Am signing docs on financing of on a rental property later in the week. Will be getting a fair bit of cash in hand. I had not really thought about what to do with the money as the project dragged on a lot longer then i expected. What’s people’s recommendations on what to do with the cash? just DCA into an index fund?
Depends when you need the money back. If you need cash in a short while (3-6 months) then it is not available for investment really.
I don’t plan to touch the money any time soon. so at least 1-3 year horizon
Is this a test question? Thought you have decided on index fund long ago.
Yah, just not sure if I should keep adding to it. Plus I always like to check for new information periodically
International markets aren’t nearly as stretched as the US market and, with the credit for foreign taxes paid, yield about 3%. VEU is one. Or, emerging markets also trade at lower multiples and higher yields. Unless you think coronavirus is going to turn all the Asians into zombies.
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For me, DCA into VOO is simple solution.
My neighbor, who does not have any investment knowledge, told me that he got 25% return with mutual fund last year (fidelity managed the investments). VOO is much better and higher than this.
My relative, again no investment expert, earned 35%-38% from FDGRX. we may not even get such returns normally.
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To achieve reasonable return with moderate risk, it is recommended to diversify investment portfolio through a combination of low-cost index funds or ETFs, REITs or rental properties, bonds, small businesses, peer-to-peer lending platforms and using a robo-advisor. Research, risk understanding and diversification are crucial.
Do we need to be so complicated? Historical return of S&P index is 7-11% with zero effort after setup. No need for robo-advisor and research.
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Diversification is a key aspect of investing to achieve reasonable returns with moderate risk. Relying solely on one investment vehicle such as the S&P index exposes the portfolio to market fluctuations and potential loss. By investing in a combination of different assets, such as low-cost index funds or ETFs, REITs or rental properties, bonds, small businesses, peer-to-peer lending platforms, and using a robo-advisor, an individual can create a portfolio that is better able to weather market downturns and take advantage of various investment opportunities.
In conclusion, diversification is not complicated, it is a way to simplify your investment strategy and achieve reasonable returns with moderate risk.
S&P is a fairly diversified portfolio of 500 stocks.
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Oh yeah, that makes sense.
Not only that but over 40% of its earnings come from abroad. Recessions lower the value of the dollar thereby increasing foreign earnings in dollar terms. So you do get good diversification with just the S&P and if you can ignore fluctuations there should be minimal risk of loss in the medium to long term. If one is worried about a sustained, systemic global collapse one should allocate 5 or 10% to gold. A sustained, systemic collapse would take out everything else including the value of cash. It’s the sort of thing one only worries about when all other worries have been dealt with.
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