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ground_up
Trad climber
mt. hood /baja
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Topic Author's Original Post - Nov 28, 2011 - 12:06pm PT
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Who would you trust ? What would be the smartest investment ?
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Melissa
Gym climber
berkeley, ca
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Nov 28, 2011 - 12:09pm PT
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I'd buy a vacation property that I would enjoy regardless of what happened with the markets and just hope that it turned out to be a good investment too.
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Ghost
climber
A long way from where I started
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Nov 28, 2011 - 12:13pm PT
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Give it to Fattrad.
And don't ask any questions.
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FRUMY
Trad climber
SHERMAN OAKS,CA
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Nov 28, 2011 - 12:15pm PT
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If it was me a large part would be in Kinder-Morgan PTRS LP (KMP)
The rest in High quality DIVIDEND PAYING companies.
But that is just me & how I make my money.
Best of luck to you.
Do you homework.
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FRUMY
Trad climber
SHERMAN OAKS,CA
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Nov 28, 2011 - 12:17pm PT
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If you want total safety eKat is right.
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Prod
Trad climber
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Nov 28, 2011 - 12:25pm PT
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First are you completely out of debt? If not get there. I'd even pay off my house if I had step 2 covered.
Second, do you have 1 year of living cost in savings? If not do that.
If yes to the above, then Melissa has a good idea, as long as you can afford the overhead and upkeep etc.
If you enjoy investing, buy some books, read up and get a scottrade account, or etrade etc. It's pretty fun/ addictive. Max out IRA investments every year. You can control those in your on line trading accounts as well.
There is always Wine Women and Song.
*EDIT* I am not, at this point, on the Gold bandwagon, at all.
Prod.
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Toker Villain
Big Wall climber
Toquerville, Utah
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Nov 28, 2011 - 12:28pm PT
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Put it in a compact disc jewel case and forget where you put it. Then suspect everyone,..
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Sierra Ledge Rat
Social climber
Retired to Appalachia
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Nov 28, 2011 - 12:35pm PT
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I'd buy a beach cabana near Cancun, and a cute little Mexico honey to keep me company, and I'd retire.
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Norwegian
Trad climber
Placerville, California
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Nov 28, 2011 - 12:36pm PT
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smoke it
or goes it up your knows.
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Melissa
Gym climber
berkeley, ca
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Nov 28, 2011 - 12:37pm PT
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Check out Planet Money re: the Elko gold rush.
Good points, Prod. For me "having $400K to invest" assumes that the one is in the black with an adequate liquid life cushion. Otherwise, it's $400K to spend. Although if one has a small (relative to property value) 15 yr. 3.25 right now, a bit of mortgage debt is probably not a heinous thing given the right (general happiness and financial security) investment opportunity.
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BooDawg
Social climber
Butterfly Town
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Nov 28, 2011 - 12:43pm PT
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I'd put about $300K into a nice rural property that had some rental units (for income) in addition to a place for me to live (shelter), a workshop or two, and an orchard, gardens (food), enough oak trees for harvesting firewood, etc. I'd keep some cash reserve invested wisely and look for small, ventures, like Guido's or my own tour company to invest in.
No matter what happened to the economy, the basic investment would remain solid. The housing, workshops, and land would be used to build community and grow small businesses. Trust yourself and your friends. Procreative assets (orchards and other living assets) will gain value with time.
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Brandon-
climber
The Granite State.
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Nov 28, 2011 - 12:45pm PT
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Land, grow-op, and invest the rest in gold.
Guaranteed large return if you have a card to legalize the grow-op.
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Prod
Trad climber
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Nov 28, 2011 - 01:06pm PT
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Great idea. Look at how that worked out for today's retirees. You fukking retard.
Ok then, what would you do?
Prod.
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Gunkie
Trad climber
East Coast US
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Nov 28, 2011 - 01:10pm PT
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Put it all on 'black'.
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tolman_paul
Trad climber
Anchorage, AK
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Nov 28, 2011 - 01:13pm PT
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What is the term of the investment? 5 years, 10 years, 20, 40? Are you looking for it to grow for retirement, or are you looking for it to provide a suppliment for your incomre?
I like Boodogs idea, rental property and using it to sead a small business.
There is no-one more interested with your financial success than you, hence you should use the money with your skills to make the most profit. Professional money managers interest is in enriching themselves, if you make a proffit that is secondary to their primary interest.
Personally I'm quite leary of the market and don't see it settling down for several years. I don't have any faith in the traditional models and "wisdom" regarding sinking $ in the market. Volatile unpredictable markets equally provide the opportunity for large gains, and large losses. Unless you spend the time to really research funds and companies, you really are gambling.
BTW, if it were me, I'd pay of my house, turn it into a rental property and buy another house.
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scooter
climber
fist clamp
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Nov 28, 2011 - 01:31pm PT
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4 shares Berkshire-Hathaway.
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Prod
Trad climber
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Nov 28, 2011 - 01:33pm PT
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again...
hahahaha gud 1 Locker.
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Hawkeye
climber
State of Mine
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Nov 28, 2011 - 02:02pm PT
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pepper spray
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jstan
climber
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Nov 28, 2011 - 02:19pm PT
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Humans, and especially americans, feel more is better. This is greed. Pure and simple. Greed has to be gotten out of any investment plan. Because greed maximizes risk. As we move into ever lower standards of living, risk is something one has to keep low.
Take the time to calculate what you will actually need. This is the essential first step in any plan. You cannot just skip it.
Since one presumably hopes to continue living one needs first to look at probable future cash flow. If you think loss of your present cash flow is, say, a 30% probability that will need to be a scenario included in the plan. Just good worst case planning that avoids the risk of having to unwind positions into bad markets.
Momentum investing tells one to go with whatever vehicle is hot right now. A premium then has to be placed upon timing. You can also invest based upon what you think will happen next. I have tended to invest in that mode but have also modified that plan with what will possibly follow that next thing. Back in 2006-7 you may remember my bitterly decrying our huge indebtedness. A huge indebtedness undertaken in the face of flat to declining income. Flat to declining income unable to support what was obviously a bubble in real estate prices. There would be a correction and that would mean a flight to quality, something I prefer anyway. As part of that correction there would be government intervention possibly involving printing of money with the risk of inflation. In 2007 I acted so as to deal with both scenarios, and have done as well as I expected. Through times when almost all of the common assumptions have been violated.
I am beginning to think Krugman is right and we have entered a new paradigm in human affairs and 1970’s ideas about inflation have to be rexamined. We may well be following Japan now. Doubts last seen in the 1930’s have reappeared. Oddly, this tends to make investing something more intellectually interesting than it would otherwise be.
Buying a stock in hopes that it will go up is one dimensional. Investments should have components in both cash flow and appreciation. If they do you have a much better ability to deal with different scenarios.
A plan has to have depth. Otherwise you may find yourself above the next hard move with no idea where your next protection will be.
Not good.
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Grampa
Trad climber
So Cal
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Nov 28, 2011 - 02:19pm PT
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Deposit $400K in an Ameritrade Leveraged account.
This gives you approximately $800K buying power.
Purchase $800K worth of SDS ( S&P500 2x Short leveraged ETF )
Sell when the market crash bottoms in late 2012.
Disclaimer: While this strategy will work perfectly, timing is everything, so remember, buy low, sell high.
"This offer void where fraud is prohibited by law."
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couchmaster
climber
pdx
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Nov 28, 2011 - 02:23pm PT
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This is something you need to sort out based on your age (and age to retirement), tolerance for risk, job skills, income and life goals. To start, immediately make sure your high interest bills are payed off and stay paid off. Any 18-22 percent credit cards or high interest loans. Make sure your retirement is funded to the max so you can defer taxes. You don't say where the $ came from, but you might consult a tax attorney if you are in doubt or unsure of your tax liability. A consult will be cheap and fast, and a possible huge return on investment.
Let the internet be your friend, and take your time. Certainly there are financial advisers and accountants out there who can help. Don't give them your money, invest it yourself.
http://findanadvisor.napfa.org/Home.aspx
BTW, I have some gold, but would not recommend it as an investment. Getting some gold should be likened to gambling, not investing. For instance, the aggregate cost to pull the gold out of that open pit mine in Nevada which Newmont owns is @260 an ounce. Thus, they are working as fast as possible to pull it out and sell it to us suckers for just under $1700 an ounce. If demand slackens, ask yourself where will gold prices be.
Certainly the old standby is sticking it into a bunch of no load mutual funds to get the diversification. Look at Fidelity and Vanguard funds.
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TrundleBum
Trad climber
Las Vegas
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Nov 28, 2011 - 02:26pm PT
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At my income level:
That would be enough to just go climb for the rest of my life
(or at least till I was as old as Donini, maybe even Becky)
I'd just spend it all on time ;)
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Karl Baba
Trad climber
Yosemite, Ca
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Nov 28, 2011 - 03:13pm PT
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The housing market is down but probably has a ways to crash further as more people are forced into foreclosure. Keep the $400K liquid until you are in a position to jump in and get an amazing deal on income producing property like rentals.
If one of the units would be an acceptable living space if times get tough, so much the better.
Peace
Karl
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nature
climber
back in Tuscon Aridzona....
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Nov 28, 2011 - 03:13pm PT
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14000 cans of sardines from Trader Joes
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Roger Breedlove
climber
Cleveland Heights, Ohio
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Nov 28, 2011 - 03:14pm PT
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I would say the first thing is to make sure that you have a sensible financial plan. Do you have high interest permanent debt (already asked)? Do you have medical insurance? Do you need and have life and disability insurance? Do you have a will? Do you have a sensible idea of how much you will need for retirement and when? Do you have a short-term cash cushion (mad money)? Investing is the final part of a financial plan.
If you have answered all of these questions and you have $400K to invest, then the two hardest questions to answer are your risk tolerance (most folks don't act the way they talk) and do you want to manage, on a regular basis, your investment.
I think that one of the best ways to get started is to visit Schwab and tell them about your financial plan and listen carefully to what they tell you. Ask them to help you figure out your risk tolerance and desire to manage your investment. Reading Morningstar.com’s fund, EFT and stock blurbs and watching the world markets move will give you a good idea of the uncertainty in thinking a specific investment is a slam-dunk: for everyone buying a hidden gem, someone is selling a turkey.
Again the key questions are the risk tolerance and how actively you want to manage the money. Four-hundred thousand is not enough money to get anything more than cursory advice (one of the downsides of being in the 99%) but it is enough money to take seriously—lots of folks have blown that amount of money. If you have a sound financial plan, and you invest reasonably well, that amount of money can give you increasing levels of financial security, which can be converted into lots of different things that make you happy.
Currently, I am amongst investors who are very nervous about contagion of the Euro debt crisis. I don't think anyone knows exactly how an Italian default or Euro breakup will affect both international banking and worldwide GDP. For me the downside risk is too high for any short term gains. Now, my problem is deciding when to reinvest and where. I work on it every day.
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FRUMY
Trad climber
SHERMAN OAKS,CA
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Nov 28, 2011 - 03:25pm PT
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Of course Nature is right.
I always give Fatrad sh-+ but he is dead nuts on with what he said on page one.
Fortmental I have done very well though the last 3 hard years.
I don't day, week, or month trade I invest in high quality companies that run their business properly & have a proven record of paying dividends.
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Bruce Morris
Social climber
Belmont, California
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Nov 28, 2011 - 03:26pm PT
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Rent a condo in Vail or Aspen. Invite all your friends up for a Big Party & spend it all in 6-months on drugs, women and skiing. I knew a guy in college who did just that after inheriting a half mil from his aunt and wound up at 27 back working in a hardware store. He never regretted it because all his relatives were filthy rich. He just had to wait in line for the next big legacy to come down the pipe. Dead relatives were his best friends.
Now if your family isn't filthy rich and you're not in line to inherit a bunch more, then . . . then . . . you might adopt a more cautious approach.
PS- Whenever you have nothing more left to sell, sell you ass.
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bergbryce
Mountain climber
South Lake Tahoe, CA
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Nov 28, 2011 - 03:29pm PT
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My grandpa has been buying duplexes in Kentucky for like $32k the past two years. In retirement he's making $$ hand over fist.
Helps to live near the units though so you can screen the tenants.
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Reilly
Mountain climber
The Other Monrovia- CA
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Nov 28, 2011 - 03:32pm PT
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I'd tell you but then I'd have to kill you.
Those advocating paying off all debt other than your home are right. Paying
off your home right now is probably a bad idea but one can't generalize.
There is plenty of money to be made in the markets but it takes a fair bit
of savvy. Good financial advisors generally won't talk to you if you've less
than $500K unless they are fee only but many of them are not worth it. If
they were they'd be percentage men for the big accounts.
Putting it all into real estate is not that bad an idea as it is a buyer's
market. But then your money is locked in for a goodly while. Putting it in
a CD is just giving it away to inflation. Muni bonds are giving 5% right now.
You can get 9% from junk bonds with more risk.
It is a complicated subject so you have much reading to do.
This is a good place to start: http://www.bobbrinker.com/
While it is called Bob Brinker's Marketimer, and you should avoid being a
'market timer', he is pretty conservative and there is a ton of good free
advice there.
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tolman_paul
Trad climber
Anchorage, AK
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Nov 28, 2011 - 03:48pm PT
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Money is a tool, and it only benefits you if you use it. Sure, you could stuff it away in a savings acount and forget about it until you retire, or until some immergency requires you use it.
Then again, you could use it to make a dramatic change in the quality of your life, but you need to figure out what your life plan is. So it's impossible for any of us to guess the best use of your money. I think most people are projecting how it could best benefit them. For some it is just the piece of mind of having it. For others it is a means to gain additional income or returns, for others mad money.
So figure out what motivates you most, a fully funded frugal lifestyle, early retirement, change in lifestyle for a short term, financial independence......
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Elcapinyoazz
Social climber
Joshua Tree
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Nov 28, 2011 - 03:53pm PT
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You could buy quite a few politicians, and use about $500 to setup a corporate structure, then have your bought politicians steer some fatty govt contracts your way, which you of course sub-out and skim a "management fee" off the top. Say 15% of the $500million contract in fees for providing baby wipes to the military or something.
But you need to diversify...buy some Republicans AND some Democrats.
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the Fet
climber
Tu-Tok-A-Nu-La
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Nov 28, 2011 - 04:14pm PT
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Escort Service.
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JLP
Social climber
The internet
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Nov 28, 2011 - 04:16pm PT
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I'd put about $300K into a nice rural property that had some rental units (for income) in addition to a place for me to live (shelter), a workshop or two, and an orchard, gardens (food), enough oak trees for harvesting firewood, etc. I'd keep some cash reserve invested wisely and look for small, ventures, like Guido's or my own tour company to invest in. Sounds like a great plan - for about 4 million.
400k will set you clear in a single family on a 1/4 acre in the shitburbs - or a fukin condo in a place people actually want to live, bro!
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Prod
Trad climber
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Nov 28, 2011 - 04:24pm PT
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Rental management? With 400K? Good luck. 2 rentals will give you a headache and a job as a handyman or having you pay 10% to a rental management company who hopefully has 50 plus properties, or 49 plus of your competitors when times are tough and vacancies are high.
Prod.
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Prod
Trad climber
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Nov 28, 2011 - 04:28pm PT
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My scottrade portfolio went up 5.627% today. If I was investing your 400k you would have made $22,508. Lets talk.
Prod.
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Moof
Big Wall climber
Orygun
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Nov 28, 2011 - 04:41pm PT
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Pay off all debts. Debts suck away freedom. A house over your head you own gives you options.
Consider investing in yourself. 100k on a new education can get you a job that doesn't suck, and is something that can't be taken away easily. I contrast my life, albeit somewhat more sedentary than I would like, to that of my father and his father, and I'm darn happy I have a degree. Indoors, no heavy lifting. I could not however go back to school thanks to the mortgage I have, so I am glad I already have my degree.
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Mighty Hiker
climber
Vancouver, B.C.
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Nov 28, 2011 - 04:42pm PT
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Isn't EKat trying to sell her cottage high atop a drumlin in the north woods, just a few kilometres from paradise - Canada, that is? Complete, presumably, with deer, moose, and flocks of turkeys.
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Seamstress
Trad climber
Yacolt, WA
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Nov 28, 2011 - 04:57pm PT
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As others said, it is all dependent on:
1) what phase of life you are at
2) what your assets and debts are
3) what is your risk tolerance
I absolutely would not put it in gold. The older people - like me - have seen gold bubbles before, and this walks and talks like a gold bubble. You should have bought gold 2 years ago. Now is the time to hold or sell it.
How is the rest of your life savings invested? If you already have significant investments in the stock market, you might want to consider setting up your retirement. With my last good bonus (a fading ememory), I put a big downpayment on a vacation/retirement property. Yes, in Central Oregon you can get quite a nice property for $300K - $400K. Mine came complete with a renter and furniture. I have a property management company that currently gets 8%. The renter left, but was easily replaced in a month last year with another nice family. In a few years, I will retire to this beautiful house. In the meantime, the mortgage, insurance and taxes are covered by my renter. So it is costing me nothing, and I am quite confident this property will not get cheaper. I'm glad I did it as lending requirements tightened up since then.
Eventually the housing glut will clear up. That probably would be about the time I plan to retire. Since I was born during the peak of the baby boom, lots of us geriatrics will be migrating and driving up the price of lovely homes.
Years ago financial advisors thought that was too small a sum to bother with. Nowadays they are hurting for business and will be happy to take on your business. Yes, there are fees. However, I do not want to be tied to managing my portfolio everyday while maintaining a full time job and trying to get in some good climbing trips. Looking at the totality of your assets, liabilities, and dreams is important. Got to have a plan.
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phylp
Trad climber
Millbrae, CA
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Nov 28, 2011 - 05:20pm PT
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It really depends on:
your age
your income/debt profile
if you are living where you want to live
if you have a job that you love and that will keep you employable for the next 10-20 years
if you are partnered w or s children or want to have those things in the near future
Good luck thinking thru your options.
One other thing. This statement was made above:
"Professional money managers interest is in enriching themselves, if you make a proffit that is secondary to their primary interest."
There are big differences among the functions that SEC-registered Financial advisors, financial planners, and stock brokers perform. It is useful to know what the differences are.
If you are paying someone a % of your portfolio to manage your money (a common way to do it), their primary interest is to maximize your return within your risk profile. That way they make more money as your portfolio goes up, rather than less money as it goes down. Esp. because if it goes down too much and you fire them, they make no more money at all and their reputation suffers.
I'm not in the financial industry, that's just the way I see it.
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CrackAddict
Trad climber
Canoga Park, CA
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Nov 28, 2011 - 05:56pm PT
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Deposit $400K in an Ameritrade Leveraged account.
This gives you approximately $800K buying power.
Purchase $800K worth of SDS ( S&P500 2x Short leveraged ETF )
Don't do this. Even if you are correct about the bust, your timing has to be spot on or you will lose everything from volatility leakage.
Double short/long ETFs are a disaster if held for longer than a few days. Look at all the double shorts and superimpose the double long positions on them. In a relatively short time they both become asymptotic at zero.
The reason for this is simple, if the ETF tries to double the daily change, changes are usually +- a percent or two per day, but going down 1% and up 1% do not get you back to where you were, you are still down. The effect is the same whether it is double short or double long.
CD's are a terrible choice though also. Even the government admits we have 4% inflation (go to shadowstats.org to see the real rate) and CDs pay what, 1%? So after 10 years your money is worth about 74% of what you started with.
I would buy real things, land, commodities, gold, silver, copper, stocks in companies that do business overseas.
Incidently, if more inflation is in our future (I would bet that it is, once our obligations become larger than our ability to sell debt, our government will be forced to steal even our meager savings), then real estate is probably the best investment, but if you really want to make money don't use cash. Buy with the best fixed rate loan you can get and leverage yourself to the limit. Eventually rent will be sky high and the number on the postage stamp will be larger than the number on your mortgage check.
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Roger Brown
climber
Oceano, California
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Nov 28, 2011 - 06:05pm PT
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Paying off the house as fast as possible worked for us. We payed off our original GI Bill loan two years early. What a great feeling. Things just seemed to be easier after that. Been in this house for 26 years now, and we ain't going nowhere:-)
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Hawkeye
climber
State of Mine
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Nov 28, 2011 - 06:09pm PT
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Hire a sniper and take care of guys like Fattrad.
this was a really shitty thing to even infer Coz.
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barry ohm
Trad climber
escondido, ca
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Nov 28, 2011 - 06:13pm PT
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I would pay off the House any any credit so I could live debt free. then I would make sure I had 1 years worth of money in a FDIC insured account to cover in case of a emergency, Then take whats left and go on a road trip. Cheers
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pyro
Big Wall climber
Calabasas
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Nov 28, 2011 - 06:35pm PT
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boodawg is right.
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Elcapinyoazz
Social climber
Joshua Tree
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Nov 28, 2011 - 06:42pm PT
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Hookers and blow dude, hookers and blow.
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Hawkeye
climber
State of Mine
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Nov 28, 2011 - 06:52pm PT
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least he could have done fattrad is to suggest some pepper spray, or a tazer....
:)
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FRUMY
Trad climber
SHERMAN OAKS,CA
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Nov 28, 2011 - 06:54pm PT
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Fattrad I guess guys like you are why I use a 1903D Springfield 30-6.
Of course it should be without saying pay off your home & all debt first thing.
Second live under your means.
Third invest wisely what ever the investment.
Then 14,000 cans of sardines.
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nature
climber
back in Tuscon Aridzona....
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Nov 28, 2011 - 06:56pm PT
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cuz you know that'll be one hell of a SushiFest!
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FRUMY
Trad climber
SHERMAN OAKS,CA
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Nov 28, 2011 - 07:06pm PT
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Sushifest -- Sushifest
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Bowser
Trad climber
Red River NM
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Nov 28, 2011 - 07:09pm PT
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I can't believe you guys are suggesting he put it in a bank or stocks.
Duhhh.....
Real estate, gold, and coffee.
TB
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Mighty Hiker
climber
Vancouver, B.C.
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Nov 28, 2011 - 07:14pm PT
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A friend who is a successful investment advisor in Vancouver had an article published in the paper here yesterday, with investment advice.
Client Age 50 to 65 - BEST TIPS
 Prepare a financial plan and update it every few years or when there is a significant life event (divorce, career change, etc.). If you fail to plan, you plan to fail.
Don’t procrastinate – if you start early, time is your greatest ally; if you delay, time becomes your greatest enemy.
Live within your means.
Marry well.
Identify your risk tolerance and invest within it at all times.
Know how your advisor is compensated. Is the compensation scheme likely to influence your advisor’s advice?
Don’t buy DSC funds. (= deferred service charge)
If you don’t understand it, don’t invest in it. If you don’t have the skills to properly analyze an investment, don’t invest in it.
Invest for tax efficiency, but don’t let the tax tail wag the investment dog.
“I have met the enemy and he is us” – You and your emotions are probably the greatest obstacle to your long-term investment success. Work with an advisor you trust. Trust is crucial because at some point in your relationship with your advisor your short-term investment results
will not be as either you or your advisor would like. It is at that point, when they recommend that you stay the course, that this trust between advisor and client pays dividends.
Prepare a will and a Power of Attorney.
Properly insure your risks.
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bluering
Trad climber
Santa Clara, CA
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Nov 28, 2011 - 07:19pm PT
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Real estate and silver.
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powderdan
Social climber
mammoth lakes
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Nov 28, 2011 - 07:26pm PT
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what a dilema to have!
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tolman_paul
Trad climber
Anchorage, AK
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Nov 28, 2011 - 07:27pm PT
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One other thing. This statement was made above:
"Professional money managers interest is in enriching themselves, if you make a proffit that is secondary to their primary interest."
I still stand by that point. Sure, those various entities may be legally bound to various degrees to invest my money into what is supposedly my best interest, but that doesn't mean there is any gurantee on a return on those investments, nor any protection against losses. Whether or not I make a proffit or suffer a loss, they take home a paycheck. I've lost a fair some of money over the years trusting my hard earned dollars to prfessionals.
My personal somewhat jaded and slightly conspiratorally minded thought is that the push to 401k's is that it has been means of the bankers/stock brokers to steal vast somes of money from the working class by pushing them to have their own retirement funds, then raiding those funds through market manipulation. Remember, those $'s didn't just disapear, they went somewhere, or rather into somebody elses accounts.
I look at those I know who have become wealthy, and they didn't become wealthy via trusting someone else to make money with their money. They used their own personal knowledge and skills to start small businesses or invest directly into companies, real estate etc. Who better to know your local real estate market then you, who can see what the trends are in house prices, the local economy etc. Maybe it makes sense for you to get a rental property, especially with foreclosures on the market, maybe it doesn't in your area.
I'd say stick the $ into federally insured savings acounts for 1 year, and spend every spare minute figuring out how you can best use that money to live the kind of life you want to live. Maybe that's getting a 50' sailboat and traveling the world, maybe it's a cabin in the boonies with 5 acres ot grow your own food, maybe it's a few acres in El Portal and a 5th wheel trailer with daily commutes to Yosemite to climb every day, maybe...
It isn't enough money to be self sustaining in surburbia without additional income, but it is enough money to get out of surburbia and lead a really interesting life.
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FRUMY
Trad climber
SHERMAN OAKS,CA
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Nov 28, 2011 - 07:39pm PT
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Mighty Hiker that is great advice.
Most of my life I invested in property. In 2004 I started selling my investment properties & finished buy the end of 2005.
The only way I would invest in land now would be like boodawg was saying -- something I was going to work & live on.
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CrackAddict
Trad climber
Canoga Park, CA
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Nov 28, 2011 - 08:30pm PT
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Client Age 50 to 65 - BEST TIPS
Prepare a financial plan and update it every few years or when there is a significant life event (divorce, career change, etc.). If you fail to plan, you plan to fail.
Don’t procrastinate – if you start early, time is your greatest ally; if you delay, time becomes your greatest enemy.
Live within your means.
Marry well.
Identify your risk tolerance and invest within it at all times.
Know how your advisor is compensated. Is the compensation scheme likely to influence your advisor’s advice?
Don’t buy DSC funds. (= deferred service charge)
If you don’t understand it, don’t invest in it. If you don’t have the skills to properly analyze an investment, don’t invest in it.
Invest for tax efficiency, but don’t let the tax tail wag the investment dog.
“I have met the enemy and he is us” – You and your emotions are probably the greatest obstacle to your long-term investment success. Work with an advisor you trust. Trust is crucial because at some point in your relationship with your advisor your short-term investment results
will not be as either you or your advisor would like. It is at that point, when they recommend that you stay the course, that this trust between advisor and client pays dividends.
Prepare a will and a Power of Attorney.
Properly insure your risks.
I guess if you marry well, you don't need the other tips
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FRUMY
Trad climber
SHERMAN OAKS,CA
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Nov 28, 2011 - 08:39pm PT
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I didn't do so well on the marry part.
Good luck to anyone on that.
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kennyt
climber
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Nov 28, 2011 - 08:48pm PT
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Invest in a new home in Markleeville Ca. by Kenny Thompson
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SteveW
Trad climber
The state of confusion
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Nov 28, 2011 - 10:26pm PT
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Jstan, you make it sound simple. But for a simpleton like me. . .
knott so much. . .
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Ezra Ellis
Trad climber
WA, & NC & Idaho
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Nov 28, 2011 - 10:58pm PT
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1. Pay off credit card debt
2. Pay off auto loans
3. Pay off home loan
4. Who the fu*k knows from here... a vacation property will at least make you happy!
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jstan
climber
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Nov 28, 2011 - 11:03pm PT
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SteveW:
Money is profoundly uninteresting. So you need to introduce something to the process that is interesting. I started out with a technique for getting bills and records off my desk that required no effort at all. I staple them, in the chronological order received into a spiral notebook. When full you put the starting and ending dates on the cover. I can find 25 year old records in minutes just based on chronology. Should anyone tell me I owe something, I have all the proof I need, right there. But before I put them in I enter the data into an excel spreadsheet. The sheet allows me to plot out my cost of living and reconcile my accounts each month in minutes. And I can see how cost of living has changed over the years.
When you can do this you know what you need, and can start thinking about investments.
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Fritz
Trad climber
Choss Creek, ID
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Nov 28, 2011 - 11:26pm PT
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Thank you all for sharing advice.
Heidi & I have suffered the investment roller-coaster for the last 25 years, and have participated in many of the investments mentioned.
The only decision I can still look back on, with major satisfaction is:
Placing, most of our investment money into Vanguard Mutual Funds.
Disclaimer!
I don't work for any investment related company.
Vanguard simply charges way lower management fees than any other Mutual Fund company, I know of.
They are one of the largest, and one of the most reputable Mutual Fund Companies. If in doubt: check their Forbes Magazine ratings.
Their funds may not be top rated every year, but you will be saving money on their fees.
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nature
climber
back in Tuscon Aridzona....
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Nov 28, 2011 - 11:43pm PT
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invest in LED technology?
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Hilt
Social climber
Utah
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Nov 28, 2011 - 11:52pm PT
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Rental properties. Just make sure it's in a good location so you always have plenty of clients asking to move in so you can be very picky.
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Ken M
Mountain climber
Los Angeles, Ca
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Nov 29, 2011 - 01:49am PT
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there is a LOT of outstanding advice in this thread, setting aside the trolling.
I've done well in real estate and the market. I'm getting back to pre-recession levels. Key was to sit tight.
I agree that getting rid of high-level debt is key. If you look at the rates being paid on credit cards and even a morgage, it is hard to come up with a safe investment that has that rate of return with no work. Think about it, if you pay off a credit card that is at, say, 15%, it is the same as though you invested in something paying 15%, WITH NO RISK. Where can you get an investment like that??
One thing that has not been covered, is entering into various investments with others. This is a HIGHLY DANGEROUS thing to do, not in terms of physical safety, but in danger to relationships. It is extremely hard to do, but in investing with friends as partners, it is the assumptions that kill you. Often unspoken. If you treat the situation as though you were entering into it with someone you didn't trust, that would at least be a good start. The stories I could tell......
So I agree with many others that getting rid of high-yield dept is the first priority. By the way, making advanced payments of principal for those with some money, but not bagfulls, is also a great investment.
I also agree that one should evaluate one's place in life, age, earning potential, working life. And should create a fiscal plan. And should gain a real handle on expenses.
I think that rental real estate can be very good, if you know what you are doing, are very hands-on, and you live nearby. The leveraging that can be done with real estate, combined with tax advantages, can really create money.
For example, if one had $100,000.00, and purchased 5 $100,000 properties, paying 20% down, and setting it up so that the rent/tax advantage covered the expenses, and paid off the loans in 15 years, you will now own $500,000 worth of property assuming that they did not increase in value, AT ALL.
That is a 500% increase in money in 15 years, or 33% per year.
Assume that the property LOST 20% of it's value over those 15 years.
You now own $400,000 worth of property, a 400% increase, or 26% per year.
If the property appreciates, we're talking about REAL money.
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Ken M
Mountain climber
Los Angeles, Ca
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Nov 29, 2011 - 02:34am PT
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Just for fun, I explored a stock market strategy the last two years, that ended up being interesting. I noticed how, even in a variety of market conditions, that one sees a lot of day-to-day variability, and that often, when one has a down day, one often has a similar up day pretty shortly.
Here is the strategy: First, I developed a list of stocks with certain properties: Large companies that you've heard of that are generally well thought of. Pay dividends, preferrably quarterly. I have a list of about 10 stocks. Dow stocks are nice.
When I wake up in the morning, and hear how the markets are doing, I look for a DOWN day, where the market has broadly lost more than 1%. I look at my list, and look for stocks that have dropped by 1 1/2 percent. I look to see if there was some specific problem with the stock--there almost never is, it is the "wobble" in the market that has hit that particular stock. I buy the stock, and generally there are 2 or 3, which is best, as I like to diversify by using multiple stocks, and decrease my risk. (although increasing the expenses, as you are charged by the trade)
Now I set an automatic sell order for a 1% gain, so I don't have to sit around and watch the stock on an hourly basis, I'm not trapped on my computer (that was the situation, until I started using the automatic sell orders). I've also gotten a little confused, and did not sell a stock that I thought I had sold. That's ok, I made 3% on that one.
What I'm shooting for, is a turnaround of a day, or a few, for a 1% return on my money-minus the cost of the trades (you can do this for less than $4). If the market stays down, you might have to stay in the stock for awhile, but because it is a solid company (lets say, 3M, GE, Disney, for example), the risk of loss of the investment is very little. You may also collect some dividend money while you are waiting for it to go back up, which boosts your return.
Well, that seems pretty simple. As I considered it, I thought "this is too simple to work, I must be missing something." So, I gave it a try.
I did this rather casually, by which I mean I wasn't sitting by the computer waiting for this to happen.
Over the two years, I made about 30 trys.
Of the 30, it worked...........30 times. I lost no money, at all. On a couple of occasions, I did have to hang onto a stock for more than a month, but eventually sold at the 1% gain. It was a little unnerving, when a stock had dropped by 5%, but it came back up.
This is not a lot of money, each time only 1%. HOWEVER, the principal is the same money, so I actually made 30% appreciation over that 2 years, or 15% per year. (minus expenses) That is better than the bank. If I'd been serious, I could probably have done a buy several times a month, at least.
This is a cousin to the strategy known as "day-trading", but differs in important ways.
Your mileage may differ, and unless you are a sophisticated investor, I would work with one of the brokerages that allow you to make "phantom trades" so that you can see what happens, before you consider risking any money (which I did).
No guarantees, and I admit that I consider market timing to be very closely related to gambling at Vegas.
But don't do what I did, you'll probably lose all your money. :)
If you do, let me know what happens.
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Rattlesnake Arch
Social climber
Home is where we park it
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Nov 29, 2011 - 06:41am PT
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Problems with gold as an investment:
1. It doesn't pay interest. All earnings are capital gains.
2. Taxed as a collectable = 28%. A big bite when you sell.
3. Someone might steal it. Good luck getting insurance.
4. If you want "secure" storage you have to pay which cuts into your gains.
5. New antiterrorism laws force dealers to report gold sales. The IRS is watching.
6. The government has confiscated gold from private citizens in the past, and could do so in the future.
7. A dramatic rise in gold value likely means the dollar has collapsed. You may need a good automatic weapon to go shopping with your American Eagles.
8. Central Banks have huge reserves that they may be tempted to sell to pay their bills.
BTW Electronic gold is not gold, it is just another risky way to speculate.
Otherwise its a good investment...
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steveA
Trad climber
bedford,massachusetts
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Nov 29, 2011 - 07:32am PT
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Much good advice here.
I have to agree with Jstan--if I'm reading him right.
The standard of living has started to swing to a downward trend, and there is going to be an increasingly larger gap between the rich and poor.
The increasing cost of energy will have a significant impact on the world economy. I preached this to my high school students 30 years ago.
Focus on securing a comfortable retirement and get rid of DEBT. Make every effort to own a roof over your head, in an area of your choice, with as little tax burden as possible.
I've made many mistakes playing the market and I have learned from those mistakes. There is a long learning curve and I would NOT recommend gambling your money. I generally do make money now but it is not an activity for a novice.
I like the idea of sticking your money in a secure place and spending a year forming a strategy for the future.
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SteveW
Trad climber
The state of confusion
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Nov 29, 2011 - 07:53am PT
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Jstan
That sounds a bit easier. I used to do something like that after I read
Your Money or Your Life.
I'll have to start that. . .
Thanks!
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Rattlesnake Arch
Social climber
Home is where we park it
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Nov 29, 2011 - 08:11am PT
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All the basic investment strategies still work with todays markets. You need to have discipline and be patient to be a good investor,though.
For instance, take saving for retirement. Advisors recommend Asset Allocation based on your age, with your portfolio divided between stocks, bonds, and cash. Then periodic rebalancing to maintain your desired allocation.
Where people went wrong is "forgetting" to rebalance. The stock market went up, their stock allocation got out of whack. But they didn't want to sell stocks because of the euphoria. Even most professionals lacked the discipline to rebalance.
Another basic strategy is buy and hold. You pick a portfolio of stocks with good fundamentals, buy them, then be patient. If you bought 10 stocks, 9 can be dogs if you picked one Apple.
If you lack patience and discipline, stay out. I believe the stock market is rigged, there is much inside trading and the little guy will get squashed if he tries trading strategies.
Oh, BTW I learned about 10 years ago that I lack the discipline to be a good stock investor.
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Reilly
Mountain climber
The Other Monrovia- CA
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Nov 29, 2011 - 11:30am PT
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Many people who attempt to trade on insider info wind up in jail.
Unless you're a congressman: NYTimesInsiderTrading
Sorry for the thread drift, sort of. Back when I was in commodities then
we could have talked about some funny business! It was all about insider
trades in the most literal sense. "Oops, I seem to have dropped that sell
order for that schmuck in Poughkeepsie! Oh well, we'll reconcile him at the
end of the day."
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Ken M
Mountain climber
Los Angeles, Ca
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Nov 29, 2011 - 11:40am PT
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If one is tempted to have a broker give advice and/or do trades for you, an educational read is "Liars Poker" by Michael Lewis, who was such a trader. You'll never do it again.
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Jingy
climber
Somewhere out there
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Nov 29, 2011 - 11:44am PT
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Never really thought about it.
Never found myself with a $400K paycheck, IRS refund or bonus.
I guess I'm just not applying myself enough.... I can do it, I just have to believe in myself
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Rattlesnake Arch
Social climber
Home is where we park it
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Nov 29, 2011 - 11:50am PT
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Except for your comment about rebalancing, you are completely wrong I take that as a complement. Thank you.
Many people who attempt to trade on insider info wind up in jail
True, there are some high profile cases - they even got Martha Stewart. But we will never know the true extent of insider trading.
I'm entitled to my opinion that the tables are rigged to take advantage of the "dumb money" - people with 401(k)'s and the like. There is more than just inside trading involved.
Jim Cramer told us how he used to do it:
"A lot of times when I was short at my hedge fund . . . meaning I needed (a stock) down, I would create a level of activity beforehand that could drive the futures," said Cramer. "It's a fun game and it's a lucrative game."
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FRUMY
Trad climber
SHERMAN OAKS,CA
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Nov 29, 2011 - 12:37pm PT
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Rebalancing is a joke. It's a brokers way to get movement on your portfolio. They make their money when you buy & sell.
If you buy ten stocks hoping to get one Apple you are making a major mistake.
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FRUMY
Trad climber
SHERMAN OAKS,CA
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Nov 29, 2011 - 01:43pm PT
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I'M WITH YOU FATTRAD. THATS WHY I SAID YOU WERE SPOT ON.
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Inner City
Trad climber
East Bay
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Nov 29, 2011 - 02:00pm PT
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There are a lot of platitudes being thrown around on this thread which seem to suggest that someone knows the actual 'right' thing for a person to do. The truth is deeper. Mighty Hiker seems closest to the truth because his post shows a number of variables which need to be considered.
Further, large investment houses are not for most. Transactional business tends to cause financial 'advisors' to act in their own interest, whereas a fee-based RIA (Registered Invesment Advisor) has his interests aligned with the client by charging a fee based on the amount of a client's assets under management (AUM).
Look for a couple of well-respected RIA's in your area and do a preliminary interview. By rule, an RIA cannot do old school (transactional) biz. The industry is moving away from this type of stuff.
I work in this field and speak to financial advisors on the phone each day.
Investing is a challenging business right now, and it is going through some big changes. Many clients are reassessing their own risk tolerance in the wake of the market upheaval of '08.
This (off-)topic is important and smart decisions are not easy to come by.
Be thoughtful and beware of someone who thinks they have all the answers, as the smarter person knows how much they don't know.
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Rattlesnake Arch
Social climber
Home is where we park it
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Nov 29, 2011 - 02:23pm PT
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Rebalancing is a joke. It's a brokers way to get movement on your portfolio. They make their money when you buy & sell.
The point is to remove the average investor from market timing decisions, which he/she will screw up (myself included). Of course the brokerages generate commissions this way and you will never get rich listening to them.
If you buy ten stocks hoping to get one Apple you are making a major mistake. Agreed. My example was simplistic. As an average buy and hold investor you would do the best you can to pick say 10 good companies. You are hoping the overall market will rise over the long term, also that you will be lucky.
I am not recommending these strategies as a way to invest $400k because I think the stock market has a small number of winners, the majority of us are lucky if we get our money back. But whatever you do, follow a strategy you understand and make your own decisions about where you put your money.
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Rattlesnake Arch
Social climber
Home is where we park it
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Nov 29, 2011 - 02:36pm PT
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Cramer was (at hedge fund) and to a certain extent a momentum player, it's just a small gain and if you have more than a ten day hold time frame, pretty meaningless.
Certainly Cramer was small potatoes, thats probably why he went to TV. But if he is capable of generating volatility and profiting from it, you can bet there are much bigger players that also are doing this. In fact my belief is that much of the recent trading range volatility is not due to Europe, or macroeconomics, or any fundamental issue.
One can envision the Big Boys creating volatility to generate profits for their own accounts.
Fine, but not with my $400k.
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Rattlesnake Arch
Social climber
Home is where we park it
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Nov 29, 2011 - 02:44pm PT
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BTW I don't have $400k to invest - fun to talk about though.
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Jingy
climber
Somewhere out there
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Nov 29, 2011 - 05:57pm PT
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We don’t invest in nukes.
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BigNick
Trad climber
Los Angeles
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Nov 29, 2011 - 06:44pm PT
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The currency of the future is food (as it has been in the past), which is much more palatable then land or gold. I invest in high production, localized, urban food systems that exceed organic standards and can function off the water grid. Yes, urban farming is viable and conforms to the pillars of the triple bottom line. Come to LA for a farm tour!
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Gorgeous George
Trad climber
Los Angeles, California
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Nov 30, 2011 - 12:13am PT
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Sustainable housing from agricultural waste (I.e. Straw) see www.enviroboard.com
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Rattlesnake Arch
Social climber
Home is where we park it
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Nov 30, 2011 - 06:34am PT
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a fee-based RIA (Registered Invesment Advisor) has his interests aligned with the client by charging a fee based on the amount of a client's assets under management
Sounds good,Inner City. Couple questions.. what would the annual fee be on $400k? Could one expect to beat the S&P ??
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FRUMY
Trad climber
SHERMAN OAKS,CA
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Nov 30, 2011 - 11:40am PT
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RATTLESNAKE ARCH -- I started my investing with $50 in 1973. It's not about how much you have but the homework you put into it.
A few people here have good ideas. But most miss the target. It does not matter big investment house - small house. IT MATTERS WHAT YOU BUY.
Gold, Silver, or tinfoil are wothless TO ME - they don't pay dividends.
For many years I bought & sold Aluminum. Because I could by it dirty @ 10 cents a pound & sell it cleaned at 40 - 80 cents a pound. Cost of cleaning averaged 10 cents a pound.
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blahblah
Gym climber
Boulder
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Nov 30, 2011 - 11:41am PT
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Sounds good,Inner City. Couple questions.. what would the annual fee be on $400k? Could one expect to beat the S&P ??
Since the vast majority of invested money is professionally managed, why would you think that any particular manager will exceed average returns?
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Reilly
Mountain climber
The Other Monrovia- CA
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Nov 30, 2011 - 11:43am PT
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Short the Euro - TODAY!!!!! You'll retire before the end of next month.
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Inner City
Trad climber
East Bay
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Nov 30, 2011 - 11:55am PT
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"What would I pay"--most RIA's charge in the neighborhood of 1 percent of your assets under management per year.
"Should I expect to beat the S and P 500?" Tough question. As the S and P is an equity index, if you were someone with an extremely high risk tolerance and young of years, you could conceivably beat the S and P with the right allocation. But, it is too difficult for me to say given all the variables.
I know what I don't know (which is a lot!)
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JLP
Social climber
The internet
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This thread is full of horse sh!t advice.
Reality check: most of you are in debt. You've never had 400k to invest and you never will.
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FRUMY
Trad climber
SHERMAN OAKS,CA
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Dude what better advice than 14000 cans of sardines.
These people will complain about anything.
& it doesn't matter how miuch you have -- if you follow step 1 & 2 you'll be able to, in time buy all the sardines you need.
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MikeL
climber
SANTA CLARA, CA
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In these economic times, it would make sense to pay off debt as fast as one can. I know money is cheap, but equities' volatility is high, and bonds are lackluster. Sure, American treasuries still sell at a premium, but the global political and economic risks are unpredictable, at best. What has gone around financially in markets will come around for the U.S. sooner or later. The U.S. can no longer remain immune to global financial impacts. We're all in this together now.
Last, most of the readers here are probably old'ish: 6-12 months' worth of liquid funds will be important. Simply put: age is risky; you can be sure that something unpleasant is coming your way. (In today's world, one might want to redouble that warning.)
Pay-off the home or debt, and then one can dream a little more easily.
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