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Thoughts on investing bonuses / lump sums of cash
Posted: Mon May 02, 2022 11:56 am
by legalpotato
Know this isn't exactly timely given when bonuses were paid out, but it has been busy.
How are you investing your bonuses or other lump sums of cash? Normally I dollar-cost avg into ETFs, but given inflation I'm not really interested in having a bunch of cash sit around while I DCA. But also given volatility, not really wanting to dump it into equities all at once when we may be at a peak. CDs are absolute garbage right now. Other thoughts??
It goes w/out saying that nothing on here is or should be taken as any sort of investment advice. Just curious what other folks are doing.
Re: Thoughts on investing bonuses / lump sums of cash
Posted: Mon May 02, 2022 12:18 pm
by Wanderingdrock
The correct answer is to invest it all at once. Set it and forget it.
That said... I DCA. I'm getting senior enough that the bonuses are a large enough chunk of cash that I'm just not comfortable buying all at once. If I had that kind of risk tolerance, I'd not have gone to law school.
Edit to add: The correct answer is still to invest in equities.
Re: Thoughts on investing bonuses / lump sums of cash
Posted: Mon May 02, 2022 12:21 pm
by LittleRedCorvette
legalpotato wrote: ↑Mon May 02, 2022 11:56 am
Know this isn't exactly timely given when bonuses were paid out, but it has been busy.
How are you investing your bonuses or other lump sums of cash? Normally I dollar-cost avg into ETFs, but given inflation I'm not really interested in having a bunch of cash sit around while I DCA. But also given volatility, not really wanting to dump it into equities all at once when we may be at a peak. CDs are absolute garbage right now. Other thoughts??
It goes w/out saying that nothing on here is or should be taken as any sort of investment advice. Just curious what other folks are doing.
Same as every year -- I put it in ETFs. I don't DCA though, I just dump it all in. If I was smart enough to time the markets or predict valleys and peaks, no way in hell I'd be grinding through merger agreements all day.
Re: Thoughts on investing bonuses / lump sums of cash
Posted: Mon May 02, 2022 12:33 pm
by Anonymous User
viewtopic.php?f=23&t=311855
Vast majority put it in right away. Many who followed that advice this year might be turned off, but TITCR and continues to be.
ETFs all the way unless you're older than your average biglaw associate. I'm not going to worry about diversifying asset classes until I'm in my late 40s.
Re: Thoughts on investing bonuses / lump sums of cash
Posted: Mon May 02, 2022 7:55 pm
by Anonymous User
Somewhat related, but with ETF investing: when do people actually want to retire? I'm looking at my portfolio and I'm thinking about retiring after having put in about 10 years or so (or if I can't get there, just do it for 7 years or so and then do something else that pays reasonable well for 5-6 more years) and then retire in a LCOL country. I wouldn't be much older than 40 then. But apparently people are seeing themselves slugging away in biglaw into their 50s?
Re: Thoughts on investing bonuses / lump sums of cash
Posted: Mon May 02, 2022 8:25 pm
by LittleRedCorvette
Anonymous User wrote: ↑Mon May 02, 2022 7:55 pm
Somewhat related, but with ETF investing: when do people actually want to retire? I'm looking at my portfolio and I'm thinking about retiring after having put in about 10 years or so (or if I can't get there, just do it for 7 years or so and then do something else that pays reasonable well for 5-6 more years) and then retire in a LCOL country. I wouldn't be much older than 40 then. But apparently people are seeing themselves slugging away in biglaw into their 50s?
I figure I'll be working regardless, so I plan on doing the biglaw thing and stacking cash as long as I can tolerate it, then choosing a job based more on interest than $. Where is LCOL these days, and what's your target $ for retirement? You'll need enough for...50+ years?
Re: Thoughts on investing bonuses / lump sums of cash
Posted: Mon May 02, 2022 10:47 pm
by Wanderingdrock
Anonymous User wrote: ↑Mon May 02, 2022 7:55 pm
Somewhat related, but with ETF investing: when do people actually want to retire? I'm looking at my portfolio and I'm thinking about retiring after having put in about 10 years or so (or if I can't get there, just do it for 7 years or so and then do something else that pays reasonable well for 5-6 more years) and then retire in a LCOL country. I wouldn't be much older than 40 then. But apparently people are seeing themselves slugging away in biglaw into their 50s?
I'm not sure, but it sounds kinda like you're suggesting early retirement is incompatible with ETF investing? I mean this with respect, but that is simply not the case. Anybody looking to have a long retirement is going to want a healthy portion of their net worth sitting in ETFs, which are the safest way to get healthy longterm growth. Even if you're super conservative and load up on years worth of cash, a bond ladder, whatever, you still want to be in a position to top that up in a rebalance every so often.
Re: Thoughts on investing bonuses / lump sums of cash
Posted: Mon May 02, 2022 10:53 pm
by Anonymous User
legalpotato wrote: ↑Mon May 02, 2022 11:56 am
Know this isn't exactly timely given when bonuses were paid out, but it has been busy.
How are you investing your bonuses or other lump sums of cash? Normally I dollar-cost avg into ETFs, but given inflation I'm not really interested in having a bunch of cash sit around while I DCA. But also given volatility, not really wanting to dump it into equities all at once when we may be at a peak. CDs are absolute garbage right now. Other thoughts??
It goes w/out saying that nothing on here is or should be taken as any sort of investment advice. Just curious what other folks are doing.
Lump sum historically offers better returns but DCA provides better psychological effects. Assuming you have enough $$ to survive if shit hits the fan (where you don’t have to sell at a huge loss to get liquidity), I usually buy a big chunk of an ETF initially (70-80% of bonus) and then DCA as things get interesting. No rhyme or reason to this.