I'm feeling some paralysis about new money

[dualstow]

It's easy to tell people to just keep plugging savings into all four assets, but I don't know if I can buy more EDV.
More gold....eh, maybe I should at least wait for a drop below 1500.
Stocks? Just rebalanced out.

I will likely do the cowardly thing and just keep too much in cash, and then regret it later.

There's no windfall, I'm just talking about periodic investable new money.

[Xan]

You're overthinking... Yes, maybe the money you put in this month isn't a good time to buy bonds. Maybe next month's will be. It'll even out.

[ochotona]

It's easy to tell people to just keep plugging savings into all four assets, but I don't know if I can buy more EDV.
More gold....eh, maybe I should at least wait for a drop below 1500.
Stocks? Just rebalanced out.

I will likely do the cowardly thing and just keep too much in cash, and then regret it later.

There's no windfall, I'm just talking about periodic investable new money.

Make a plan to invest it slowly over the next several months... maybe over the next year.

[dualstow]

Yup, agree with both of you. Best not to think too much about it and let it do its thing over time. Thanks.

[Kbg]

Look at my avatar, and then say out loud three times: “It’s the portfolio that matters, not the assets. My assets simply provide the expected performance and risk profile OF THE PORTFOLIO.”

Yell the last three loudly as it relieves stress.

[Tyler]

I used to worry about the timing of asset purchases as well, but over time I've come to understand just how little short-term purchase inefficiencies matter in the grand scheme of a long-term portfolio plan.

Pick your ingredients based on the recipe and stop tasting the baking soda.

[pmward]

Yeah, for new funds, they are such a small percentage of the overall that I don't really worry about it too much. It does feel silly putting money into just about any individual asset right now, haha. I agree with kgb that it's the portfolio as a whole that really matters, and that's what I keep in mind every two weeks when fresh funds are going in (mostly into stocks right now as that's the lagging asset, which I feel almost positive are about to drop, but oh well).

[Kriegsspiel]

Nothing cowardly about stacking cash.

[Tortoise]

I understand your hesitation, ds.

A few months ago I realized that I was very overweight in cash in my taxable accounts, so I closed my eyes, clenched my fists, and bought a bunch of stocks, bonds, and gold on the same day to bring everything to a 4x25 PP. Pulling the trigger was tough, but I’m glad I did it.

Also, a few weeks ago I received a sign-on bonus for a new job and had to decide whether to leave it in cash or use it to rebalance my 4x25 PP. Again, I agonized over it for about a day but ended up putting it in the PP. And again, I’m glad I did it.

Come on in, the water’s fine!

[dualstow]

Great posts all around, guys. Thanks again.

[Smith1776]

I think it's perfectly natural to feel some trepidation towards at least one of the PP asset classes at any given time.

When all else fails, I think the safest option to calm any fears is to overweight the cash portion of course.

Browne did say (I think in Fail-Safe Investing?) that an acceptable alternative to the PP was just t-bills.

Better than putting it all on red.

[sophie]

I've got the same trepidation, because I was actually a bit underweight in bonds, and if I hit a rebalance band soon I will probably have to buy some.

So here's a thought: I'll buy the bonds in taxable. That way, if bonds go down which is what we all expect, I'll have a nice tax loss harvest to look forward to a year from now.

[dualstow]

One form of “mental accounting” (kind of like a fallacy) that I engage in is that i find it fairly easy to hold an asset even when I don’t feel like buying more of it.

[sophie]

Buying is hard for me too. I always feel like I'm going out on a limb and disaster may strike at any moment.

Having a framework for everything, including cash, is worth its weight in gold for me!

[ochotona]

One form of “mental accounting” (kind of like a fallacy) that I engage in is that i find it fairly easy to hold an asset even when I don’t feel like buying more of it.

Yup. The Endowment fallacy or illusion. Seriously though, TLT has gone vertical for all intents and purposes. It cannot continue in that fashion.

[Tyler]

One form of “mental accounting” (kind of like a fallacy) that I engage in is that i find it fairly easy to hold an asset even when I don’t feel like buying more of it.

Interesting. Now that you mention it, I can definitely relate to that.

It reminds me of buying a car. I get super paranoid about not getting the best price, spend way too much time researching negotiating points, struggle pulling the trigger, and get really frustrated if I see a particularly good deal after I already committed. But after the over-thinking it phase wears off, all I think about is how much I like the car and am happy with my choice.

I think some people are just wired to optimize, which is a blessing in a lot of ways but can also create a lot of mental friction in others.

[Kbg]

I very humbly with no disrespect don’t get these sentiments being expressed with the PP. At a portfolio level it is all handled very elegantly via your rebalancing strategy.

Other strategies I get it, but not the PP. I have a pretty good active strategy that buys/sells Nasdaq 100 stocks and it is quite difficult to buy and sell manic moods in the market because this strategy has spectacular moves both ways at the individual stock level...and with very high correlation.

With the PP normally I smile on a rebalance and don’t think twice on a purchase of the down and out asset because by definition it is out of phase and out of favor.

Not to say I didn’t ask myself the following question...is UGLD ever going to get in the green (since 2014)? :-)

[dualstow]

I very humbly with no disrespect don’t get these sentiments being expressed with the PP. At a portfolio level it is all handled very elegantly via your rebalancing strategy.

...
With the PP normally I smile on a rebalance and don’t think twice on a purchase of the down and out asset because by definition it is out of phase and out of favor.
...

That’s just it. There are no down and out assets. This thread is about new money.

[Maddy]

I hate to break it to you, guys, but this month I took the plunge and moved substantially toward the PP. This means, of course, that the PP will cease to work for the first time. Just thought I'd warn ya.

[Kbg]

LOL, the story of my life. However, with patience I’ve found that a good strategy will work out. I pretty much bank on the fact that as soon as I invest it will have an awful year.

[Mike59]

Having been through a couple of cycles and having done a ton of research, I can tell you that investing up front is statistically most likely to return you the highest. You're losing out on bond yield, stock dividends and capital gains on the sidelines, ultimately you miss out on the power of compounding. The PP has only a handful of negative years over the last few decades and the odds of you timing the negative year by staying in cash is roulette.

I just push new money in 4x25 , the first few times don't look at your returns for a few months and stop watching CNBC or checking the stock market news, it helps temper the nausea that comes with this process.

[jalanlong]

Browne did say (I think in Fail-Safe Investing?) that an acceptable alternative to the PP was just t-bills.

Better than putting it all on red.

Harry said putting all your savings in T-bills was acceptable alternative to the PP for all of your savings? I will have to go back and read that again. That seems dangerous in times of low interest rates. T Bills haven’t kept up with inflation in the last 5 years or so.

[Smith1776]

Browne did say (I think in Fail-Safe Investing?) that an acceptable alternative to the PP was just t-bills.

Better than putting it all on red.

Harry said putting all your savings in T-bills was acceptable alternative to the PP for all of your savings? I will have to go back and read that again. That seems dangerous in times of low interest rates. T Bills haven’t kept up with inflation in the last 5 years or so.

Yeah, just found it -- page 116 of Fail-Safe Investing.

He says if you aren't comfortable with constructing your own PP that you could: 1) put it in PRPFX; 2) put it all in t-bills; or 3) diversify amongst 3 commercial bank accounts.

Diversifying amongst commercial banks... it's too bad Browne did not live to see 2008.

[sophie]

I hate to break it to you, guys, but this month I took the plunge and moved substantially toward the PP. This means, of course, that the PP will cease to work for the first time. Just thought I'd warn ya.

Way to go Maddy! For the first time in the history of this forum, someone won big after putting a big chunk into the PP. Outstanding.

[ochotona]

New money coming... lump sum pension payment... and I'm getting the same paralysis.

Money doesn't come until December... maybe some of the markets will break up or down by then...