Large amount of cash to reinvest soon

Pat38493

I was going to post this on the Trum tariff thread but it's only indirectly related.

It will be an interesting time the next couple of months.  Assuming our house downsize goes through, this will result in in sitting on about  £300K in cash which constitutes more than 45% of our overall pot.  (we also have DB pensions)

Part of the reason for this is that we still have some big ticket spending items that will only end in a couple of years from now, and I had already moved a chunk of money to cash based on the worst case scenario that the sale doesn't go through (which could still happen as no exchange yet).  However, we will still need to figure out how to invest a good chunk of that £300K and when.

I suppose the smart thing to do is just stick to the plan and invest a big chunk of it back into equities.

I am just wondering whether to increase my cash bucket from 2 years to 3 years.  At the moment I am targetting:
- 2 years Cash
- 3 years 70/30
- 5 years 80/20
- 10+ 100% equities.

I suppose that if I only do rebalancing every year, I will end up with only 1 year in cash at the end of each planning year.

Given that my plan calls for much larger DC spending for the first 11 years, could it make sense to have a larger number of years in cash, particularly as I will hopefully have the cash coming anyway in a month or two so I won't need to sell anything to achieve that objective?

squirrelpie

Pat38493 said:

I suppose the smart thing to do is just stick to the plan and invest a big chunk of it back into equities.

I am just wondering whether to increase my cash bucket from 2 years to 3 years.  At the moment I am targetting:
- 2 years Cash
- 3 years 70/30
- 5 years 80/20
- 10+ 100% equities.

So you have 2 + 3*0.3 + 5*0.2 = 3.9 years of cash? That is, your bucket is nearly 4 years already?

If you're nervous because of the recent rapid falls, then just spread your new investments over a few months instead of investing all at once.

Pat38493

squirrelpie said:

Pat38493 said:

I suppose the smart thing to do is just stick to the plan and invest a big chunk of it back into equities.

I am just wondering whether to increase my cash bucket from 2 years to 3 years.  At the moment I am targetting:
- 2 years Cash
- 3 years 70/30
- 5 years 80/20
- 10+ 100% equities.

So you have 2 + 3*0.3 + 5*0.2 = 3.9 years of cash? That is, your bucket is nearly 4 years already?

If you're nervous because of the recent rapid falls, then just spread your new investments over a few months instead of investing all at once.

No - the 30% and 20% are bonds.

squirrelpie

Long-dated or short-dated? i.e. cash equivalent or not?

Pat38493

squirrelpie said:

Long-dated or short-dated? i.e. cash equivalent or not?

About £38K is in VAGS and £28K in Vanguard Global Bond Index Hedged Acc GBP (which I think are basically the same thing but ETF vs fund).

Fixed Income

Effective Maturity 8.50

Effective Duration 6.45