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Discussion Starter #1 (Edited)
I recently sold some income property and have about $500,000 to invest. I want to buy dividend stocks because I need the income but the fact that we are at the tail end of an 11 year bull market, and the market seems way overbought scares me. It would be my luck to go all in right before a major drop in the market.

Is there any way to get a decent return, without running this risk? Or should I chance it? What would you do?
 

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It is a crap shoot. There are people who have been sitting on the sidelines for a year. How would that make you feel? FOMO?

Have a look at our 2020 Predictions to get the mood of the fine people here who are brave enough to express their opinions. Jan 13th.
 

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the market seems way overbought scares me. It would be my luck to go all in right before a major drop in the market.
Is there any way to get a decent return, without running this risk? Or should I chance it? What would you do?
I'm not going in at these levels...and I have been watching and waiting for a 18 months for this market to come off the boil
Yours is the million dollar question, and I don't know what the answer is. Not sure whether anyone does.
I wish I wudda gone in 12 months ago, but then it seemed the sky was falling.
Most pundits that I read are saying 2020 will be flat - no big changes, and then 2021 may (or not) be the drop that has been anticipated.
With the US election coming in 11 months, I'm expecting ups and downs (no growth), followed by a big question mark.
 

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Rusty forget using the stock market for a cow


I really like the price pattern of Bitcoin possible wave count was 3 up going into all time high wave 4 looks complete & the 5th wave up looks like it has recently started with still along way up to go. I recently purchased GBTC & will buy some more on Monday for my TFSA. I hardly ever risk trading in my TFSA only if reward is very high with favorable odds.

Price pattern in gld looks like a high reward to risk with high probability to short with OTM put options. Looks like gold will be in triple digits in next few years. Central bankers are lousy market timers & have been buying hand over fist lately.

Tesla I Like the price pattern to play the long side

OTM puts/leaps on spy or spx look good here.

risk Max of 2% on any of the above of the 500,000
 

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Discussion Starter #5
If I want to speculate I can do very well in TQQQ but good opportunities only come along 2 or 3 times a year. I am looking for a steady income as from dividends to replace the rental income I no longer get.
 

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Is there any way to get a decent return, without running this risk?
Simple answer, no but also depends on what you call a "decent return".

You could spread out the funds over FI and dividend equities, padding more into FI if you don't like the current market levels.
 

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I sold my home about 15 months ago and thought the same thing as you did. Ended up moving into the market slowly over a period of months and currently have 11 holdings. All are up except for 2 so being diversified helped with that. Really hard to determine when to get in, I would just start over time and do it. A year from now the markets are likely to be higher but who knows for sure, that being said invest when you have the money. There is currently and always be some risk when investing in stocks, no way to avoid that generally.
 

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Canadian Banks are lingering and down a bit right now, especially compared to the the TSX and S&P500.

If I were looking to invest a ton of cash as a retiree and wanted nice dividends, I'd be loading up on Canadian banks, holding my breath, and hoping for the best.
 

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Canadian Banks are lingering and down a bit right now, especially compared to the the TSX and S&P500.

If I were looking to invest a ton of cash as a retiree and wanted nice dividends, I'd be loading up on Canadian banks, holding my breath, and hoping for the best.
...interesting comments pete, I've been considering doing just that....but procrastinating - as usual....
 

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It is not an easy choice and everyone's circumstances and risk tolerance are different. Presumably the OP already has an investment policy statement that guides their investment strategy and asset allocation.

So what to do? Educate oneself. Vanguard has a paper that I found helpful to examine my risk tolerance and approach, Invest now or temporarily hold your cash?.
Vanguard said:
At some point in their lives, investors may receive a large sum of cash, such as a pension payout or inheritance. Finance theory and historical evidence suggest that the best way to invest this sum is all at once according to an investor’s asset allocation. Many investors nevertheless choose to put the money to work over time, a systematic implementation plan that is commonly referred to as dollar-cost averaging. We explore the benefits of both strategies, quantify the costs, and reach three conclusions that can guide decision-making.
It is a short paper, 8 pages in all, so a quick and easy read.

They do offer that,
Vanguard said:
Though the data demonstrate that immediate investment has, on average, outperformed, those who choose a systematic investment plan are likely more concerned about worst-case scenarios than averages or probabilities.

For investors with a large cash balance on hand, the stakes are high. Out of worry that an investment will quickly lose value, they may gradually ease into the market. Such an approach can minimize feelings of regret by providing short-term, downside protection against a rapid decline in a portfolio’s value.
Personally I've had two instances to test out my personal risk tolerance, one in Q3 2018 when we had also sold an income property and the markets looks long in the tooth and somewhat expensive. In both instances the choice was to invest it all at once. If you remember, Q4 2018 wasn't the best time for equity markets. Nevertheless I have zero regret with the approach taken and would do it again if/when another lump sum comes our way.

Whether that is the correct approach for the OP is completely up to them and their risk tolerance. As I said, reading the Vanguard paper helped educate me on the factors that I should consider before making my choice. The OP, or anyone else facing this situation, should educate themselves and make the choice that best suits their needs.
 

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Canadian Banks are lingering and down a bit right now, especially compared to the the TSX and S&P500.

If I were looking to invest a ton of cash as a retiree and wanted nice dividends, I'd be loading up on Canadian banks, holding my breath, and hoping for the best.
You might want to Google "shorting canadian banks". There are many who, based on Canadian economy, do not have positive outlook for Canada and therefore , also for the banks. Personally, I would try and keep bank allocation at lower rather than higher level.
 

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I recently sold some income property and have about $500,000 to invest. I want to buy dividend stocks because I need the income but the fact that we are at the tail end of an 11 year bull market, and the market seems way overbought scares me. It would be my luck to go all in right before a major drop in the market.

Is there any way to get a decent return, without running this risk? Or should I chance it? What would you do?
In looking at re-arranging our portfolios, I have had similar questions. What would be a safe investment with decent cash flow with market at current state? One thought, is to not worry about the market valuation. Think more about the cash flow.

For equity, maybe look at the so called dividend aristocrats - the ones that have a long track record of maintaining and increasing dividends. If you invest now and the cash flow is sufficient, then don't worry about valuation dropping. You will still get your cash flow. And eventually, markets will recover (if they initially do go down) I am personally trimming out the non-aristocrats.

My other approach that not everyone here buys into, is to buy split preferreds. With these, if the markets tank, the capital side of the splits will see the losses, but the preferred side hardly at all and they continue to receive the fixed dividend. To spread the issuers risk, I hold about 5 of these. Yield in 5% range.

Another thought, is to diversify more geographically because Canada may underperform if you believe some pundits. Various ways to do this.

Maybe put some of that $500K in fixed income. Either by buying balanced funds/etfs or bonds or preferreds - Some perpetuals will yield 5% and it is dividend income. Capital may get eroded if interest rates increase, but you will still get the cash flow.

Anyway, having also been thinking about these things, those are my current thoughts.
 

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I've recently started adding monthly to a TD direct investing tfsa. I look at the charting on the purchases thinking, "that is doing well, am I picking the right time to get into this?" Years ago I read - "markets trend up over time" putting my faith in that line. :)
 

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If I want to speculate I can do very well in TQQQ but good opportunities only come along 2 or 3 times a year. I am looking for a steady income as from dividends to replace the rental income I no longer get.
Dividends arent magic. Selling shares creates income just the same.
 

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What would you do?
I once was sitting on about 600K in cash that I wanted to earn dividend income on. The logical thing to do was to just go all in. But that is difficult to do psychologically. I started by parking the cash in HISA accounts that at least earned something. 1.6% at TD right now. You can spread money around a bit to stay under the CDIC insurance limits -- EQBank 2.3%, Laurentian 3.3%. Next I allocated a slice to go into a GIC ladder and set up two 10-way ladders (one $US and one $C). You can keep a steady 2.8% income via GICs these days.

Buying into the market was a bigger step. I was always scared to go in all at once, so I made a plan to deploy the money over a 2 year period, with so much to go in each week and used a spreadsheet to track what I was buying and how much was deployed. I picked almost all blue chip Canadian dividend payers that I chose by reading the dividend investing blogs, looking at what the index constituents were, and following, very approximately, the Argo 5-pack strategy, winding up with a 24-pack or so, roughly equal weight amongst Argo's sectors.

Maintaining the discipline to follow my buying schedule was hard. There were many weeks that the prices of likely targets seemed too high and I waited when I should have just gone in. But there were lots of dips along the way to make buying psychologically easier. It wound up taking more than two years, but a bit less than three to get fully invested but I think overall the plan was okay. The dollar-cost-averaging approach definitely made the psychological intimidation of market timing a lot more manageable.
 

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Contrary to popular financial planning rhetoric, it is always riskier to be invested in cash then it is to be invested in the stock market. That is because of the cost of being wrong is not weighted the same. If you invest in the stock market, and even if your worse fear comes about, which is unlikely, and the stock market starts going down right away, it will fix itself over time. Time alone can fix this wound.

If, however, you invest it in cash, waiting for a downdraft of some magnitude, of which, how far down, will soon become your next question, the risk of the cash position adds a untenable risk to your long term performance. The risk the cash provides is that if you are wrong and the stock market keeps going up, even if it goes back down some day and it will, you cannot be sure it will come back to the price level where your mistake of not investing, took place. Time becomes your enemy and real and permanent loss of performance can take place, as opposed to the temporary type that comes from actually being invested in stocks.

I think you probably can see what I am talking about because if you need the stock market to provide your long term returns, any time you are not in it, is a risk of permanent loss, with no assurance or precedent to recoup that lost money, if given more time.
 

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Canadian Banks are lingering and down a bit right now, especially compared to the the TSX and S&P500.

If I were looking to invest a ton of cash as a retiree and wanted nice dividends, I'd be loading up on Canadian banks, holding my breath, and hoping for the best.

TD is where the 12k TFSA $$ went.

Of course recession is on the horizon...right behind it is another bull market...dividends are the key to not giving in to emotions.
 

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TD is where the 12k TFSA $$ went.

Of course recession is on the horizon...right behind it is another bull market...dividends are the key to not giving in to emotions.
Whats even better is the bull market will even be stronger and go higher BECAUSE of the recession.
 

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TD is where the 12k TFSA $$ went.

Of course recession is on the horizon...right behind it is another bull market...dividends are the key to not giving in to emotions.
12k only ?

Recession is great if you drip it. Get to buy more with bargain price. To me, I look at the number of shares only, seeing the number grows years after years. not the total value until I need to sell.
 
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