I sold my Acura last week and the check finally cleared my bank account, so now I've been figuring out what to do with the proceeds.
The first thing I did was pay off the remaining balance on my first 0% APR credit card. This is the portion I wasn't able to transfer over when I switched to a new 0% APR card. I also setup automatic payments on the new card so that I wouldn't forget to make a payment and incur horrible penalty payments and interest.
My other major decision was to max out my IRA in one big lump sum this year. In previous years I've thought this was a bad idea for a number of reasons. First, I didn't have the cash to do it. Second, I wanted to take advantage of dollar cost averaging for my contributions. [In retrospect, with a continually rising market like we had for the past 6 years, buying it all early would have been better]. Dollar cost averaging is certainly easier on the check book.
So this year I find myself with the cash and a yearning to invest while the market is down. Granted, the bottom could still be lower yet, but I'm not good enough to call it and investing now has some advantages. I've been wanting to increase my REIT holdings for a while, but since that fund is held in my IRA I've been limited by the annual contribution limits for 2008. So this January has seen a nice confluence of factors and I bought into the Vanguard REIT fund VGSIX.
I like this fund because it, like all Vanguard funds, has low cost and low turnover. REIT funds also have impressive dividend returns. In fact, the most recent dividend payout for my REIT fund was greater than from my S&P 500 fund even though the S&P fund has significantly greater assets. Because of the higher dividend payouts, it's a good idea to keep REITs in a tax sheltered account like an IRA. Buying at the begining of the year means greater dividend payments throughout the year.
On a side note, I just found out that bonanza means an exceptionally large and rich mineral deposit (as of an ore, precious metal, or petroleum). Hopefully this IRA turns out to be a dividend bonanza!
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