| Smartest way to invest 150k cash |
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73V375
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| Smartest way to invest 150k cash |
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what is the best way to make the money work ?
early 30's not married
is investing in bonds a better idea then stocks and real estate ?
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Sat Nov 29, 2014 7:29 am |
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oldguy
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Early 30's, I would invest it in a SP500 Index Fund - and then invest it into bonds & CDs at about age 60.
Most of us are given about 30 years for wealth-building, followed by years of wealth-preservation.
Law of investing - Risk & return are directly proportional. 'Safe' things (savings accounts, bonds, CDs) are designed to give you safe storage of your money but no growth (about the same rate as inflation). And things with moderate risk are less safe but they grow faster than inflation, so your wealth compounds.
Stocks, the generic US Stock Market has a longterm average return of about 11%/yr.
http://politicalcalculations.blogspot.com/2006/12/sp-500-at-your-fingertips.html
The most recent 30 yrs had an average return of 11.2%/yr - and that's typical of most 30 yr blocks.
Your $150k, at 11%/yr would be $3,400,000. So that would give you a pretty solid retirement fund if you simply invested it and left it alone - and you would be free to spend every dime that you earn from here forward if you were so inclined. Or you might add a little to a 401k for the next 30 yrs and have an extra million.
If you have no heirs you will be concerned with only your own needs in retirement. If you have some heirs later, you'll probably want to over-stash so that they will inherit the surplus.
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Sat Nov 29, 2014 2:40 pm |
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73V375
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how would one start as they don't plan on loading all the cash at once but maybe 10k at first would that be wise choice what is meant by buying the market not the fund?
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Sun Nov 30, 2014 12:14 am |
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oldguy
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If the money will be in $10k chunks, open an account at a no-load provider such as Vanguard or Fidelity, and place $10k of SP500 Index Fund in the account. And then add $10k more each time it becomes available.
Not sure what you mean - 'buying the market not the fund'. The SP500 Index is a measure of the US market (similar to the Dow Industrial Average) - so if you invest in a SP500 Index Fund it will track the generic US market.
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Sun Nov 30, 2014 1:32 am |
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payment proof
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Speak with an experienced financial planner instead of asking advice on a forum. A financial planned can help you set up a diversified portfolio built for long term returns. My advice anyways.
See Proof. You can make free money online.
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Sun Nov 30, 2014 3:05 am |
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oldguy
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quote:
Speak with an experienced financial planner
But use their info as a learning tool, don't follow it blindly. Planners need to give you the standard blurb - "3 or 6 months in EF, save 10%, mutual fund while you are young" - ie, the things that are safe and will keep you mediocre, that approach is necessary to protect their job and their employer. It isn't the kind of advice that will help you become wealthy.
edit.
$150k is the kind of boost that few people get. Using the Rule of 72 (google it) and using 11%/yr investments, your $150 should double about every 7 years - $300k in 7 yrs, $600k in 14 yrs, $1.2M in 21 yrs, $2.4M 28 yrs from now - and so on. And your retirement doesn't affect this - when you are 75 yrs old it will still be doubling every 7 yrs. (I've been retired for 16 yrs, I have way more money now than I had at retirement - I have to admit, it something that I hadn't thought about  )
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Sun Nov 30, 2014 9:48 pm |
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73V375
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thanks oldguy =]
so if i use 11% of 150k every year by 7 years it will double to 300k that sounds great to me
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Mon Dec 01, 2014 9:05 pm |
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oldguy
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quote:
so if i use 11% of 150k every year by 7 years it will double to 300k that sounds great to me
Yes, that's the longterm average. Over a 30-yr career the market ups and downs cancel so that the 11%/yr average comes very close. Over short periods - 7 years - it could be quite a bit higher or lower. So you have to be patient and make it a longterm commitment. But the $3,000,000 in 28 yrs is worth waiting for.
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Mon Dec 01, 2014 10:40 pm |
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