Investing 50K+ in US (suggestions for a DCA strategy)

woodsong · Post by **woodsong** » Thu May 10, 2007 8:25 pm

Hi all,

I have cash sitting around (approx 50K) and although I have been reading about index funds, asset allocation for the last couple of years, I have kept the money in a high yield savings account instead of dollar cost avging it into a set of index funds (the laziest strategy that one go for).

Now I feel uncomfortable investing a lump sum in the market given that every broad market (US, Europe, Asia) have had such good runups over the last few years.

#1) One option is to can start DCAing now but that would mean it would take a few years for me to invest the money in the market, but at the same time I would probably be able to sleep well and be able to take advantage of the dips in the market.

#2) The other option is not to enter the market at all (the one that my wife prefers :-( )is to buy another house and rent out the one we have. But I am not comfortable with it given the high one time cost of this option (something like buying a funds with an entry load), but at at the same time it looks like a stabler than investing the lumpsum in equities/bonds and RE seems to be appreciating even now where I live, but dont know for how long :-(

Any other suggestions for #1) if I dont choose #2) inspite of the heavy pressure from my wife :-)

Added to #1)

I want to r2i in about 5 years (USC) (which also makes me consider #2 sometimes) so I think I would need to start putting some money into the indian market as well.. If I sound confused - I am ..but I am working on coming with a plan and implementing it.

WS

Jaggudada · Post by **Jaggudada** » Thu May 10, 2007 9:10 pm

When you say rent the house, have you considered the maintenance costs? or you were thinking about low maintenance condos etc.

futureR2I · Post by **futureR2I** » Thu May 10, 2007 11:20 pm

MeraNaseebR2I;23891JD

I did not hear you say - we both want to R2I in 5 years! Anyways, just giving you a hard time.

---

I had asked a similar question several months back with 250K. Came from exercising a few options that were expiring.

25% goes to buying two small apartments in Mumbai - I plan to refinish the interiors and then let it out.

Hope this helps

25 % of 250 K is 62.5 K which is equivalent to about 25 lakhs. Given the recent run up in real estate in India, how can you buy one apartment, let alone buying 2.

RRK · Post by **RRK** » Thu May 10, 2007 11:55 pm

[QUOTE]Now I feel uncomfortable investing a lump sum in the market given that every broad market (US, Europe, Asia) have had such good runups over the last few years.

This is exactly what one should avoid. Otherwise you will end up "buying high sell low."

Usually investors are happy to invest at market top and sell at market bottom. No incentive or encouragement is required.

OP,
you should read on asset allocations and plan carefully. Start with what you want to do with this money, how long, how much you can afford to lose etc.,

There are several pointers available in this forum for beginning to plan AAP.

anandr2i · Post by **anandr2i** » Fri May 11, 2007 1:23 am

woodsong;23876Hi all,

I have cash sitting around (approx 50K) and although I have been reading about index funds, asset allocation for the last couple of years, I have kept the money in a high yield savings account instead of dollar cost avging it into a set of index funds (the laziest strategy that one go for).

Now I feel uncomfortable investing a lump sum in the market given that every broad market (US, Europe, Asia) have had such good runups over the last few years.

#1) One option is to can start DCAing now but that would mean it would take a few years for me to invest the money in the market, but at the same time I would probably be able to sleep well and be able to take advantage of the dips in the market.

#2) The other option is not to enter the market at all (the one that my wife prefers :-( )is to buy another house and rent out the one we have. But I am not comfortable with it given the high one time cost of this option (something like buying a funds with an entry load), but at at the same time it looks like a stabler than investing the lumpsum in equities/bonds and RE seems to be appreciating even now where I live, but dont know for how long :-(

Any other suggestions for #1) if I dont choose #2) inspite of the heavy pressure from my wife :-)

Added to #1)

I want to r2i in about 5 years (USC) (which also makes me consider #2 sometimes) so I think I would need to start putting some money into the indian market as well.. If I sound confused - I am ..but I am working on coming with a plan and implementing it.

WS[/quote]

WS:

I am in the same boat as you (R2I in 5-6 yrs and have cash sitting in the bank) have already posted something on these lines

http://www.r2iclubforums.com/clubvb/showthread.php?t=1432

If you cant go to this url check on messages by "anandr2i" and look for all threads started by me.

nand · Post by **nand** » Tue May 15, 2007 12:14 pm

DCA it in equal monthly installments over the next 5 years. On an average a 5 yr cycle includes a good part of an economic cycle. there is no one easy right answer to this though.