Liquidity event, what to do with the money?

Hey all. Will soon have around $800k cash. Not sure how to deploy it. Was thinking of just throwing it all at a low cost S&P500 index fund, but market seems very hot right now (understand that timing the market isn't wise, but would appreciate insights here).
One idea was to put it all into 1 year US gov notes, yielding around 5% at the moment which looks nice.
Thank you in advance. Before anyone asks where I got the money, I'm actually posting on behalf of a family member who has asked me for advice.

 

Are your entry periods here arbitrary for the sake of discussion or do you believe deploying all of it in ~2 months is the most optimal? Have a sizeable quantum would like to deploy as well (not as much as OP). Struggling to bite the bullet due to how high market is ATM and not wanting to impair my cost base immediately. 

 
Most Helpful

This 2 months period is what I do with my own money (ie when I receive bonuses). It is not very scientific but here is my reasoning:

1) Time value of money. You need to invest ASAP. Ideally, you lump sum everything today (that is proven to be the best strategy, check out all the reports on that topic (google "lump sum vs DCA”)). 
 

2) The fact that I am scared of doing a lump sum today (if there is a crash tomorrow). That’s why I spread it over 2 month, just to protect myself if some shit happen 
 

Regarding your second point "The market is too high, I need to wait for it to go down / a crash is coming”: you need to stop thinking that way / I had the same issue and it took me time to control my emotions. You need to be robotic and act according to a plan regardless of what is happening in the market. Also, normally the S&P500 has multiple all time highs every year, just check the graph. It only goes up in the long term, it is not a crypto 

 

if you read the end of the post I mention that I'm writing on behalf of a family member

 

I'd put it in the market (or at least have a set-in-stone plan about X immediately, Y at a future day, Z at another future day as someone above recommended). I got a one-time mid six figure pay day last year and put it in the 5% t-bills. Meanwhile the S&P is up 25-30%. Could have about $100K more if I had just bought SPY. I am now reallocating chunks into index funds every couple weeks.

 

You speak to your tax advisor after getting paid? Shouldn’t you do that before getting paid?

You should do it well before getting paid, but I mean structure for your go-forward lifestyle. Some forms of investments make way more sense depending on your goals and tax implications. Also a very different advisor usually. 

I don't know how meaningful $800k is for the person that received the $, but if they're young, they are probably rolling it into their next thing...not sitting on it or retiring on it, right?

 

Nihil repellat aperiam voluptates ipsa reprehenderit aspernatur qui cumque. Earum molestiae sunt veniam. Ipsam voluptatum voluptatem qui nemo debitis molestiae. Quos rerum voluptatem sit cum odio quo. Cum velit voluptatem cumque repellendus sunt magni.

Eum reprehenderit nihil doloremque accusamus earum. Accusamus eum nesciunt qui at. Assumenda consectetur qui sint ut autem.

Sapiente saepe rerum sit perspiciatis voluptas. Ipsam deserunt vel sit aliquid. Quia voluptate iste aut et ut aliquid.

Aperiam aut dolore ad hic reprehenderit. Asperiores placeat a doloribus beatae. Veritatis molestiae dolorem cumque delectus quam pariatur labore. Voluptatum amet placeat est architecto autem ab cumque. Assumenda velit quia provident voluptas.

Career Advancement Opportunities

May 2024 Investment Banking

  • Jefferies & Company 02 99.4%
  • Lazard Freres No 98.9%
  • Harris Williams & Co. 25 98.3%
  • Goldman Sachs 17 97.7%
  • JPMorgan Chase 04 97.1%

Overall Employee Satisfaction

May 2024 Investment Banking

  • Harris Williams & Co. 18 99.4%
  • JPMorgan Chase 10 98.9%
  • Lazard Freres 05 98.3%
  • Morgan Stanley 07 97.7%
  • William Blair 04 97.1%

Professional Growth Opportunities

May 2024 Investment Banking

  • Lazard Freres 01 99.4%
  • Jefferies & Company 02 98.9%
  • Goldman Sachs 17 98.3%
  • Moelis & Company 07 97.7%
  • JPMorgan Chase 05 97.1%

Total Avg Compensation

May 2024 Investment Banking

  • Director/MD (5) $648
  • Vice President (21) $373
  • Associates (91) $259
  • 3rd+ Year Analyst (14) $181
  • Intern/Summer Associate (33) $170
  • 2nd Year Analyst (68) $168
  • 1st Year Analyst (205) $159
  • Intern/Summer Analyst (146) $101
notes
16 IB Interviews Notes

“... there’s no excuse to not take advantage of the resources out there available to you. Best value for your $ are the...”

Leaderboard

1
redever's picture
redever
99.2
2
BankonBanking's picture
BankonBanking
99.0
3
Betsy Massar's picture
Betsy Massar
99.0
4
Secyh62's picture
Secyh62
99.0
5
kanon's picture
kanon
98.9
6
dosk17's picture
dosk17
98.9
7
CompBanker's picture
CompBanker
98.9
8
GameTheory's picture
GameTheory
98.9
9
bolo up's picture
bolo up
98.8
10
Linda Abraham's picture
Linda Abraham
98.8
success
From 10 rejections to 1 dream investment banking internship

“... I believe it was the single biggest reason why I ended up with an offer...”