by Archie M. Richards, Jr.
December 10, 2007

Susan writes, "My IRA contains almost $400,000 cash. I also have $43,000 in mutual funds and other retirement accounts. I'm healthy. I like my job, and I'm only 56 years old. The $400,000 cash is earning only 5 percent, and I'd like to get it invested now. But most advice I read suggests investing over time, not all at once. What's your opinion?"

Put it all in now, Susan. Here's why:

In the long run, the market goes up. In the short run, we don't know what it will do. Therefore, the best time to buy is when you get the money.

Don't cut your risk by investing over time. Instead, cut the risk by acquiring a wide range of asset classes, including foreign and domestic stocks, long-term bonds, and real estate investment trusts. (See archierichards.com > Suggested Portfolio for specific recommendations and a spreadsheet.)

Investment professionals recommend investing over time because they have a conflict of interest. Their first priority is to avoid losing clients.

The professional doesn't know what the market will do. But many new clients expect him to know. He doesn't go out of his way to reveal his ignorance on the matter.

If the professional recommends that the client invest his money all at once, and the market falls, the client finds another professional who, with flawless hindsight, says that (SET ITAL) he (END ITAL) would have invested the money gradually.

This leaves the first fellow without the client he worked so hard to obtain.

The stock market falls about a third of the time. It stays about the same a third of the time and rises a third of the time. If you invest your money all at once, you have a two-thirds chance of coming out all right. Those are pretty good odds. And since you're investing for the long run, it doesn't much matter if you begin with losses, providing you continue to hold.

I don't have the conflict of interest described above. I have no investment clients, and newspapers continue paying me no matter how much of a fool I make of myself. I can therefore offer conflict-free advice.

Go for it.

Marshall writes, "I'm retired after many years of government service. My thrift savings plan is worth $151,000. Withdrawals from the plan are taxable. But now that I'm 59½, the withdrawals are free of additional penalties. My home is worth about $500,000. My mortgage balance is $119,000.

"I'd love to own my home free and clear. To reduce taxes, I propose withdrawing from the thrift savings plan about $40,000 every year for three years to pay off the mortgage. The thrift savings plan would be much reduced, of course, but my pension income is ample.

"I have repeatedly been advised by an investment person not to use retirement money to pay off a mortgage. But I'd like to get that noose off my neck. What do you think?"

Forget the fellow's advice, Marshall. It's in his interest, not yours that you invest and not pay off the mortgage.

Money serves to satisfy our emotional needs, not the other way around. You want to own your house free and clear? By all means do so. You'll still have ample financial resources.

If you'd like to discuss the matter further with a financial planner who's paid fees only and has no conflict of interest, visit www.napfa.org.

Charlie writes, "Considering the current difficulties with real estate, does your recommendation of 20 percent in real estate investment trusts still stand? REITs seem pretty bad right now."

Ten months ago, Charlie, Vanguard's exchange-traded fund of REITs (VNQ) reached a high of 87. Now it's 68.

When something goes on sale in a grocery store, people want to buy it. But when something goes on sale in the stock market, people want to sell.

Don't follow the crowd. Lower prices are better. My recommendation for 20 percent in REITs still stands.