Q: I am 59 years old. I have just over $100,000 in cash to invest. The market has been very high and I was waiting for a dip to happen, but it seems to be going up further. Because they saying goes “Buy Low, Sell High,” I don’t know where to begin. Please help me. Where should I begin?
A: Your question is one we are addressing on a daily basis with our existing clients, and with new clients investing new money. At 59 years old, the first thing you need come up with is an appropriate portfolio allocation between fixed income (bonds) and equity (stocks), based on your personal risk tolerance and time horizon. With the market going up each day, the bond market, in general, has been declining, which is a good opportunity to put your bond allocation to work.
As far as the stock portion of your portfolio, I would recommend a strategy called Dollar Cost Averaging, which you may have heard Wes talk about on his show. Simply put, this is a process of investing your stock allocation over a period that you feel comfortable with. For example, invest 25% of your stock allocation on a single day, then invest another 25%, 30 days later, and so on, until you have the entire amount invested in over four months. If there is a significant market decline during this period, you can invest the funds ahead of the next scheduled investment.