I am 33 years old and have about 140K in my retirement accounts. I made a bad decision and cashed out of stocks in Feb 2012 and have everything in a money market account. I have conflicted emotions right now of what to do. The options are as follows:

1) Find a safe but better return than what my money market is giving me. The safe return would put me in a great position IF there is a correction.

2) Invest some number(maybe $5K or 10K) a month into a mutual fund / stock / ETF. By investing over time this would help minimize buying at the top.

3) Same as #2, but invest in mostly dividend stocks to help cushion the blow if there is a correction.

Any other ideas? I feel like I am in a pretty crappy position since the market is so expensive, and a correction seems inevitable but it could be a long ways off. Given my time away from the market I am growing impatient. Please no lectures on my bad decision of taking my money out, I have already beaten myself up.

  • Something to keep in mind about #3, if there is a market crash some dividend paying stocks may reduce their dividend or even stop paying dividends - dividends are not a guarantee. If a company starts losing money or even making smaller profits during a market downturn they might need to stop paying dividends until things pickup and they start making more profits again. – Victor Dec 28 '14 at 21:07
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    A dividend paying company is not a good long term investment. At 33 you should be looking for growing companies not the ones who dont know what to do with the income and keep paying dividends. – Parminder Singh Chahal Dec 28 '14 at 22:56

Option 1 is out. There are no "safe returns" that make much money. Besides, if a correction does come along how will you know when to invest? There is no signal that says when the bottom is reached, and you emotions could keep you from acting.

Option 2 (dollar cost averaging) is prudent and comforting. There are always some bargains about. You could start with an energy ETF or a few "big oil" company stocks right now.


You are only 33, with plenty of time to generate long-term returns. A correction is an opportunity for you to buy more at a lower price.

My advice: invest about half in an index fund (S&P 500, for example) and half in a target fund (pick your retirement age), keep saving regularly, and in 30 years you'll be very happy you did. 5-10K a month is fine until all of the money is invested. (You said this is a retirement account, so invest the entire amount. Keep a rainy day fund in your non-retirement savings.)

You can fiddle around with how you invest the money and I'm sure you'll get variations on my answer. My above suggestions may not be the absolute best option, but they are certainly not the worst option. Given that you are very risk-averse, keep in mind that you are in this for the long term and should be investing in something where you can safely ignore short-term downswings.

  • Target funds often have high expenses (and underperform the market quite a bit from my research so far). I would stay away from them unless you either don't want to or don't feel qualified to rebalance your portfolio on your own every couple years. – EkoostikMartin Dec 29 '14 at 16:24

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