What would you do with a Clondike bar?

[fallout man]

My basic question to all you financially independent, successful folks:

If you had X hundred thousand dollars on hand, how would you safely make it grow?

As I really like the idea of not losing money, what's the best savings scheme able to provide the most return on a few hundred K? I'm looking for slow-and-steady, and also would like the option of having the cash on hand to buy realty in the near future.

 

[TechAZ]

Are you Native American by chance?

 

[JS80]

What would you do with a Clondike bar?

I would vote against the rescue bill and risk Great Depression part 2.

 

[nonameo]

Index funds?

 

[cKGunslinger]

Buy some spell-checking software..

 

[fallout man]

Originally posted by: TechAZ
Are you Native American by chance?

No, but I've potentially inherited a few hundred K funbucks. I'm trying to think of ways to make the best of it.

I just had a labored conversation with my mom telling her to split it into separate sub-100k accounts. It was rough, as she does not have grasp of the whole FDIC concept.

Edit: Maybe I should switch to republican and start hating people on welfare.

 

[First]

Here's a factoid I always make open to those who need investment advice; buy Jeremy J. Siegel's Stocks for the Long Run. The crux of his book is simple and sweet; equity investment in the U.S., well diversified and in the long run, shows a remarkably consistent trend. I'll repost part of what he says verbatim here; "The real return on equities has averaged 6.8% per year over the past 204 years [1802-2006]", page 12 Table 1-1 in the first chapter of his book. This is peer-reviewed research that has been verified over and over by other economists, and also a gold mine of information for any sane investor in case you're curious. In any case, equities in particular show that no matter what system of money, commodity or paper, the U.S. economy has returned remarkably stable value on equities, and that there has never been a 30 year period where equities didn't return these remarkably stable earnings to investors, including the Great Depression.

 

[Perknose]

What would you do with a Clondike bar?

I'd start off by spelling it correctly, K?

 

[The-Noid]

Fund of hedge funds. Easiest way to diversify among many hedge funds. Usually 500k+ minimum. Credit Suisse, UBS, Merrell, and Citi run them. You can also invest in some legacy funds that are otherwise closed to new investors such as Citadel.

Long/Short and diversified is all I would put new money to work in, in this environment.

 

[fallout man]

Originally posted by: Evan Lieb
Here's a factoid I always make open to those who need investment advice; buy Jeremy J. Siegel's Stocks for the Long Run. The crux of his book is simple and sweet; equity investment in the U.S., well diversified and in the long run, shows a remarkably consistent trend. I'll repost part of what he says verbatim here; "The real return on equities has averaged 6.8% per year over the past 204 years [1802-2006]", page 12 Table 1-1 in the first chapter of his book. This is peer-reviewed research that has been verified over and over by other economists, and also a gold mine of information for any sane investor in case you're curious. In any case, equities in particular show that no matter what system of money, commodity or paper, the U.S. economy has returned remarkably stable value on equities, and that there has never been a 30 year period where equities didn't return these remarkably stable earnings to investors, including the Great Depression.

I'll try to look into it. Basically, I've been working in a very specialized, but low-paying field out of school, and I've never seen this kind of money EVER. I'd rather not fuck it up.

At the same time, I'm not much into micromanagement, so I would prefer less return for guaranteed security. Call me crazy.

 

[TechAZ]

Originally posted by: fallout man

Originally posted by: Evan Lieb
Here's a factoid I always make open to those who need investment advice; buy Jeremy J. Siegel's Stocks for the Long Run. The crux of his book is simple and sweet; equity investment in the U.S., well diversified and in the long run, shows a remarkably consistent trend. I'll repost part of what he says verbatim here; "The real return on equities has averaged 6.8% per year over the past 204 years [1802-2006]", page 12 Table 1-1 in the first chapter of his book. This is peer-reviewed research that has been verified over and over by other economists, and also a gold mine of information for any sane investor in case you're curious. In any case, equities in particular show that no matter what system of money, commodity or paper, the U.S. economy has returned remarkably stable value on equities, and that there has never been a 30 year period where equities didn't return these remarkably stable earnings to investors, including the Great Depression.

I'll try to look into it. Basically, I've been working in a very specialized, but low-paying field out of school, and I've never seen this kind of money EVER. I'd rather not fuck it up.

At the same time, I'm not much into micromanagement, so I would prefer less return for guaranteed security. Call me crazy.

That's not crazy. Depending on your age, the lower risk and lower return portfolio (they will always tell you to diversify and set it up for you) is the best option.

 

[TridenT]

I'd buy a house and be happy that I never have to worry about it again.

 

[cubeless]

haven't read the siegal book, but i gather he would like low fee index funds? since most people's diversification isn't so great...

and, as one who is down by over the median yearly wage in my stock account this year, picking good stocks is pretty frikkin difficult...

the good news is that you may be coming in at a low, so your chance of beating the long-term average is probably better than average... unless we have have a japan-like next 15 years...

what sux is that it's a crap-shoot...

good luck...

 

[JS80]

Originally posted by: Evan Lieb
Here's a factoid I always make open to those who need investment advice; buy Jeremy J. Siegel's Stocks for the Long Run. The crux of his book is simple and sweet; equity investment in the U.S., well diversified and in the long run, shows a remarkably consistent trend. I'll repost part of what he says verbatim here; "The real return on equities has averaged 6.8% per year over the past 204 years [1802-2006]", page 12 Table 1-1 in the first chapter of his book. This is peer-reviewed research that has been verified over and over by other economists, and also a gold mine of information for any sane investor in case you're curious. In any case, equities in particular show that no matter what system of money, commodity or paper, the U.S. economy has returned remarkably stable value on equities, and that there has never been a 30 year period where equities didn't return these remarkably stable earnings to investors, including the Great Depression.

Who the hell has 204 years to invest?

 

[JS80]

Originally posted by: Yoxxy
Fund of hedge funds. Easiest way to diversify among many hedge funds. Usually 500k+ minimum. Credit Suisse, UBS, Merrell, and Citi run them. You can also invest in some legacy funds that are otherwise closed to new investors such as Citadel.

Long/Short and diversified is all I would put new money to work in, in this environment.

So you pay fees to a money manager to invest in a hedge fund that has a money manager and high fees for sub-par adjusted for risk returns?

I would, however, get in a Citadel fund in a second.

 

[TechAZ]

Originally posted by: cubeless
haven't read the siegal book, but i gather he would like low fee index funds? since most people's diversification isn't so great...

and, as one who is down by over the median yearly wage in my stock account this year, picking good stocks is pretty frikkin difficult...

the good news is that you may be coming in at a low, so your chance of beating the long-term average is probably better than average... unless we have have a japan-like next 15 years...

what sux is that it's a crap-shoot...

good luck...

Most investments include foreign markets.

 

[The-Noid]

Originally posted by: JS80

Originally posted by: Yoxxy
Fund of hedge funds. Easiest way to diversify among many hedge funds. Usually 500k+ minimum. Credit Suisse, UBS, Merrell, and Citi run them. You can also invest in some legacy funds that are otherwise closed to new investors such as Citadel.

Long/Short and diversified is all I would put new money to work in, in this environment.

So you pay fees to a money manager to invest in a hedge fund that has a money manager and high fees for sub-par adjusted for risk returns?

I would, however, get in a Citadel fund in a second.

A lot of good funds that have access through fund of hedges.

 

[fallout man]

Originally posted by: TridenTBoy3555
I'd buy a house and be happy that I never have to worry about it again.

One of my options is to buy a condo/apartment in the area, and save myself the exorbinant rent I currently pay. That would be an investment in itself, given that I pay more for a room in a shared apartment than what many people pay for a 3 story house mortgage in the boons.

I'm basically dumping 8k a year on rent into some douche's pocket, which is a significant portion of my pay. Even with condo fees (and small mortgage payments if I need a little more for the place I really like) I should probably break even.

Decisions decisions.

 

[Perknose]

Originally posted by: JS80

Originally posted by: Evan Lieb
Here's a factoid I always make open to those who need investment advice; buy Jeremy J. Siegel's Stocks for the Long Run. The crux of his book is simple and sweet; equity investment in the U.S., well diversified and in the long run, shows a remarkably consistent trend. I'll repost part of what he says verbatim here; "The real return on equities has averaged 6.8% per year over the past 204 years [1802-2006]", page 12 Table 1-1 in the first chapter of his book. This is peer-reviewed research that has been verified over and over by other economists, and also a gold mine of information for any sane investor in case you're curious. In any case, equities in particular show that no matter what system of money, commodity or paper, the U.S. economy has returned remarkably stable value on equities, and that there has never been a 30 year period where equities didn't return these remarkably stable earnings to investors, including the Great Depression.

Who the hell has 204 years to invest?

You realize yours is a stupid question, not remotely relevant to the OP's point, which was one of remarkably consistent return over time.

Right?

 

[ebaycj]

Originally posted by: fallout man

Originally posted by: TridenTBoy3555
I'd buy a house and be happy that I never have to worry about it again.

One of my options is to buy a condo/apartment in the area, and save myself the exorbinant rent I currently pay. That would be an investment in itself, given that I pay more for a room in a shared apartment than what many people pay for a 3 story house mortgage in the boons.

I'm basically dumping 8k a year on rent into some douche's pocket, which is a significant portion of my pay. Even with condo fees (and small mortgage payments if I need a little more for the place I really like) I should probably break even.

Decisions decisions.

Wow man, your world is twisted if you think $666/month is exorbitant. Also, if you buy something, be prepared to pay this much per month in property tax (whether or not you own the property outright).

Around me, property taxes are 2% of assessed value per year, so on a $400,000 house that is $666 per month. I don't know what the rates are around you, but based on your ~$1300 per month 2-br apartment, I'm guessing you are in a similar situation (living costs wise).

You might be able to find a cheaper tax rate, or go with a cheaper property, but expect to be paying AT LEAST 350 per month in property tax. You will be able to deduct this from your income tax though.

And if $666/month is a significant portion of your pay you should get a real job instead of pimple farming at McD's.

 

[The-Noid]

The way you make money in real estate is via the leverage as someone else is able purchase your building on credit as it appreciates. That is the problem with the current housing market is people can't lever up as much as they could in the past.

However, home ownership peaked at 69.6% while the historical average is 66% so there will be people looking to rent in the near future.

My best guess for you is to go meet with a CFP/CPA that will be able to provide you with tax and financial planning advice about what will work best in your own situation. People that have never had money don't realize how much tax you will end up paying no matter what you do.

 

[Blackjack200]

Originally posted by: fallout man
My basic question to all you financially independent, successful folks:

If you had X hundred thousand dollars on hand, how would you safely make it grow?

As I really like the idea of not losing money, what's the best savings scheme able to provide the most return on a few hundred K? I'm looking for slow-and-steady, and also would like the option of having the cash on hand to buy realty in the near future.

The only "Safe" investment is treasuries. Everything else has some kind of risk. You can put the entire amount into various treasury mutual funds and never have to worry about it again.

If you don't want to just dump everything in treasuries, you will have to get comfortable with the idea of risk. Without it, there is no reward beyond the treasury yields. You can manage risk, but as Putnam and BNY clients found out last week, it is still there.

Originally posted by: fallout man

One of my options is to buy a condo/apartment in the area, and save myself the exorbinant rent I currently pay. That would be an investment in itself, given that I pay more for a room in a shared apartment than what many people pay for a 3 story house mortgage in the boons.

I'm basically dumping 8k a year on rent into some douche's pocket, which is a significant portion of my pay. Even with condo fees (and small mortgage payments if I need a little more for the place I really like) I should probably break even.

Decisions decisions.

If you dump 250,000 into Vanguard's Intermediate Term Treasury Fund, yielding 3.17%, you would make $7,925 a year without eating into your investment. That would pay for rent. Investing in Real Estate is quite risky.

 

[ebaycj]

Originally posted by: Blackjack200
Investing in Real Estate is quite risky.

It's not risky at all if you plan on buying a primary residence in cash, that you plan on living in for the forseeable future.

It certainly is risky if you are trying to speculate / make money.

 

[First]

Originally posted by: Perknose

Originally posted by: JS80

Originally posted by: Evan Lieb
Here's a factoid I always make open to those who need investment advice; buy Jeremy J. Siegel's Stocks for the Long Run. The crux of his book is simple and sweet; equity investment in the U.S., well diversified and in the long run, shows a remarkably consistent trend. I'll repost part of what he says verbatim here; "The real return on equities has averaged 6.8% per year over the past 204 years [1802-2006]", page 12 Table 1-1 in the first chapter of his book. This is peer-reviewed research that has been verified over and over by other economists, and also a gold mine of information for any sane investor in case you're curious. In any case, equities in particular show that no matter what system of money, commodity or paper, the U.S. economy has returned remarkably stable value on equities, and that there has never been a 30 year period where equities didn't return these remarkably stable earnings to investors, including the Great Depression.

Who the hell has 204 years to invest?

You realize yours is a stupid question, not remotely relevant to the OP's point, which was one of remarkably consistent return over time.

Right?

I can't be sure, but I think JS80 was joking.

Btw, fallout man, that's 6.8% compounded annually. Meaning every year, you earn that interest rate on whatever principal you started out with that year. So say you have $100,000 to invest today. If you were to put that into the stock market, and into a well-diversified portfolio (some in tech, some in manufacturing, some in financial services, etc.), you'd get a return of $719,677 (minus your initial $100,000) for a net profit of $619,677 before taxes, over 30 years. But remember, you can't touch it unless you're confident/sure you can time the market, which is very difficult to do.

 

[First]

Also, fallout man, there is no such thing as a risk-free investment save for what they call short-term T-bills (basically, you're betting the U.S. gov't won't go bankrupt in the near future, which is as close to certainty as you can get). But the return, obviously, isn't great. I would do everything in your power to 1) put cash into the stock market, especially since there are a lot of great buys out there with current conditions being as glum as they are, 2) find a stable job, 3) build your credit history to get a score over 720 (i.e. pay off your credit card balance every month, if possible, to avoid finance charges), and 4) use as little cash as possible for a down payment on a house. You can loan the rest, and probably get a good interest rate if your job and credit look pristine.