| Author |
Message
|
| Gilgamesh |
 Posted: Wed Aug 09, 2006 7:38 am Post subject: What to do with cash in a balanced portfolio? |
 |
|
Investing Associate
Joined: 03 Aug 2006
Posts: 38
This Month: 0
Location: IL
3620.43 e$
Net worth: 10,800.83
Portfolio Value: 7,180.40
Monthly Return: -12.04%
Trades this month: 0
Churn Rate: 0.00%Items
|
I am cashing out of a life insurance policy that will be giving me around 25k extra to work with above and beyond all fees, taxes, what I am keeping out for fixed income just to keep balance etc.
I have a portfolio, right now I am not doing individual stocks only mutuals and bonds (I am working towards normal investing, thats why I am here. When I go into stocks again, I want to be in control and not rely on an advisor who has much bigger clients to watch out for, so for the short term i am looking for options.). I have a Fully funded 401k, have other life insurance, no debt to pay off etc.
Where do I put the money?
Keep with mutual funds? Market is expected to slow, is now the time to be putting more money in mutuals?
Index funds? if theres an expected downturn it seems a bad move.
REIT's? No experiance with them, but sound interesting. Also getting mixed reviews on them since the bubble is collapsing, but still sounds like theres profit to take.
Short term CD's and in 6 months re-evaluate?
Other Ideas? |
|
| Back to top |
|
 |
| geb9696 |
| Posted: Wed Aug 09, 2006 7:55 am Post subject: |
|
|
Investing VP
|
| I would go with short-term CD and then re-evalute in 6 months. And while you are waiting that 6 months I would read The Intelligent Investor by Benjamin Graham. |
|
| Back to top |
|
|
| rykarde |
| Posted: Wed Aug 09, 2006 9:35 am Post subject: |
|
|
Investing Sr. Associate
|
| Short term CD would be a good idea. Catch a little bit of interest then be able to work on a plan. |
|
| Back to top |
|
|
| Im Not Warren Buffett |
| Posted: Wed Aug 09, 2006 10:20 am Post subject: |
|
|
CFO
|
It depends how you want to allocate that money. If you already have a large amount in stock/bond funds, you might want to keep a larger amount of that money in cash. With the run up on interest rates, you can consider "cash" a decent position right now, and if you ladder some CDs you can probably get 4.5-5% from that while still keeping your savings fairly liquid. Some 6 month $25,000 CD rates from bankrate.com had an APY over 5.5%.
Like I said, what types of investments you want to allocate your money into will obviously play a huge role in determining how you handle things. Any additional information might help us help you.  |
|
| Back to top |
|
|
| Gilgamesh |
| Posted: Wed Aug 09, 2006 10:58 am Post subject: |
|
|
Investing Associate
Joined: 03 Aug 2006
Posts: 38
This Month: 0
Location: IL
3620.43 e$
Net worth: 10,800.83
Portfolio Value: 7,180.40
Monthly Return: -12.04%
Trades this month: 0
Churn Rate: 0.00%Items
|
Theres the issue, Not sure where to go in this market, I am doing a lot of reading but lack broad experiance. If I was more comfortable with my abilities, I'd go ahead and move into the market and manage for the risk. My issue right now is that I don't have the skills to manage for that risk reliably (hence being in mutuals since I can't rely on my Merrill broker to give me timely advice on individal stocks).
as far as cash requirements go, my paycheck amply covers all needs and I tend to invest on top of the 10% taken out for a 401k. Leaving it in cash, while an option, is also lower yielding and since I can buy and sell out of bonds or purchase CD's through my broker its probably wiser to go that route and still be near cash.
Right now, I am heavy on the mutuals including being overweight on internationals for the past couple of years. I am willing to take calculated risks and have no issue in taking a long view on a position. While this is a major chunk of money for me, it is a minority of my assets.
What more do you wish to know?
At some point I wil be opening an online brokerage account, but I am not in a rush on that. |
|
| Back to top |
|
|
| pkc63 |
| Posted: Thu Aug 10, 2006 3:27 am Post subject: Investment Plan |
|
|
New Poster
Joined: 07 Aug 2006
Posts: 5
This Month: 0
12777.06 e$
Net worth: 12,777.06
Portfolio Value: 0.00
Monthly Return: 0.00%
Trades this month: 0
Churn Rate: 0.00%Items
|
You need to establish a long-term investment plan. For retirement investing, I only recommend mutual funds. I think you need to start there, then if you have other shorter term goals or you wish to trade stocks, that should be separte.
For a long-term retirement plan, you need to first establish an asset allocation (AA) to stocks/bonds/cash and stay with it. Your AA will determine 70-90% of the risk you take. Once established, you need to understand allocation to asset classes and the big impact of costs. If this money will be in a taxable account, you have to be careful in selecting only tax-efficient funds. I'm saying this about the AA because if you had a plan, then you would know exactly where the new cash should go. Your plan needs to cover both your 401k and other accounts in total.
So, like some other replies, I suggest you keep the money in cash for now, even a money market, and do a little more learing. If you knew where you where going to invest, you could park the money there in a MM acct and then move into funds when your overall plan was developed.
I suggest these two books for covering the fundamentals for mutual fund investing:
"The Bogleheads' Guide to Investing" by Larimore, Lindaur and LeBoeuf
"The Four Pillars of Investing" by William Bernstein.
You might find them at your library.
Paul |
|
| Back to top |
|
|
| Gilgamesh |
| Posted: Thu Aug 10, 2006 5:16 am Post subject: |
|
|
Investing Associate
Joined: 03 Aug 2006
Posts: 38
This Month: 0
Location: IL
3620.43 e$
Net worth: 10,800.83
Portfolio Value: 7,180.40
Monthly Return: -12.04%
Trades this month: 0
Churn Rate: 0.00%Items
|
hmm, I guess I wasn't explicitly clear enough on that I do have a basic plan and it does take into account your points. However, the way things are looking has caused me to re-evaluate implementing it at this time and has given me an oppertunity to make some changes in where I am putting the money. If i simply followed it blindly as you suggest, that would be simple, But perhaps not wise.
I haven't looked at some of the other options out there in the past because I had been going the mutual funds, but now seemed a good idea to expand my horizons which is why I was asking in the first place. |
|
| Back to top |
|
|
| pkc63 |
| Posted: Thu Aug 10, 2006 4:13 pm Post subject: |
|
|
New Poster
Joined: 07 Aug 2006
Posts: 5
This Month: 0
12777.06 e$
Net worth: 12,777.06
Portfolio Value: 0.00
Monthly Return: 0.00%
Trades this month: 0
Churn Rate: 0.00%Items
|
Hello again,
I think my last reply did address your concerns. Here are the tipoffs.
| Quote: | | I have a portfolio, right now I am not doing individual stocks only mutuals and bonds (I am working towards normal investing, thats why I am here. |
It sounded like you were interested in normal investing with funds.
| Quote: | Where do I put the money?
Keep with mutual funds? Market is expected to slow, is now the time to be putting more money in mutuals?
Index funds? if theres an expected downturn it seems a bad move.
REIT's? No experiance with them, but sound interesting. Also getting mixed reviews on them since the bubble is collapsing, but still sounds like theres profit to take.
Short term CD's and in 6 months re-evaluate?
|
This kind of indecision really says you do not have a set investing strategy.
| Quote: | | Theres the issue, Not sure where to go in this market, I am doing a lot of reading but lack broad experiance. If I was more comfortable with my abilities, |
| Quote: | | that I do have a basic plan and it does take into account your points. However, the way things are looking has caused me to re-evaluate implementing it at this time |
Again, this indicates you really do not have a strategy. If you did, it would clearly define your objective and how you are going to get there. The only point I'm trying to make here is to continue learning fundamentals. The books I suggested are very good.
regards,
Paul |
|
| Back to top |
|
|
| Gilgamesh |
| Posted: Thu Aug 10, 2006 4:57 pm Post subject: |
|
|
Investing Associate
Joined: 03 Aug 2006
Posts: 38
This Month: 0
Location: IL
3620.43 e$
Net worth: 10,800.83
Portfolio Value: 7,180.40
Monthly Return: -12.04%
Trades this month: 0
Churn Rate: 0.00%Items
|
| We are going in circles in a pointless debate on sematics and circular logic. If it makes you happy, fine, right now I have no stratagy since I am unsure if my old ideas were as sound as they should be since they were built in ignorance. Thank you for the input. |
|
| Back to top |
|
|
| pkc63 |
| Posted: Fri Aug 11, 2006 8:14 am Post subject: |
|
|
New Poster
Joined: 07 Aug 2006
Posts: 5
This Month: 0
12777.06 e$
Net worth: 12,777.06
Portfolio Value: 0.00
Monthly Return: 0.00%
Trades this month: 0
Churn Rate: 0.00%Items
|
Gil,
I apologize if you find my suggestion of no value. I was simply trying to help you replace your admitted ignorance with knowledge. With knowledge comes clarity and the ability to formulate a solid plan and make good decisions.
Good luck to you,
regards,
Paul |
|
| Back to top |
|
|
|
|
 |
| yandig |
| Posted: Fri Aug 11, 2006 8:28 am Post subject: |
|
|
Investing Manager
|
It sounds like you are willing to wait a bit before putting anything into stocks. That is good.
Since you seem to value the liquidity of this money, I highly suggest putting the funds into CDs. If you want, take a small amount ( < $2,000) and start your online brokerage account. Test the waters for a few months. Then you will get an idea of what stocks you want to put your $ into, and how risk averse you really are.
I also suggest avoiding mutual funds for now. it sounds like you have a nice security base with your 401k etc...Investing in funds will just add to that base.
It seems like you are ready to be a little more risky with these funds. Getting into individual stocks is always a risk, and you are at a disadvantage if you don't understand as much about the market as the next guy.
I hope these suggestions help a bit, and good luck with your investing.
- Scott |
|
| Back to top |
|
|
|
|
stock market game on the web. At eInvesting you compete for monthly cash prizes while you interact, make virtual dollars, purchase items, and trade in the realistic stock market simulator. We make investing FUN!
