invested" before in taxable, accepted the "default" option in my 401k, had no clue I could even have a Roth account (let alone years of Mega Backdoor Roth I missed), didn't know what an AA was, or why bonds might be helpful (or frankly what the heck a bond was), and a great many other gaps. I full on admit I was financially illiterate at the time.

So I get it...

Again, to their credit, with their high savings (high income + exceeding low spending especially for NYC), using basically nothing but "cash", having amassed something like $1.2M (ignoring the house value) is extraordinary!

They've been losing money due to inflation, and having to work extra hard to earn/save more. Now it's time to let some of that money do the hard work! Get some invested, let it do its job and start enjoying the wonders of compound inflation interest!

I get the sense that with a little encouragement, we'll help AnnetteLouisan go from baby steps to full speed on their path to a better financial outlook. But those initial few steps are the hardest...
Last edited by SnowBog on Thu Jan 20, 2022 4:42 pm, edited 1 time in total.
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AnnetteLouisan
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

retired@50 wrote: Wed Jan 19, 2022 7:40 pm
AnnetteLouisan wrote: Wed Jan 19, 2022 7:37 pm I’m not going to do $200k tomorrow - or 20k a month - although I see your reasoning, but just out of curiosity, is that even allowed? To do that online in a Fidelity account in one day? There are no safeguards built in to protect someone from themselves? I mean obviously one would have to fund it, but no one would step and say, “hey grandma, how’s it going? Everything ok?”
Of course it's allowed. I've moved over $500,000 in a single day for my father in law at Vanguard. It's your money after all.

Regards,
This is like one of those music videos with stacks of hundreds getting tossed around. 😅
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

SnowBog wrote: Thu Jan 20, 2022 4:33 pm To OP's credit, especially if you've followed this thread, and some of their other ones, they are at the start of a journey.

I think they've been rationale, thoughtful, and disciplined in figuring out how to start on that journey. IIRC they even acknowledged earlier that it was going to take some changes on their side to get to an AA of 30/70.

But assuming that OP is now:
  • Comfortable with their 30/70 AA
  • Confident in their fund selection and placement (such as FSKAX in Roth)
  • Ideally, has created an Investor Policy Statement, so they are clear about their own goals, objectives, etc.
Then it's time to "execute the plan".

For myself, when I found BH a few years ago, my first steps were really scary. Ignoring employer stock and a few random purchases, I'd never "invested" before in taxable, accepted the "default" option in my 401k, had no clue I could even have a Roth account (let alone years of Mega Backdoor Roth I missed), didn't know what an AA was, or why bonds might be helpful (or frankly what the heck a bond was), and a great many other gaps. I full on admit I was financially illiterate at the time.

So I get it...

Again, to their credit, with their high savings (high income + exceeding low spending especially for NYC), using basically nothing but "cash", having amassed something like $1.2M (ignoring the house value) is extraordinary!

They've been losing money due to inflation, and having to work extra hard to earn/save more. Now it's time to let some of that money do the hard work! Get some invested, let it do its job and start enjoying the wonders of compound inflation!

I get the sense that with a little encouragement, we'll help AnnetteLouisan go from baby steps to full speed on their path to a better financial outlook. But those initial few steps are the hardest...
Indeed, Snowbog! So well said.

And my IPS is further up in the thread but will be updated.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by retire2022 »

AnnetteLouisan wrote: Thu Jan 20, 2022 4:33 pm
retired@50 wrote: Wed Jan 19, 2022 7:40 pm
AnnetteLouisan wrote: Wed Jan 19, 2022 7:37 pm I’m not going to do $200k tomorrow - or 20k a month - although I see your reasoning, but just out of curiosity, is that even allowed? To do that online in a Fidelity account in one day? There are no safeguards built in to protect someone from themselves? I mean obviously one would have to fund it, but no one would step and say, “hey grandma, how’s it going? Everything ok?”
Of course it's allowed. I've moved over $500,000 in a single day for my father in law at Vanguard. It's your money after all.

Regards,
This is like one of those music videos with stacks of hundreds getting tossed around. 😅
I’ve moved 1.7 million last August 2021 and brought on a dip in Sept 2021.

Today’s levels approaching Oct 4, 2021 levels for me.

I may deploy my remaining 100k
clip651
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by clip651 »

SnowBog wrote: Thu Jan 20, 2022 4:33 pm To OP's credit, especially if you've followed this thread, and some of their other ones, they are at the start of a journey.

I think they've been rationale, thoughtful, and disciplined in figuring out how to start on that journey. IIRC they even acknowledged earlier that it was going to take some changes on their side to get to an AA of 30/70.

But assuming that OP is now:
  • Comfortable with their 30/70 AA
  • Confident in their fund selection and placement (such as FSKAX in Roth)
  • Ideally, has created an Investor Policy Statement, so they are clear about their own goals, objectives, etc.
Then it's time to "execute the plan".

For myself, when I found BH a few years ago, my first steps were really scary. Ignoring employer stock and a few random purchases, I'd never "invested" before in taxable, accepted the "default" option in my 401k, had no clue I could even have a Roth account (let alone years of Mega Backdoor Roth I missed), didn't know what an AA was, or why bonds might be helpful (or frankly what the heck a bond was), and a great many other gaps. I full on admit I was financially illiterate at the time.

So I get it...

Again, to their credit, with their high savings (high income + exceeding low spending especially for NYC), using basically nothing but "cash", having amassed something like $1.2M (ignoring the house value) is extraordinary!

They've been losing money due to inflation, and having to work extra hard to earn/save more. Now it's time to let some of that money do the hard work! Get some invested, let it do its job and start enjoying the wonders of compound inflation interest!

I get the sense that with a little encouragement, we'll help AnnetteLouisan go from baby steps to full speed on their path to a better financial outlook. But those initial few steps are the hardest...
I agree with all of the above, well said!
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AnnetteLouisan
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Marseille07 wrote: Thu Jan 20, 2022 3:00 pm
SnowBog wrote: Thu Jan 20, 2022 2:56 pm +1 With the assumption that your AA should be 30/70. [Your AA is your entire investment portfolio, which is made up of whatever parts that includes with however they are invested.]

And again, it's not "investing $20k a month" (or similar) as much as it is "I need to transfer these funds from my right pocket to my left pocket to make sure the weight is distributed as I want".

You aren't going to get to an AA of 30/70 with a starting point of 15/85 with $1.8M, with the 85% growing ever bigger, by going slowly...
I'm sensing the OP needs to evaluate their ability, need or willingness to take risk. I struggle to see all 3 checkboxes checked.
You have a point Marseille07.

Ability to take risk? Yes.
Need? Arguably, yes.
Willingness? Yes, SOME risk. Not a lot though. Problem is there is no way to avoid all risk so 25-30 percent equities helps address inflation and interest rate risk.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by Marseille07 »

AnnetteLouisan wrote: Thu Jan 20, 2022 6:53 pm
Marseille07 wrote: Thu Jan 20, 2022 3:00 pm
SnowBog wrote: Thu Jan 20, 2022 2:56 pm +1 With the assumption that your AA should be 30/70. [Your AA is your entire investment portfolio, which is made up of whatever parts that includes with however they are invested.]

And again, it's not "investing $20k a month" (or similar) as much as it is "I need to transfer these funds from my right pocket to my left pocket to make sure the weight is distributed as I want".

You aren't going to get to an AA of 30/70 with a starting point of 15/85 with $1.8M, with the 85% growing ever bigger, by going slowly...
I'm sensing the OP needs to evaluate their ability, need or willingness to take risk. I struggle to see all 3 checkboxes checked.
You have a point Marseille07.

Ability to take risk? Yes.
Need? Arguably, yes.
Willingness? Yes, SOME risk. Not a lot though. Problem is there is no way to avoid all risk so 25-30 percent equities helps address inflation and interest rate risk.
Let us know if we can help you execute the plan. SnowBog and I presented a 20K/mo idea and we believe this pace is very reasonable.

If the number seems big, you can rephrase it as 5K/week :D
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by muffins14 »

To be concise, and maybe a little too direct, I think you should get over your discomfort with investing 20k per month.

It's just a number, and if you're accumulating cash so fast that you will never even reach a 30/70 portfolio, you may be being a bit too conservative.

Another way of thinking about this is that you believe you are hesitating to "invest" this 200k, but in reality you have already invested it. You've invested it in cash, which so far has lost 6% in purchasing power in the last year, while stocks went up 12%.

I'm not suggesting that the past 1-year performance is the best way to make decisions, or that you should be all in stocks, but if you want to be 30/70 for the long-term, you should be 30/70 today. Delaying is costing you real money in future returns. I like the idea of 100k today, and 100k over 6 months as a conservative approach
Crom laughs at your Four Winds
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by Marseille07 »

muffins14 wrote: Thu Jan 20, 2022 7:29 pm To be concise, and maybe a little too direct, I think you should get over your discomfort with investing 20k per month.

It's just a number, and if you're accumulating cash so fast that you will never even reach a 30/70 portfolio, you may be being a bit too conservative.

Another way of thinking about this is that you believe you are hesitating to "invest" this 200k, but in reality you have already invested it. You've invested it in cash, which so far has lost 6% in purchasing power in the last year, while stocks went up 12%.

I'm not suggesting that the past 1-year performance is the best way to make decisions, or that you should be all in stocks, but if you want to be 30/70 for the long-term, you should be 30/70 today. Delaying is costing you real money in future returns. I like the idea of 100k today, and 100k over 6 months as a conservative approach
This poster brings up a good point. Yes, the cash is already allocated as part of 15/85; basically this whole exercise is rebalancing from 15/85 to 30/70.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

And food for thought... With the recent market drop, we are approaching the prices from Oct. 2021.

This is one of those "glass half full" vs. "glass half empty" moments.

The "glass half empty" side, will be worried that the market will continue to fall (and it very well might), the price is still too high, etc. You'll find reasons to delay investing - what about this geopolitical thing, or this domestic item, or did you hear the news about the new...

The "glass half full" side would be going "wholly cow - this is great - I can invest at Oct. 2021 prices!!!" And you'd jump at the chance to make quick progress towards your target AA, knowing that you rarely get a chance to buy at the price things were 3 months ago...

And to be transparent, for all we know this is the start of a 2-year market downturn, where we'll see prices continue to fall - and you'll hate all of us for "forcing you in the market". We don't know. We never know. One of the Bogleheads principles is "don't time the market" - as that's a fool's game. If you are comfortable with your AA, the markets are going to do what they are going to do. Your job is to let them do what they are going to do! You "stay the course" with the AA you set, do not panic and sell thinking you'll "wait and get back in" - that always ends badly. Consistently, over the long-term, the markets go up. The ride can be bumpy, but they go up. When you buy a total stock market fund - all you care about is where does it end up 10+ years from now when I need the money. The rest is "noise"...
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by AnnetteLouisan »

Oh yeah, no - please don’t worry that I will blame anyone for “forcing” me. I don’t move a literal nickel (or do anything else quite frankly) without 100 percent owning the decision. I totally understand no one can predict where the markets will go.

To the contrary I greatly appreciate everyone’s time, explanations and eagerness to show me the path. I’ll get there eventually.

While we’re on the topic, I placed an order for FSKAX at its then current price of 127 a few days ago and it executed at 126.4, to my benefit. But I assume it could go the other way too, right? Do we just accept the risk of the execution price being higher than when we ordered?
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by retired@50 »

AnnetteLouisan wrote: Thu Jan 20, 2022 8:16 pm Do we just accept the risk of the execution price being higher than when we ordered?
It depends on the order type. Market, limit, etc.

See link: https://www.bogleheads.org/wiki/Order

Edited to add, using mutual funds, the order type isn't relevant as all orders execute at end of day NAV price. You have no choice in this matter. Order types only refer to stocks and ETFs.

Regards,
If liberty means anything at all it means the right to tell people what they do not want to hear. -George Orwell
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

AnnetteLouisan wrote: Thu Jan 20, 2022 8:16 pm Do we just accept the risk of the execution price being higher than when we ordered?
I do (now). The market is what it is.

But when I started "investing" (meaning I picked the fund and executed the order vs. my 401k doing it for me), I was like you. I wanted to buy at a specific price. And I saw my orders not execute... Again, and again. Then I saw the light.

Part of it is I realized the "price" never bothered me when my 401k transaction happened. It was simply investing the new money available at the current price. Why should it be different when I'm investing?
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by muffins14 »

AnnetteLouisan wrote: Thu Jan 20, 2022 8:16 pm Oh yeah, no - please don’t worry that I will blame anyone for “forcing” me. I don’t move a literal nickel (or do anything else quite frankly) without 100 percent owning the decision. I totally understand no one can predict where the markets will go.

To the contrary I greatly appreciate everyone’s time, explanations and eagerness to show me the path. I’ll get there eventually.

While we’re on the topic, I placed an order for FSKAX at its then current price of 127 a few days ago and it executed at 126.4, to my benefit. But I assume it could go the other way too, right? Do we just accept the risk of the execution price being higher than when we ordered?
The price is the price is the price. If you waited a day, maybe you would have saved an extra dollar, or maybe if you waited a day it would have lost you a dollar if stocks rose over night. There are too many moment-to-moment changes, so I just invest whenever I have a moment and don't worry about it.

Usually I invest biweekly, but sometimes I invest a couple days "early" if there's a dip, and let my incoming paycheck replenish the cash that used to be there.
Crom laughs at your Four Winds
clip651
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by clip651 »

AnnetteLouisan wrote: Thu Jan 20, 2022 8:16 pm
While we’re on the topic, I placed an order for FSKAX at its then current price of 127 a few days ago and it executed at 126.4, to my benefit. But I assume it could go the other way too, right? Do we just accept the risk of the execution price being higher than when we ordered?
With mutual funds, there is just one price per day, the end of day NAV. You won't know exactly what it will be when you place your order, since the final value for it is calculated shortly after the markets close for the day. You need to be OK with that when buying or selling mutual funds. If you want, you can get a reasonable estimate of how the mutual fund is doing that day by looking at a corresponding ETF, especially towards the end of the trading day, but really there is no need to do that (unless perhaps you are tax loss harvesting some day in the future, and really need to a good estimate of current price vs your cost basis). And sometimes prices do move up or down in the last few minutes of a trading day, so an estimate can still be off. Everyone buying (or selling) shares of a given mutual fund on a given day gets the same price.

ETF prices vary minute by minute (even second by second) throughout the trading day. There are many possible prices per day, and what moment you pick to place your order can affect your price. And so this is where you need to at least understand market vs. limit orders, etc, and know what you are doing with your order types when you buy or sell ETFs. Some days the market is up a bit for part of the day and then down, or the opposite, etc. So two people are likely to get two different prices for ETF shares bought on the same day, unless they both pick the same moment to buy.

As a non-market timer, I find the one price per day aspect of mutual funds to be quite helpful. There's no need for me to worry about it, the only decision is whether to invest that day or not, so it really simplifies things. And with a mutual fund, I can even put in an order to buy the night before, or on the weekend, or schedule ahead of time for a particular date. If I put in an order while the market is closed, I'll get the closing price for the next day the market is open, or for the date that I've scheduled an automated investment.

I hope that helps!
cj
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by Marseille07 »

You want to craft a plan and stick with it. If 20K/mo seems a lot, then 10K/mo? 5K/mo? Whatever it is, you want to come up with something and follow through. I am not going to get into the exact figure, but can tell you I've deployed more than 20K this month myself.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by retire2022 »

Annette

Warren Buffett once said that it is wise for investors to be “fearful when others are greedy, and greedy when others are fearful.”

https://www.investopedia.com/articles/i ... greedy.asp
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

Marseille07 wrote: Thu Jan 20, 2022 9:40 pm You want to craft a plan and stick with it. If 20K/mo seems a lot, then 10K/mo? 5K/mo? Whatever it is, you want to come up with something and follow through. I am not going to get into the exact figure...
+1000!!!

If the plan is set, move to executive phase!
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by Marseille07 »

SnowBog wrote: Thu Jan 20, 2022 10:32 pm
Marseille07 wrote: Thu Jan 20, 2022 9:40 pm You want to craft a plan and stick with it. If 20K/mo seems a lot, then 10K/mo? 5K/mo? Whatever it is, you want to come up with something and follow through. I am not going to get into the exact figure...
+1000!!!

If the plan is set, move to executive phase!
I don't think the plan is set yet, though I don't know what they're struggling with. We've shown the math and I don't think 20K/mo is crazy.

To put it differently, if they think 20K/mo is too much and can only do 5K/mo, then wherever 5K/mo takes them by the end of 2022 might be their target AA.
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Re: Where Do I Go From Here - Asset Location [2022 Update]

Post by SnowBog »

I was meaning the broader plan... More the "strategy" side of things.

AA - check
$ needed tuition get to AA - check (or close to)
Fund selection - check (or I think so away)

I view "execution" as the mechanics of delivering on the plan. So figuring out the $ and frequency I consider more "execution" things (as they don't change the plan/strategy).

But there is an argument to make that lump sum vs. DCA, and/or different speeds of DCA might be part of the "plan" phase...
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