What should you do with your bonus?


Let’s say you get a bonus. Or a tax refund. Or a modest inheritance. Whatever it is, it’s a nice chunk of change. And it’s not money you’re planning on using in the next five years, rather you’ve earmarked it: Future.

So what should you do with it? Put it into your portfolio, divvying it up in sync with your current (and of course, well-thought out) asset allocation? Or should you hold it on the sidelines and dollar-cost average it in over the next six to 12 months?

That’s a question Richard Graziadei, managing director at TIAA-CREF Trust Co. and his research colleagues posed recently. They looked at every 12-month period in the S&P 500 from 1926 (i.e. pre-Great Depression) to mid-2014, and examined asset allocations ranging from 20% stocks/80% bonds, to the reverse. The results: In most cases, putting the money to work right away turned out to be…

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