I’ve recently come into a lump sum.
So here’s what i’m doing:
- invest the bulk (90%) into a money market fund, with 0% transaction cost. Return is only 1% to 3%
- the next 10% divided into 20 funds:4 bonds (HY) / 16 stocks (one time transaction cost 0.75% of the invested amount, regardless how many funds). Widely diversified geographically and in sectors.
I already own these funds, so I am only adding $200~300 into the stock funds and $500~$1000 into the bonds.
If not, i would take 20% of the lumpsum as minimum required first investment in the 20 funds.
- every month i will continue to add the same amount, some contributed by my salary savings, some by selling a couple of thousands from the money market fund (no transaction cost to sell)
- if i ever need a lumpsum to invest in real-estate or some other opportunity, i will sell the money market fund and reduce the monthly contribution to each fund.
Is it a bad strategy?
