I want to invest 600K cash, which I am planning to invest in next 2 years with below strategy: Invest 600K in fidelity, which automatically puts it in SPAXX money market fund, returning 5% a year Create an automatic investment plan to invest 6k every week in FXAIX and FSKAX (US total market and 500 index) till June 2025. In India, it’s called STP-SIP combo and I got decent returns in the past with this strategy. Please suggest if it’s a dumb move or it looks a good plan to you? TC: 400K self, 100K spouse; Expenses: 150K including rent
Why not Real estate?
Just put everything in at once in the funds instead of money market. You’ll be on the dividend gains from day 1 for full amount which you can reinvest and compound further. There have been some study that said if you have money to invest then put all in at the same time instead of DCA. It always beats DCA.
What's DCA? What if the market goes down further after I invest? Putting all the money together is similar to buying a house. You never know if the price will go down in coming months and need to have the long term mentality
SIP in india is called DCA here - Dollar Cost Averaging. Time in the market > Timing the market. Your fear of market going down is just as irrational as other half blind saying market is going to 10x from here. You think you’re acting rationally by DCAing but you’re not. If you don’t need the money for next 20-30 years then go all in and forget. The 5% interest rates are not permanent. But ultimately, you do what you think is best for you.
Just lump sum it all today and start collecting dividends even on index funds 2 percent of 600k adds up. Total market already includes SP500 so why overweight it? Keep it simple. Get some international stocks. Do anywhere between 60/40 and 80/20 depending on how bullish you are on US continued dominance.
I am 95% on FSKAX and 5% on bonds, international funds etc.
Stock market is overvalued based on pretty much any indicator. Bonds and money markets pay pretty well atm so why put everything to stocks? Split 50/50 to stocks/fixed income securities.
Good plan, if market goes down then you have cash as cushion plus 5% yield as long it is and DCA at lower price. If market goes up, then you will miss gains but some can be offset by 5% yield. Overall good mix of risk/reward.
Few suggestions - 1. Us total market and 500 is not so different, just pick us total market. 2. DCA for 6 months. 3. Pick VTI vs fidelity fund, or have different fund between retirement and brokerage accounts.
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Are you going to help him get an allocation?
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How did you get $600K?
Equity after selling my old house