Invest it all now or invest in PP over time?

[mortalpawn]

I've been just starting to invest in the PP, having been burned before by the big downswings in 1987, 2000, 2008.

I've read the PP book, looked at a variety of alternatives (Boglehead, 60/40, 80/20, Gone fishing, etc...) and read those books too!

I'm thinking of going "all in" on the PP concept with a significant portion of my IRA and also taxable investments.

To the questions:
- Should I invest it all at once or dollar cost average things in over a few months?
- About half my money is in taxable accounts and I'm in a high tax bracket - is there any tax advantage to investing this in blocks over time versus all at once - perhaps to be able to capture losses on individual blocks of investments in future tax years?
- Would you split your allocations across taxable/non-taxable accounts to save on taxes (i.e. put the bonds/cash in an IRA and gold/stocks in taxable) or go with a 25/25/25/25 allocation in both (taxable and non-taxable)?  I understand splitting saves on taxes, but I'm concerned because I project my taxable portfolio will eventually be much larger than my IRA.  So my IRA could eventually be 100% bonds!  Also I certainly like some cash to be in the taxable accounts just in case the emergency fund ever runs low.

Doc

[sophie]

- Should I invest it all at once or dollar cost average things in over a few months?
- About half my money is in taxable accounts and I'm in a high tax bracket - is there any tax advantage to investing this in blocks over time versus all at once - perhaps to be able to capture losses on individual blocks of investments in future tax years?
- Would you split your allocations across taxable/non-taxable accounts to save on taxes (i.e. put the bonds/cash in an IRA and gold/stocks in taxable) or go with a 25/25/25/25 allocation in both (taxable and non-taxable)?

Welcome to the board and to the PP!  To answer your questions....

This is a great time to buy in, but if you would be more comfortable doing it in stages over a period of time e.g. one year, feel free to do that.  Just be sure and buy equal amounts of each asset each time you pour money into the PP.  An unbalanced PP can be highly volatile, incurring the very risks you are trying to avoid.

You should probably talk to a tax accountant about liquidating assets, if you're not sure.  Any losses you incur can of course be carried forward, so there's really no advantage to waiting.  In addition, if you've got investments in high expense funds, you probably shouldn't waste any time getting rid of them.

There are many threads here on splitting assets between taxable and tax-advantaged accounts, and there's also good information on this in the Bogleheads wiki.  Some people here do this (including me) and some prefer to run separate PPs.  A few things to consider:

1. Taxable gold should be in physical form.  Keep some gold ETFs in tax-deferred accounts for rebalancing purposes.  Some people use GTU in taxable to get the lower capital gains rate, but I gave up on this as being too complicated.

2. Bonds would be great in tax-deferred accounts, but remember that if rates go up, the value goes down and you won't be able to tax loss harvest.  Similarly, stocks are good for tax loss harvesting.

3. Definitely keep a good slug of cash where you can get at it.  Currently, cash returns are not worth worrying about, but there are two good ways to protect the income:  US savings bonds (tax deferred), and stashing cash in a Roth IRA (tax free, but only principle is available after a 5 year waiting period).

Hope this helps!

[Ad Orientem]

Welcome to the forum. There's no right or wrong answer here. The PP is a long term investment strategy so I'd just do it and get it over with. But if you are more comfortable with DCA then that works too. I don't see any advantage either way worth writing about.

[magneto]

'- Should I invest it all at once or dollar cost average things in over a few months?'

If DCA is chosen then to be worthwhile IMHO the period to invest should at least encompass a full business cycle (4 years or so) to ensure some buying in market troughs.

Not being an 'all in' sort of guy, I prefer to make gentle adjustments to my investments to maintain psychological balance in the face of storms, so only move gradually from one type of portfolio to another.  This is probably a minority view.

Good Luck

[dragoncar]

'- Should I invest it all at once or dollar cost average things in over a few months?'

If DCA is chosen then to be worthwhile IMHO the period to invest should at least encompass a full business cycle (4 years or so) to ensure some buying in market troughs.

Not being an 'all in' sort of guy, I prefer to make gentle adjustments to my investments to maintain psychological balance in the face of storms, so only move gradually from one type of portfolio to another.  This is probably a minority view.

Good Luck

I think missing up to 4 years of (expected) gains would be a very losing strategy on average.  Of course if you KNOW there's an upcoming market trough, then by all means delay purchase.