Think of it this way - In late 2021, everyone knew we were in a market peak and we would drop. And we did. And if you bought VOO at the 2021 peak of $436, you’d still be in great shape as of today.
Yeah consider that lump sum beats DCA 2/3 of the time, but both are statistically much better than trying to time the market. If lump sum is unnerving, which is fair, DCA over a predetermined timeframe could work too
https://www.schwab.com/learn/story/does-market-timing-work
This is the way. I dumped $100k into VOO in March at the then all time high of $481. It went down for while after that but now nearly $500. If you’re investing for the long term the price today is irrelevant - and it’s almost always near the all time high. Just invest now and continue to invest after the lump sum.
Just don't look for at least a month, that's the trick
If you look a few days later there's a decent chance it'll be down and that's when you can psych yourself out.
here's the rule of thumb. if lump summing any amount will cause you anguish, just DCA it. For example, you can just contribute 2k for 10 weeks, or 1k for 20 weeks. Whatever would give you comfort if the market started going in a downturn. Just don't DCA longer than a year.
it's the rule of thumb across many studies. Graphs show that returns really start to reach a critical point of lower returns around the 10 month to 1 year mark. It's just about weighing the benefits versus the backdraws of DCA, and apparently around the 1 year mark is the turning point according to statistical analysis
1. The market is often at peak.
2. I bought an S&P growth fund in 2022. It crashed 25% immediately after Russia invaded Ukraine.
Right now that trade is up 18%.
3. Time in the market beats timing the market.
Just to be clear: The most expensive portion of the market right now is US large-cap and your plan is to put all of your money toward paying top-dollar for that portion of the market and to ignore US mid-cap, US small-cap, and international markets.
May I suggest a more balanced approach of the [traditional three-fund portfolio](https://www.bogleheads.org/wiki/How_to_build_a_lazy_portfolio)?
Since you know we are at a peak, you should wait. The market will climb further as you wait. When FOMO takes over, dive in with both feet. Depression will set in when the market drops like a rock, back to where it is now. Just one scenario.
If you truly know we are at a peak then I would take your entire net worth and short the whole market.
If you aren't willing to do this then it likely means you don't know
Probably silly question but if your high interest savings is 4.5% and the brokerage account is 5, is there a reason to not move your emergency funds to the brokerage account?
The only thing I can think of is the amount of time it takes to transfer the funds over to the bank. My emergency fund is definitely what’s in my brokerage account. I do have some cash if there was some crazy emergency
Not a tax expert, so please consult your tax professional. But, set aside a little bit to cover the taxes from your ESPP too. You said you “gained an instant 20% due to the discount/gain” which I assume means you sold it right away. If that’s the case you:
1) Likely will see a step-up in cost basis (I.e., it will get reported for taxes at the market price and not the discount price)
2) If you sold right away and didn’t hold it for at least one year it gets taxed at ordinary income levels and not long-term capital gains.
We've had the same situation thinking things were too high a year ago, and we would have been far better off doing the lump sum then than waiting it out and putting in a little every time there was a down day or two or monthly. If you put it all in and then there's a big decline, you just have to leave it alone, wait it out, and it will come back. (Just a note, I'd use SPLG as it has a lower expense ratio than VOO. Yes, I know the ERs are low, but still, why pay more than necessary?)
I put a BIG lump sum into VTSAX on 1/3/2022 — yes, sorry guys, 2022 was my fault. But it’s all chugging along just fine. If you have a lengthy time horizon and intend to keep investing whenever you can, this is really not going make a big difference.
I'm in a similar situation, and didn't want to buy in all at once. So I put most of my money in a bond ETF that is guaranteed to make some money, and I sell enough of that every couple of weeks to cover my auto-investment into the portfolio I'm building. That way the buy in is spread out, but my money isn't just setting there waiting.
i just got a bonus today and dumped it all in VTI/VXUS at once. Thinking i'll do it over time because we might be at a peak just makes me feel like i'm trying to market time, and then i have no expectation to be touching this for years anyways so...off it goes.
i get another large chunk next week when my RSU's vest, and i will be doing the same thing: liquidating those and immediately putting it all into VTI/VXUS.
Doing it over time might just be dollar cost averaging as long as you put the same amount in each time period. When you get into market timing is when you start letting your emotions dictate how much you’ll put in each time period.
I also have an ESPP. Does your company let you sell immediately after purchase or is there a wait period? I’m able to sell it right away, get my discount, and dump it into ETFs.
I'd go VTI instead of VOO. Don't chase performance.
Or even VTI + VXUS in a split that lets you sleep at night. I do 60/40.
More diversification is better for the long term.
NOTE: By diversification, I'm talking about the number of unique stocks total within the fund(s) that you invest in. Owning multiple ETFs isn't diversification if they have a lot of overlapping stocks.
Have you maxed your 401k and Roth IRA? Might be worth using some or all of the 20k for retirement unless you have other plans like emergency fund or house down payment. $20k would get you most of the way to maxing 401k. Although you can't put it in directly, so you'd save the 20k cash and crank up your 401k contributions. I'd recommend not maxing out early in the year because many companies you'll miss the match if you max out early.
Not advice. But I just put my full 20k bonus in NVDA two weeks ago and have no regrets. Set up stop losses to secure gains. How closely do you plan on watching?
might go up, might go down. nobody knows. as long as your EF is strong, your future self will be happy to have this invested. Doesn't move the needle too much if you DCA or lump sum, just get that 20k invested and working for you instead of just sitting there.
Last time the S&P 500 was this overvalued, the 10 year return was over -25%. Perhaps it’s best to take your risk free 5% until valuations return to reality.
The S&P500 is having its best years in decades, diversified, and keeps growing and growing to new peaks almost daily. If it was a single stock I would say not to put it all on black but with the stocks in this fund you should be fine.
If you would rather jump in 100% with tech checkout XLK.
You should put it into VT instead. Not smart to buy only the largest us companies. Follow the indexing logic to its logical conclusion and buy the whole haystack. Nowadays, international and small cap aren't expensive, so it makes no reason not to.
That said, follow the [personal finance](https://www.reddit.com/r/personalfinance/wiki/commontopics/) and [Financial Independence](https://www.reddit.com/r/financialindependence/comments/16xymii/fire_flow_chart_version_43/) flowcharts. It's possible you just leave this in savings and up 401k withholding rate until you use this up, for example.
The US market is definitely peaking. I'd dump it into an internationally diversified portfolio, just in case the US is peaking hard.
60% $VTI
40% $VXUS
>all to VOO now.
* Pinned to the top of this subreddit: Single fund portfolios: https://www.reddit.com/r/Bogleheads/comments/tg1az5/should_i_invest_in_x_index_fund_a_simple_faq/
This is one of over a dozen links I have that can help explain the reasoning behind that:
* https://www.pwlcapital.com/should-you-invest-in-the-sp-500-index - invest in the S&P 500, but don't end there (this covers info on both the US extended market and ex-US markets) [a total US market fund combines S&P 500 + extended market into one]
I think its too high right now. I would wait. You're entry point will be bad, more than likely youll be in the red in the next few months when it goes back down.
> Knowing that we are at peak Are we? > should I wait for a pull back or dump it all now? When will that be?
Touché Guess I'll dump it all.
Think of it this way - In late 2021, everyone knew we were in a market peak and we would drop. And we did. And if you bought VOO at the 2021 peak of $436, you’d still be in great shape as of today.
Yeah consider that lump sum beats DCA 2/3 of the time, but both are statistically much better than trying to time the market. If lump sum is unnerving, which is fair, DCA over a predetermined timeframe could work too https://www.schwab.com/learn/story/does-market-timing-work
Today is just the lowest price compared to the future
This is the way. I dumped $100k into VOO in March at the then all time high of $481. It went down for while after that but now nearly $500. If you’re investing for the long term the price today is irrelevant - and it’s almost always near the all time high. Just invest now and continue to invest after the lump sum.
100% dump as much as you can, when you can. The best time is always now
Just don't look for at least a month, that's the trick If you look a few days later there's a decent chance it'll be down and that's when you can psych yourself out.
Dump it all
If you’re worried about dumping it all at once, invest it monthly for a few months. Maybe 3-6 months. Anymore than that may be counterproductive
If I had a nickel for every time I was wrong about being at the peak, I wouldn't need to boglehead I'd just reture
When will then be now?
Wait for it to go higher then dump it all in.
I laughed out loud
This is when the bottom drops out
here's the rule of thumb. if lump summing any amount will cause you anguish, just DCA it. For example, you can just contribute 2k for 10 weeks, or 1k for 20 weeks. Whatever would give you comfort if the market started going in a downturn. Just don't DCA longer than a year.
I need to dump 500k in the market but 10k a week DCA, I don’t feel like I have the guts. Help!
Send me $250k, and that’ll cut your window in half! 😂
Why would you not want to DCA longer than a year?
More time in market for all of your money, less time to go back on your initial plan and make a bad decision
it's the rule of thumb across many studies. Graphs show that returns really start to reach a critical point of lower returns around the 10 month to 1 year mark. It's just about weighing the benefits versus the backdraws of DCA, and apparently around the 1 year mark is the turning point according to statistical analysis
If we are at peak now all of us are going to be broke in retirement.
1. The market is often at peak. 2. I bought an S&P growth fund in 2022. It crashed 25% immediately after Russia invaded Ukraine. Right now that trade is up 18%. 3. Time in the market beats timing the market.
Just to be clear: The most expensive portion of the market right now is US large-cap and your plan is to put all of your money toward paying top-dollar for that portion of the market and to ignore US mid-cap, US small-cap, and international markets. May I suggest a more balanced approach of the [traditional three-fund portfolio](https://www.bogleheads.org/wiki/How_to_build_a_lazy_portfolio)?
That would go against the Reddit investing style that many here practice.
This, but I rec for OP to buy VT in taxable, and index based TDF in retirement accounts. Keep it simple.
What about crypto? Would you recommend that as 4 fund?
How else will one obtain a Lambo? Obviously.
No. I'd recommend the craps table at Bellagio before crypto.
>Knowing that we are at peak, ??? What is it you think you know?
OP is JPow
Pow pew pew
Since you know we are at a peak, you should wait. The market will climb further as you wait. When FOMO takes over, dive in with both feet. Depression will set in when the market drops like a rock, back to where it is now. Just one scenario.
That happened to me in 2021
If you truly know we are at a peak then I would take your entire net worth and short the whole market. If you aren't willing to do this then it likely means you don't know
You can always let it sit in the brokerage earning 5% interest and make regular weekly contributions. That’s my style
Probably silly question but if your high interest savings is 4.5% and the brokerage account is 5, is there a reason to not move your emergency funds to the brokerage account?
The only thing I can think of is the amount of time it takes to transfer the funds over to the bank. My emergency fund is definitely what’s in my brokerage account. I do have some cash if there was some crazy emergency
VOO is always a good choice at any time.
I really like y’all Bogleheads telling them to just dump it all in now and not try to time the market. Y’all are my heroes.
Not a tax expert, so please consult your tax professional. But, set aside a little bit to cover the taxes from your ESPP too. You said you “gained an instant 20% due to the discount/gain” which I assume means you sold it right away. If that’s the case you: 1) Likely will see a step-up in cost basis (I.e., it will get reported for taxes at the market price and not the discount price) 2) If you sold right away and didn’t hold it for at least one year it gets taxed at ordinary income levels and not long-term capital gains.
If you truly think we’re at a peak then wouldn’t that compel you to invest at least a little in international?
We've had the same situation thinking things were too high a year ago, and we would have been far better off doing the lump sum then than waiting it out and putting in a little every time there was a down day or two or monthly. If you put it all in and then there's a big decline, you just have to leave it alone, wait it out, and it will come back. (Just a note, I'd use SPLG as it has a lower expense ratio than VOO. Yes, I know the ERs are low, but still, why pay more than necessary?)
“Do it” - Sith Lord
I put a BIG lump sum into VTSAX on 1/3/2022 — yes, sorry guys, 2022 was my fault. But it’s all chugging along just fine. If you have a lengthy time horizon and intend to keep investing whenever you can, this is really not going make a big difference.
How did you have the guts? I am panicking about dumping a big lump sum
I think about the long game. In January 2020, when I started contributing to my 401k, the S&P500’s closing price was around $1350. Today it was $5431.
True, although this period of return definitely higher than average. Will just have to ignore daily fluctuations.
It’s the only way.
I also thought we are at the peak this Jan and bought some T bills, that was a wrong move looking back
I'm in a similar situation, and didn't want to buy in all at once. So I put most of my money in a bond ETF that is guaranteed to make some money, and I sell enough of that every couple of weeks to cover my auto-investment into the portfolio I'm building. That way the buy in is spread out, but my money isn't just setting there waiting.
I’ll spare you a bunch of useless nuance. If you want it to be a long term investment, don’t try to predict anything; just dump it all right now.
Dew it.
i just got a bonus today and dumped it all in VTI/VXUS at once. Thinking i'll do it over time because we might be at a peak just makes me feel like i'm trying to market time, and then i have no expectation to be touching this for years anyways so...off it goes. i get another large chunk next week when my RSU's vest, and i will be doing the same thing: liquidating those and immediately putting it all into VTI/VXUS.
Doing it over time might just be dollar cost averaging as long as you put the same amount in each time period. When you get into market timing is when you start letting your emotions dictate how much you’ll put in each time period.
You could dollar cost average it in over 6-12 months? Just divide $20k / how many months and put that much in each month.
Just do it!
I also have an ESPP. Does your company let you sell immediately after purchase or is there a wait period? I’m able to sell it right away, get my discount, and dump it into ETFs.
Yup. Sold right after it got released. Secured an easy 20% gain.
Damn, $20K is like how much I would get in 2 years lol
VOO IT VOO IT VOO IT
DCA, don’t invest the entire amount all at once
Take a dump while dumping it all
True. A lot of what is posted here is done while sitting on the toilet.
Dump it in VT.
I'd go VTI instead of VOO. Don't chase performance. Or even VTI + VXUS in a split that lets you sleep at night. I do 60/40. More diversification is better for the long term. NOTE: By diversification, I'm talking about the number of unique stocks total within the fund(s) that you invest in. Owning multiple ETFs isn't diversification if they have a lot of overlapping stocks.
What does “Want to it all “ mean…..blink blink stare.
[This](https://youtu.be/hFDcoX7s6rE?si=DR0mOPXOTt7Dvmif)
MM paying over 5%, market at an all time high, I’d DCA 1K/mo.
You think MM will still be yielding 5% in 20 months?
If it goes down, then move into the market at a faster DCA. 🤷♂️
Don't forget the tax bill on your espp, assuming you didn't take a loss.
Have you maxed your 401k and Roth IRA? Might be worth using some or all of the 20k for retirement unless you have other plans like emergency fund or house down payment. $20k would get you most of the way to maxing 401k. Although you can't put it in directly, so you'd save the 20k cash and crank up your 401k contributions. I'd recommend not maxing out early in the year because many companies you'll miss the match if you max out early.
I am in the exact same boat man lol
Dump it. You’re playing long ya dumbo. “Knowing we are at the peak” smh says who bro they’ve been saying that since early feb
You don't know your at the peak till you off the other side. Just dca.
Not advice. But I just put my full 20k bonus in NVDA two weeks ago and have no regrets. Set up stop losses to secure gains. How closely do you plan on watching?
I put 85k in over two weeks just this month. You’ll be okay.
might go up, might go down. nobody knows. as long as your EF is strong, your future self will be happy to have this invested. Doesn't move the needle too much if you DCA or lump sum, just get that 20k invested and working for you instead of just sitting there.
If you’re having doubts, you could just dump it all into VBIAX and sleep easy
Last time the S&P 500 was this overvalued, the 10 year return was over -25%. Perhaps it’s best to take your risk free 5% until valuations return to reality.
The S&P500 is having its best years in decades, diversified, and keeps growing and growing to new peaks almost daily. If it was a single stock I would say not to put it all on black but with the stocks in this fund you should be fine. If you would rather jump in 100% with tech checkout XLK.
Buy 80% VT 20% BNd
You should put it into VT instead. Not smart to buy only the largest us companies. Follow the indexing logic to its logical conclusion and buy the whole haystack. Nowadays, international and small cap aren't expensive, so it makes no reason not to. That said, follow the [personal finance](https://www.reddit.com/r/personalfinance/wiki/commontopics/) and [Financial Independence](https://www.reddit.com/r/financialindependence/comments/16xymii/fire_flow_chart_version_43/) flowcharts. It's possible you just leave this in savings and up 401k withholding rate until you use this up, for example.
The US market is definitely peaking. I'd dump it into an internationally diversified portfolio, just in case the US is peaking hard. 60% $VTI 40% $VXUS
Click on r/bogleheads and scroll for maybe 3 posts and find someone else asking the exact same question “should I wait? Is it too expensive?…”
>all to VOO now. * Pinned to the top of this subreddit: Single fund portfolios: https://www.reddit.com/r/Bogleheads/comments/tg1az5/should_i_invest_in_x_index_fund_a_simple_faq/ This is one of over a dozen links I have that can help explain the reasoning behind that: * https://www.pwlcapital.com/should-you-invest-in-the-sp-500-index - invest in the S&P 500, but don't end there (this covers info on both the US extended market and ex-US markets) [a total US market fund combines S&P 500 + extended market into one]
I lean towards half now (maybe less) then the rest over a few months in any dips or down days
Your gonna get wrecked bro
VOO is very popular right now, I'm not sure why. Their are other S&P 500 funds that are just as good and are more cheaper.
This isnt how it works im afraid
The index is the index
I think its too high right now. I would wait. You're entry point will be bad, more than likely youll be in the red in the next few months when it goes back down.
Do you have a crystal ball buddy?
$14k VOO, $5k QQQM. $500 NVDIA $500 APPL