Investing Question

[DeereClone]

It seems that financial/investing threads have become popular on here lately so I will just add to the fun!

I am looking for an efficient place to park some short to mid-term money (probably 3-5 years) and I am struggling putting money into mutual funds when the stock market is at an all-time high. Should I just "man-up" and be putting money in, or store up cash to really invest if the market breaks lower?

With long-term money I just keep socking it away with no problems, I know that will see some ups and downs. With shorter term money I just get a little more nervous.

Any advice out there?

 

[clone4life82]

It seems that financial/investing threads have become popular on here lately so I will just add to the fun!

I am looking for an efficient place to park some short to mid-term money (probably 3-5 years) and I am struggling putting money into mutual funds when the stock market is at an all-time high. Should I just "man-up" and be putting money in, or store up cash to really invest if the market breaks lower?

With long-term money I just keep socking it away with no problems, I know that will see some ups and downs. With shorter term money I just get a little more nervous.

Any advice out there?

Good question, I'm probably in the same boat as you so will be looking forward to the answers.

 

[JY07]

Just do it man

the mindset of not investing with it being at an all time high would have kept you out for the past 3 years

*edit*: you should probably average in if you're really worried about the small dips here and there

 

[erikbj]

Well with where interest rates are and where the market is, its a tough question. If you can tell me where the markets are going to be in 3 years, I would like to offer you a job at my firm!!!

I would recommend you chat with a financial advisor.

 

[CyCy]

If you are looking for income over a 3-5 year period, you could look at preferred stocks. PFF is an ETF of preferred stocks that pays a 6.5% dividend. Not much upside and could lose some value if interest rates rise, but the dividend cushions some of that.

 

[Incyte]

Probably depends on what you plan to use the money for. Would a substantial loss stop you from doing something (starring retirement, buying a house, etc) or do you just not want to risk a loss?

 

[BigLame]

Also - if you have any debt, pay that off with these funds. Then, any money you were using to service that debt, apply that cash flow to dollar-cost averaging into 'investments'. Don't know if this fits your time component well though (probably not).

If you do not have debt to pay off & have a lump sum, then it's trickier & the ideas being presented seem ok - but it would be best for a financial advisor who knows your entire financial picture to provide the best advice.

 

[MBCyclones]

Read Jim Paulsen's latest commentary. I think the market still has some time to run. He thinks IT stocks. There is a few funds out there to choose from. High dividend funds with large companies are good if you're worried about a dip. You won't get much price appreciation with those however. Simple risk reward concept.

https://www.wellscap.com/docs/emp/20140613.pdf

 

[nfrine]

Here's the only sure-fire strategy....

 

[DeereClone]

Thanks for the replies, I appreciate it.

 

[Cyclonepride]

Also - if you have any debt, pay that off with these funds. Then, any money you were using to service that debt, apply that cash flow to dollar-cost averaging into 'investments'. Don't know if this fits your time component well though (probably not).

If you do not have debt to pay off & have a lump sum, then it's trickier & the ideas being presented seem ok - but it would be best for a financial advisor who knows your entire financial picture to provide the best advice.

I like this one. If the Fed raises interest rates today, the stock market is heading south in the short term.

 

[dmclone]

I have different theories that work for my comfort level.

#1 Retirement money
I know it's for the long haul so I stick with the same kind of mix. Roughly 50% S&P 500, 25% International, and 25% other.

#2 Car replacement/Vacation money
I don't want car payments so I always save for the next one. I also use this for vacations. I would be sad if I lost this money but it wouldn't be devastating. 100% company stock that I get a 15% discount.

#3 Emergency fund
I have about 6 months worth of wages. Not invested and losing value because of inflation. When the stock market tanked in 2008 I put about 25% of this money into investments but last year I took it back out. Also have had it in TIPS at one point and it worked out well for me. Probably need to do more research on what to do with this money so that I'm earning at least a few percent.

 

[JP4CY]

If you are looking for income over a 3-5 year period, you could look at preferred stocks.

I would never invest in cologne. With possibility of another "conflict" in Iraq, I would buy numerous barrels of gasoline and store them in your basement.

 

[Bobber]

I keep a big cash balance that basically makes nothing....No real good alternatives out there as this thread is showing....

 

[NickTheGreat]

Here's the only sure-fire strategy....

THIS. One will still need toilet paper even if the dollar tanks

 

[Bestaluckcy]

I am not a financial adviser but I will pass along the thoughts from a newsletter that I subscribe to. First of all in a mid term election year like this one there is a high probability of a stock market correction. Usually 8% or more selloff. If it were to come to pass, the author's thoughts are that it will present an excellent buying opportunity. Just because it has happened in several previous years does not mean it will happen this year. As far as money outside the stock market their recommendation is one of two choices; First if you can not stand to lose any money, buy a ladder of FDIC insured CD's. Otherwise consider putting the money in short duration bond mutual funds and substitute credit risk for interest rate risk to enhance the return. A couple of funds in this category would not be limited to the following: DLSNX 1.34% yld and 1.01 duration, FFRHX 3.11% yld and .29 duration, MWLDX 1.16% yld and 1.12 duration, OSTIX 2.64% yld. and 1.96 duration. Their thoughts are that the economy will keep improving and interest rates will move closer to historical yields (higher rates sometime down the road).

Just some more market noise from your peanut gallery. As always caveat emptor and good luck.

 

[CyFan61]

If you know you don't need the money for 5 years, consider a CD; on Bankrate you can get a 5-year at 2.30% APY. That's not great but the guaranteed return part definitely is. More peace of mind and you can better prepare for what to do with the money at the end of the term when you know the exact dollar amount that it will be

 

[capitalcityguy]

This is the allocation strategy I follow and have been very pleased so far. I took $60K out of a "high interest (cough, cough) savings account and invested per Kiplinger's recommendations.

http://www.kiplinger.com/tool/inves...-finder/index.php?portfolio_select=Kip25Short

 

[DollaDollaBill]

My checking account gets like 3% on balances up to 35k. Over that, the rates step down but it's better than CD rates

 

[CascadeClone]

Another option is to split it up. Put some in a short term CD or saving account making squat, and put some in a relatively lower risk stock fund. You are basically attenuating the market that way.

This is what I do with the kids' 529s. When they were little, all in stocks. As they got older, moved some into cash. Then a little more into cash. Still leave a little in stock though, even when they are in school.

Just remember not to overthink things. What is the money for? What is my goal? What will achieve that goal? If sticking it in cash making squat will achieve your goal, then... don't overthink it.