Quandary about investing to VTSAX/VTIAX

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Topic Author
catscot
Posts: 5
Joined: Mon Oct 12, 2020 2:08 pm

Quandary about investing to VTSAX/VTIAX

Post by catscot »

Hello,
I appreciated the advice I received from my initial post about investing unexpected almost $800,000 pension last October 2020.
I have close to $700,000 in VTSAX and close to $200,000in VTIAX. And about $14000 in Tesla.
I still have about $620,000 in money market. I did have total bond market but sold as I was frustrated of constantly losing money.
The question I have been ruminating is the following:
My spouse and I hope to relocate to central California after COVID is less threatening(both now vaccinated) hopefully within 1 yr. Being mindful of stock market unpredictability, I have felt comfortable with the current portfolio.
Being almost 65 yo(yikes) and my spouse is a energetic 72 yo... should I invest more money or maintain the current portfolio to make purchasing a new place easier? I am still a neophyte with investing ....and I appreciate any feedback it all. Helps build my small knowledge base. Thanks so much...catscot. Posting from my I Pad.
dbr
Posts: 46181
Joined: Sun Mar 04, 2007 8:50 am

Re: Quandary about investing to VTSAX/VTIAX

Post by dbr »

If you are planning to need most of $600k to buy your new place soon, it should most definitely stay exactly where it is.

If that $620,000 goes for a house, you might well think about taking less risk in stocks and put more money back in bonds. How will it affect you when the stock market loses 10%, 20%, 30% . . . ?
Scooter57
Posts: 2019
Joined: Thu Jan 24, 2013 8:20 am

Re: Quandary about investing to VTSAX/VTIAX

Post by Scooter57 »

Before you do anything, especially taking advice from strangers you know nothing about, I suggest you spend more time learning about investment by reading books and posts in discussion groups holding differing viewpoints, learning from people defending contrasting theories.

Move slowly when you start to deploy your savings. Don't let fear of missing out on gains push you into experiencing regret at jeopardizing what you had.

Many people giving advice are trying to talk themselves into believing that the choices they made were correct. Many follow gurus without understanding what they are actually buying when they invest.

With the way the market has behaved since 2009, anyone with a lot of stock looks like an investing genius. But that tells us very little about the future.

If you have enough now to retire comfortably, don't get greedy. Figure out where strangers are coming from, as individuals, when considering their advice, and err on the side of preserving what you are fortunate to have Retirement is much different from investing in your 30s or 40s when you have a very highly paid job, which describes many people writing advice here.
Last edited by Scooter57 on Mon Apr 19, 2021 7:21 pm, edited 1 time in total.
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ofcmetz
Posts: 2465
Joined: Tue Feb 08, 2011 7:09 pm
Location: Louisiana

Re: Quandary about investing to VTSAX/VTIAX

Post by ofcmetz »

I would learn more about asset allocation and then pick one that you can live with. Whatever you pick won't be perfect but if it's good enough then that's ok. An example of an asset allocation would be: 40% US stock funds, 20% International stock funds, 40% fixed income (cash, bonds, bond funds, CD's). This is just an example. Remember, stocks can move up and down quickly in value, so you don't want to keep money there that you plan on needing soon.

Some questions to ask are:

How much do I plan to spend each year out of my investments? Are some of my investments needed for spending this year or next? How liquid do I want to be? (you don't want to have to sell stock funds when they are down). How would I feel or react if my stock funds dropped 50% in value and then stayed there?

Yields on bond funds are just plain terrible right now which really lowers the opportunity costs of holding a lot of cash in a money market fund.
Never underestimate the power of the force of low cost index funds.
txhill
Posts: 628
Joined: Tue Mar 16, 2021 12:27 pm

Re: Quandary about investing to VTSAX/VTIAX

Post by txhill »

If you will need cash for a down payment in 1 year, you should keep it in cash. It hurts to let it sit idly by, but it doesn't sound like you have much of a choice. Anything beyond what you'll need for the down payment / closing costs, you should deploy. I personally think your VTSAX/VTIAX approach (without VBTLX) is perfectly wise, although most others here would recommend a bond fund even in today's rate environment, especially given your risk profile based on your age. Most people increase bond holdings as a percentage of their portfolio the older they get--and it's a strategy that has worked well for many decades so I might be a fool to suggest otherwise.
Topic Author
catscot
Posts: 5
Joined: Mon Oct 12, 2020 2:08 pm

Re: Quandary about investing to VTSAX/VTIAX

Post by catscot »

Thanks for the feedback to my post... We own a home already,but like others may need to consider a bridge loan and take advantage of tIRA 60 day roll over rule. With the bridge loan I then can buy wee bit peace of mind to return the IRA monies and pay off the loan. I appreciate the collective wisdom of this blog,have been studying various Bogle Books and articles....but the stock market is a mysterious labyrinth difficult to always comphrend. I am not doing any WSB,or more complicated transactions.
Again thanks for the feedback...catscot
TheDDC
Posts: 1612
Joined: Mon Jan 08, 2018 10:11 am

Re: Quandary about investing to VTSAX/VTIAX

Post by TheDDC »

txhill wrote: Mon Apr 19, 2021 8:34 am If you will need cash for a down payment in 1 year, you should keep it in cash. It hurts to let it sit idly by, but it doesn't sound like you have much of a choice. Anything beyond what you'll need for the down payment / closing costs, you should deploy. I personally think your VTSAX/VTIAX approach (without VBTLX) is perfectly wise, although most others here would recommend a bond fund even in today's rate environment, especially given your risk profile based on your age. Most people increase bond holdings as a percentage of their portfolio the older they get--and it's a strategy that has worked well for many decades so I might be a fool to suggest otherwise.
I would not recommend a bond fund, especially in today's rate environment. BND is a return killer.

The "AA method as a proportion of age" is useless advice as we are living longer anyway, and there is a need to keep juicing the returns longer as a result. If invested at 100/0, stay invested at 100/0 in retirement.

-TheDDC
Rules to wealth building: 75-80% VTSAX piled high and deep, 20-25% VTIAX, 0% given away to banks.
mikejuss
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Joined: Tue Jun 23, 2020 1:36 pm

Re: Quandary about investing to VTSAX/VTIAX

Post by mikejuss »

You really should own some bonds (or something bond-like in stability); otherwise, you're really gambling with your retirement, which could be cut in half in the blink of an eye.
50% VTSAX | 25% VTIAX | 25% VBTLX (retirement), 25% VTEAX (taxable)
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