I recently paid of my mortgage and am trying to figure out how to handle the $2k a month that I used to but into it. One thought I had, which I posted about on the morningstar forums, is to take some of the money and DCA it into the most volatile, best-prospect fund I could find and just let it go. I was trying to come up with some ideas for that. This would be in a taxable account, so POAGX, one thought I had, is out and PRNHX, another goody, is closed. Any ideas?
At $24k a year in all, this would not be, at the start, be a major part of my portfolio, less than 3%. Given that, what would you do in my shoes, either with a part or with the whole?
edit: Actually, I just saw that I can buy PRNHX at Vanguard ... so that is a possibility.
Comments
http://www.marketwatch.com/story/almost-no-one-can-beat-the-market-2013-10-25?siteid=nwhfunds
I am not an accountant; but it is my understanding that you may have both a SEP and Roth IRA. Income levels could disallow a Roth IRA; and as noted previous, a Roth would not cover all of your available monies.
Note: a "spousal" Roth could receive some of this money, too.
Beyond the above, I won't offer any allocation thoughts; as you have already established an aggressive position with this money.
This link is for aggressive allocation funds.
Based upon the information provided, I think this puts principal value of the portfolio at about 840K. With this, what is the portfolio’s asset allocation? What is its target allocation? What goal(s) are you looking to achieve? What is your age? If close to or retired … Do you have ample cash accrued for several years of living expense? What is your risk tolerance?
These are some questions that came to me in thinking out what I’d do with an extra $2,000.00 a month. Perhaps in visiting these above questions, and some others, this will help you determine whether you should be a saver, an investor or perhaps even a trader with this money.
Something to think through … Don’t you think?
Good Investing,
Skeeter
I'm a big saver and am currently able to sock away about 30% of my annual income.
I plan to DCA at least half of the 2k a month into my moderate allocation funds. But I would like to maybe try something a little different with a bit of it.
What do ya'll think?
Well, you can be somewhat conservative with it and split it across your portfolio based upon your present asset allocation if it fits your risk tolerance. I believe though in the current investment environment I’d put it to work on a dollar cost average basis if doing this. Or, if you feel you want to become a more aggressive investor/trader you might wish to incorporate a self directed trading strategy within your portfolio and manage it yourself. I, at times, do this myself.
I have linked some sites below that you might find of interest.
Ron Rowland, I believe to be a former fund manager, offers a timing strategy which I have linked below.
http://investwithanedge.com/leadership-strategy
In addition, there is a timing strategy offered by the Decision Moose which I have also linked.
http://decisionmoose.com/Moosistory.html
Or, you may wish to venture out on your own and school up on technical analysis.
http://en.wikipedia.org/wiki/Technical_analysis
Whichever route (savings, investing or trading), or a combination thereof, you choose to transverse, I wish you the very best with these endeavors. It is your money and you sould hold yourself accountable with your choices and not others by making suggestions for you to consider. What might be right for them might not be for you. With that, you should do your own due diligence on any suggestion offered before investing any money. After all, I am just an investor much as most of the others on the board. And with this, I'd govern with some caution.
Again, I wish you the very best.
Skeeter
It's somewhat difficult to make sense out of the embedded cap gains, since many (most?) funds will have large distributions this year that may reduce those figures significantly. In any case, I wouldn't start investing until they have their annual cap gains distributions.
That said, I did a quick search for funds with moderate to low (under 75%) turnover, five year tax cost ratios under 1% and three year under 0.75%, and cap gains exposure under 50% (which is still huge). I threw in expenses under category average, and excluded bond funds. (That latter one, when one excludes muni bonds, kicks out a lot of funds.)
Keep in mind that this screen automatically excludes funds under five years old.
Next, you wanted something with high volatility - I added a three year standard deviation over 15 (based on the funds you suggested).
To prune further, I added the following screens:
- drop the bottom 10% (1* funds - past bad performance has persistence, even if past good performance does not)
- drop sector funds, single nation funds (China, Japan)
- dropped leveraged funds (Direxion, ProFunds Ultra/Inverse, Direxion 2X, Rydex 2X - these showed up as Trading-Leveraged Equities - might meet your paramters, but you're on your own here.
This left about 375 funds. Flipping through them quickly by category (and using my own knowledge of what's open and available NL, either inherently or via brokerage platforms, and also applying my own arbitrary judgment as well as past performance), here are some possibilities by category. Note that the only ones I'm really comfortable with are Pacific/Asian, Foreign Large Blend, MidCap Growth (POAGX), Small Blend (maybe), World
Emerging Markets (27 funds passed screen): Schroder EM Equity Adv (SEMVX)
Pacific/Asian (3 funds): Matthews Asia Growth Inv (MPACX)
Europe (3): TRPrice European (PRESX)
Foreign Large Bl (44): Artisan Int'l Inv (ARTIX), Harbor Int'l Inv (HIINX)
Foreign Large Gr (16): Scout Int'l (UMBWX)
Foreign Large Value (10): RidgeWorth Int'l Equity I (STITX - NTF/low min via brokers)
Foreign Small/Mid Bl (4): Vanguard Int'l Expl (VINEX - the only one of the four avail NL to retail investors)
Foreign Small/Mid Gr (7): Wasatch Int'l Gr (WAIGX; ARTJX is closed)
Large Blend (3): Janus Contrarian (JSVAX - the only NL one avail to retail investors; note: not advised, as it recently lost its excellent managers)
Large Growth (20): Principal Large Cap Growth I, Class A (PLGAX - NTF/load-waived at Fidelity)
Large Value (12): Sound Shore (SSHFX)
Latin America (2): JPMorgan Latin America A (JLTAX - NTF/load-waived via brokers)
Mid Blend (22): Fidelity Leveraged Co (FLVCX), or any extended market index fund
Mid Growth (35): POAGX
Mid Value (17): Hotchkiw & Wiley Mid Cap Value A (HWMAX - NTF/load-waived at Fidelity)
Pacific/Asia ex-Japan (1): none avail NL
Small Blend (58): Homestead (HSCSX) for concentrated fund, Glenmede Small Cap Equity (GTCSX) for more diversified
Small Growth (42): TRP Diversified Small Cap (TRSSX; ARTSX is closed)
Small Value (30): Skyline Special Equities (SKSEX - a bit pricey at 1.32%)
World (27): Artisan Global Opp (ARTRX - finally, an open Artisan fund, and less expensive than ARTGX), Oakmark Global/Global Select (OAKGX, OAKWX)
To summarize, I'd focus on MPACX, ARTIX, ARTRX, OAKGX, OAKWX, HIINX, POAGX, and maybe HSCSX, GTCSX. (If you have over $100K in combined Artisan funds, their closed funds are available to you as well.)
The advice you received to DCA in is not bad advice. Your desire to go very aggressive needs to be considered in light of how you, or you and your significant other, would react in the event of a prolonged market downturn. Such funds could easily loose 30-40% of their value over a 1 or 2 year period. So, sort that out in your mind before taking on such aggressive investments.
Perhaps already mentioned, but doing a Roth conversion out of a traditional IRA (partial each year) and using the $$ to cover taxes is another idea. Here I'd go easy too, as conversions make more sense when markets appear undervalued. But a Roth has a great many advantages.
I know the market is way high and I'm not planning to do anything right away with my 20% cash position. And I may even trim some of the holdings in my existing portfolio.
So, in a sense, this 2k (or whatever) DCA is a separate entity hopefully intended to buy in markets both good and bad, in markets both bull and bear, etc. Otherwise, what's the point of continuous DCAing, right? What I'm trying to find now are logical vehicles ...
msf: i used the Lipper numbers for the tax implications. POAGX got a 3, I think, and New Horizons got a 1. thank you for looking deeper for me and for that list of possible funds. looks like a number of good ones in there for me to check out!