I transferred my 401k to Vanguard IRA and allocated 70% of my money across:

  • VIG (Dividend growth)
  • VYM (High Dividend)
  • VXUS (International)
  • VTI (Total stock market)

With market being high as it is, would you recommend I allocate remaining 30% now or later?

I am a 35 and am full aware that timing the market is futile, but common sense says that buying high is silly. Thoughts?

  • what was the allocation in he 401k? What portion of your total investment is this Rollover IRA? Commented Jul 27, 2014 at 22:57
  • How do you know that the market is "high" relative to where it should be/will be? Remember, it should be going up about 3% a year on average just to keep pace with inflation, and historically has averaged about 8% per year. Hitting record absolute numbers is meaningless.
    – keshlam
    Commented Jul 28, 2014 at 2:36

3 Answers 3


There was a time that a rule of thumb stated your stock allocation should be 100-your age. That rule suggests that you are at 65%stock/35% bond/cash. If you are comfortable having this money 100% invested, the best advice would be dollar cost averaging, anything more specific would suggest market timing.

  • 1
    In other words you would not be concerned with the amount in question at all and what you're saying is that 20+ years from now price i buy at today is largely irrelevant? Is this correct?
    – JAM
    Commented Jul 27, 2014 at 21:30
  • 1
    Pretty much. Even a 60 year old retiree has a 25-30 year remaining lifetime and investing horizon. You have a good 50 ahead of you. Commented Jul 27, 2014 at 21:33
  • Would it be a consideration (for allocation) that I won't be able to do dollar cost averaging in this account? I don't qualify for contributions
    – JAM
    Commented Jul 27, 2014 at 21:40
  • 1
    DCA is done as you accumulate savings, regardless of whether it's in your 401(k), IRA, cash account or a combination of all of these. Similar to how one's asset allocation would span all these accounts as well. Commented Jul 27, 2014 at 21:48
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    If you are putting money in at a fairly constant rate -- no matter what that rate is -- you're benefiting from dollar cost averaging.
    – keshlam
    Commented Jul 28, 2014 at 2:38

You're saying that you're thinking of keeping 35% in cash?

If you expect the market to plummet in the next few months and then head up again, this would be a smart strategy. Hold on to a bunch of cash, then when the market hits bottom buy, then as it goes back up collect your profits.

In practice, the long-term trend of the market has been up for as long as there has been a stock market. Bear markets tend to be relatively short, usually just a few months or at most a year or two before the market gets back to where it was. If you are smart enough to predict when there will be a decline and how long it will last, you're smarter than 99% of the professionals, never mind the amateurs.

Personally, I keep only trivial amounts of cash. Let's see, right now about 2% of my assets. If you're more active in managing your retirement accounts -- if you really watch the market on a monthly basis or more frequently and adjust your assets according -- it would make sense to keep a larger cash reserve and use it when the market goes down. But for the average person, I think it would be a big mistake to keep anywhere near 35% of your assets in cash. In the long run, you'll probably lose out on a lot of potential growth.


You'll likely see several more scary market events before your autumn years.

Ahhh, everyone has an opinion on this so here is mine :)

If you are constrained to picking canned mutual fund products then I would target something with decent yield for two points.

  1. The market is fairly valued.
  2. Everyone else is doing that so you will likely get an appreciation bump with others making similar choices + yield.

The third is to keep some in cash for an 'event'.

I would say 65/35 at this point so invest 65% and have some liquidity for an 'opportunity'. Because the next crisis is right around the corner.

But stay invested.

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