Small windfall - what would you guys do with it

I'm a big saver, but if 270K is a "small" windfall, you don't need that advice. Buy a race car or a Robinson R22 heli or something like that.

Bro, if you got some windfall, get out the chainsaw and cut up some firewood for the next year. Don't even know why this is a question.

Slow your roll wrote:

Total BS. Any really believe someone got a bonus worth $270K and is going to an anonymous message board for advice? Someone smart enough to get a $270K (after tax witch was probably $400K before taxes) is not dumb enough to seek financial advise on LRC.

Ohhh you are such a buzz kill.

I think he should do the right thing and share it with his letsrun buddies.

Dang brochacho, I find myself in a bizarrely similar position. I have $240k on the sidelines, deciding what to do. Writing it out helps, so don’t worry about bragging—anonymous discussion helps clarify our thoughts.

My stats compared to yours:

1. 38, 2 kids.

2. Maximizing IRAs. Haven’t got around to 529s yet. Guess I should.

3. We also keep ~$50k cash. I don’t agree with the need for more. If the shid hits the fan, sell some stock, but I think a year of cash is a bit much.

4. No mortgage. $1.8mm valuation.

5. Other debt: $150k rental mortgage. $650k valuation.

6. Taxable brokerage + IRA = ~$850k.

7. Selling a venture for $1.08mm that will soon net about $400k after debt and taxes. Have $720k in another venture that will hopefully sell for a 2-5x multiple in a few years.

I am paralyzed on what to do with the $240k, so I have started DCA $1k per week into VFIAX. I am sure if I push it all in tomorrow, the market will soon tank. If I continue to DCA, I am sure the market will continue to climb. I have been “sure” the market was bloated and overvalued since 2016, while DJIA has gone from 16k to 28k. Now it seems more bloated than ever, I agree with you, makes it hard to move. I guess we are investing for the long run and DJIA should be at 100k in a few decades, so probably dumb to hesitate too much at 28 waiting for a fall to 20 that may never happen.

Good luck to us all.

I can't say that i ever had that kind of windfall, but i was faced with a lot of the same choices, and what i can tell you is this - unless you really feel compelled to do one over the others, it doesn't matter much. For us, we liked getting the house paid off first (probably because interest rates were higher then), and then beefed up both the investments and saving for the kid's college.

Screw the savings account - you can sell an investment if you need to, and you've got plenty of cash coming in anyway.

So, if i were you, i would do all three- make extra payments towards principal on the mortgage, invest some in the market (in a fashion and timed as you feel comfortable doing so), and throw a wad at the kid's college funds within allowable limits.

The reason i say that it's not as big a decision as you might think is that in our case, it all seemed to work out just fine without beating ourselves up about how to squeeze the most out of the process. And then we had another decision like this to make when we decided is it was worth pre-paying for the full four years of junior college tuition and fees up-front, which we did, just to lock in the current tuition rate.

Regards.

* Correction: that should be "junior's college", not "junior college".

How secure is your income? Be honest and consider recession. If it’s very secure, then just boost the savings by a little.

Add some to your taxable brokerage in equity ETF’s, but start buying some individual bonds to offset all of that equity exposure in a frothy equity environment. Investment grade corporate bonds should yield 2-3% for short-intermediate maturities, giving you a bit more yield than your cash account. Muni’s may be interesting given your tax situation. Rates are low right now, but you take what you can get.

And pay down the mortgage a bit as well. You should also be watching refi opportunities like a hawk with such a high balance. If you can pull off a 15 yr at 3.00%, do it. This stuff moves very quickly so you need to watch it daily. Keep the 10 year Treasury rate on your daily watch list.

So basically, the third option that you mentioned. Boring, but effective.

And while you’re at it, make sure that your estate planning documents are up to date and that you add an umbrella policy, which will cost you almost nothing.

Diversify further.

It's time for an investment grade car (comes down to personal preference, but the Porsche 997 or the BMW E36 M3 are near the bottom of their investment curves) and some art to hang around the house.