Post: #1

Hi all,

I've around $40k cash sat in a low interest savings account that I am looking to invest.

I have minimal knowledge of investing and have just started my research. I know a few on here are knowledgeable on this so I thought I'd get some opinions.

From my basic research, it seems ETFs and/or Mutual Funds are what I should be looking at.

Vanguard seems highly regarded?

I'd like to be able to pull out my cash after one year if needed (may buy a home).

I am self-employed, 28 years old, $100k per year income. I plan to invest a further $20-30k of my income (as it comes in) over the course of 2015 also.

I do not have an IRA/401k - perhaps I should get one by year-end as I could pull $10k out without penalty for a first-time home buy.

Should I drip-feed into investments over time?

Any thoughts, much appreciated. As I said, this is just early research for me. I may consult with a financial planner.

Post: #2

Stay with the savings account. For one year you should forget about any kind of fund - even an index-based.

You can keep it in a shoe-box and it would be better served there.

Within one year you will likely lose money due to the fee-structure of most funds. Even if you don't lose due to the fees, it's not a set deal that you will make any money.

You should generally invest only in things that you know about or being advised by an expert in his field who has no conflict of interest - 99% of financial planners do.

If you have no clue about the financial market rather use the capital to buy a house and pay it off faster, or invest in something that you know about. Even a bloody food truck by a friend of yours can be a much better investment if you offer him a partnership.

Post: #3

Guns and ammo. The stock market could collapse at any time, at which point you'll need those.

Post: #4

I'd look at using an online service like Wealthfront

Post: #5

I'm starting to think about throwing some dough at the Russians. They are getting the shit beat out of them. I get the sense there will be blood in the streets soon.

How does one go long their equity index and Govt bonds?

Post: #6

(12-16-2014 07:07 PM)godfather dust Wrote:  Guns and ammo. The stock market could collapse at any time, at which point you'll need those.

How will guns and ammo appreciate or make OP any income?

Perhaps if he sets up a gunshop.

Post: #7

Read the book Millionaire Teacher. Great book. If you're Canadian open up an account with Questrade.com It's free to buy ETFs.

Post: #8

What about the Russian central bank raising interest rates to 17%. With compounding interest that is better than anything you could get in the United States. What about Russian bonds? And if you are buying them at the Rouble's bottom, then you also get the exchange rate appreciation as the Rouble recovers.

Post: #9

2 questions for you:
1. How much time can you spend overlooking your investments
2. How willing are you to stay in the same location for the next 10-20 years?

If you're going to stay put and don't mind doing some handyman work, I would suggest investing in some real estate.

As a first time homebuyer you can qualify for FHA home loans, which give interest rates at 3.75%, which is decent. This is assuming you can put about 5% down on the property.

If you buy a small 2 bedroom or small 1 bedroom (~$100,000) property, you are probably able to rent it out for around $1000 per month (I'm assuming you live in the US and live in some suburb area). The payment on this should be about $439.96/month assuming a 30-year mortgage. Therefore your gross income per year is (1000-439.96)*12 = $6700. Factoring into account property tax, which is about 500$ per year, and repair costs, which should be about 500$ per year, the net income should be about $5700 per year.

Which would mean with an initial payment of $5000, you now have at the end of the year $5700 plus ownership of an apartment. The year after this, you would make another $5700, and after 30 years, this investment would have yielded the following:

30 years x $5700 = $171,000 from rent
Initial Property Value + Increased Value of Property ~ 4%/year x 30 years = $324,339
Total = $495,339

Not bad for an initial down payment of 5000$.

Post: #10

You can leverage that over 200k in real estate as an income generating property (or properties), that is the path I would take.

Post: #11

(12-16-2014 08:24 PM)Cattle Rustler Wrote:  

(12-16-2014 07:07 PM)godfather dust Wrote:  Guns and ammo. The stock market could collapse at any time, at which point you'll need those.

How will guns and ammo appreciate or make OP any income?

Perhaps if he sets up a gunshop.

7 year long economic cycles. Last major recession was in 2008, about 7 years ago, the previous one was in 2001, 14 years ago. The Keynes-Friedman lunatics over at the Fed and Wall Street either carefully planned it or simply don't see it coming.

Post: #12

(12-16-2014 08:42 PM)edtf Wrote:  2 questions for you:
1. How much time can you spend overlooking your investments
2. How willing are you to stay in the same location for the next 10-20 years?

If you're going to stay put and don't mind doing some handyman work, I would suggest investing in some real estate.

As a first time homebuyer you can qualify for FHA home loans, which give interest rates at 3.75%, which is decent. This is assuming you can put about 5% down on the property.

If you buy a small 2 bedroom or small 1 bedroom (~$100,000) property, you are probably able to rent it out for around $1000 per month (I'm assuming you live in the US and live in some suburb area). The payment on this should be about $439.96/month assuming a 30-year mortgage. Therefore your gross income per year is (1000-439.96)*12 = $6700. Factoring into account property tax, which is about 500$ per year, and repair costs, which should be about 500$ per year, the net income should be about $5700 per year.

Which would mean with an initial payment of $5000, you now have at the end of the year $5700 plus ownership of an apartment. The year after this, you would make another $5700, and after 30 years, this investment would have yielded the following:

30 years x $5700 = $171,000 from rent
Initial Property Value + Increased Value of Property ~ 4%/year x 30 years = $324,339
Total = $495,339

Not bad for an initial down payment of 5000$.

Where in the US can you buy a $100,000 property with property taxes of $500/year?

If you're buying a condo there will be HOA fees on top of your $500/year maintenance cost (which is not realistic in my 13 year experience). Those HOA fees can easily be $2k-$5k/year on top of property taxes which on the low end will be $3,000/year.

If it's a single family house instead of a condo then the maintenance costs skyrocket. Not $500/year, more like $3,000- $5,000/year on avg. Some years less, some much, much more.

If you have a specific example definitely post a link, because that would be a pretty sweet deal. Also if you're only putting 5% down you have to pay Mortagage insurance so the monthly mortgage payment is actually higher than $439. If they get wind it's an investment property instead of primary residence than you will need to put down 20-30%

Finally keep in mind that rental property is not a passive investment. Not only is it work, but you have to deal with the general public and that can really suck.

You also need to deduct selling fees, depreciation taken and capital gains from that end profit after 30 years and that's not a small amount.

Post: #13

I think your best Would be something like betterment, it is an online portfolio service. I work in finance and I manage about 1/2 of my portfolio myself in trading stocks. The other 1/2 is in betterment and allocates across all asset classes. Very good and I highly recommend it.

Post: #14

(12-16-2014 08:14 PM)Onto Wrote:  I'm starting to think about throwing some dough at the Russians. They are getting the shit beat out of them. I get the sense there will be blood in the streets soon.

How does one go long their equity index and Govt bonds?

RSX ticker, an ETF that follows the Russian stock market.

Post: #15

I'm in S+P 500 and Vanguard REIT, plus a selection of blue chip stocks.

I agree with don't buy what you don't understand. Anyone getting started in investing needs to read The Intelligent Investor.

I'll just say, I've done very well. The S+P keep my portfolio up to speed with inflation, and I get a nice quarterly dividend payout from the REIT and a few blue chip stocks.

But that's just me.

What I can tell you I *WOULDN'T* do, is buy a property with the intent of renting it out. Too much work and hassle. Unless you're passionate about being a landlord. I'm not. If you want to deal with that headache, go for it. I'd rather do my homework and invest.

Post: #16

Guys - OP is looking to pull money out after 1 year.

There are good funds out there - I would stay away from broad index funds unless they follow the Chinese ones. But even the best of funds should not be invested in for a duration of less than 3 years - better even more.

Also if your entire savings are 50k, then you should not invest in one similar fund - apart from better saving that amount for real estate or rainy days.

Post: #17

Hi all,

Thanks for the comments.

As it is my goal to purchase a first home in the next 12-24 months, perhaps I am best off with a simple 1% (at best) online savings account with easy access.

I did see that Wealthfront are offering 0% fees for first $15k. Would it maybe be worth sticking $15k in there with risk tolerance set to low, perhaps?

Thanks again.

Post: #18

(12-17-2014 02:01 PM)jbkunt2 Wrote:  Hi all,

Thanks for the comments.

As it is my goal to purchase a first home in the next 12-24 months, perhaps I am best off with a simple 1% (at best) online savings account with easy access.

I did see that Wealthfront are offering 0% fees for first $15k. Would it maybe be worth sticking $15k in there with risk tolerance set to low, perhaps?

Thanks again.

Check out the fees when you decide to sell after 12 months. Also research the month on month performance levels. There are some funds which make consistent small returns generating 5-8% with hardly any months in the red. But those are usually some rare Hedge Funds or structured products with significant fees - maintenance costs, front-end loaded or back-end loaded (fee to paid when buying or when selling a fund).

0% fees means nothing in that respect. There is no free lunch in the financial markets - if something is 0%, then you can bet your ass off that you will pay somewhere else.

But sure - with 15k, you are not set to lose much anyway.

Post: #19

If you need the money that soon just park it somewhere and earn the 1percent. Is it even that Hugh for a CD?

Post: #20

If you might want to repurpose your funds in a year, you're not investing in anything. You're speculating. Know your risks beforehand. Are you okay with the possibility of your net worth dropping by 50 to 80 percent for the next three to five years?

(12-16-2014 09:34 PM)LouEvilSlugger Wrote:  7 year long economic cycles. Last major recession was in 2008, about 7 years ago, the previous one was in 2001, 14 years ago. The Keynes-Friedman lunatics over at the Fed and Wall Street either carefully planned it or simply don't see it coming.

We're also on the cusp of the recession-depression K wave transition.

Post: #21

I'm going to throw in an answer that is completely different. Are you happy in your life? Are you living life on your own terms and living your passion? If not, I would say to take all the investment advice you know along with the ones given and then LOOK AT YOURSELF AS AN ASSET. Are you appreciating or depreciating? I say this because I have many friends and clients who make TONS of cash in Silicon Valley, San Francisco and I also have broke ass friends who are English teachers in Asia and ya know what? My English teacher friend's lives are way more exciting and fun. They have multiple girlfriends, (or a single HOT girlfriend), party every week, play in bands/write/(stick in whatever passion) whereas all my baller friends waste a few hours everyday in traffic, DONT get pussy, or at best, sporadically and usually with girls who are not that hot, shop at Costco and live boring mundane lives. Okay, some of them develop apps, whoopty doo! That's changed civilization for the better but I would say to try allocating part of that cash and living life on your own terms.

If you are already doing this, my apologies and I'll shut up. But if not, please consider.

As a point of reference, I'm in commercial real estate and one of the biggest lessons I learned after many years of being in this business is it's all numbers. It's all NUMBERS. It's just a return on your investment and time. But I rarely see people discussing returning ROM, RETURN ON ME.

Good luck man!

Post: #22

(12-17-2014 11:20 PM)fucksong Wrote:  I'm going to throw in an answer that is completely different. Are you happy in your life? Are you living life on your own terms and living your passion? If not, I would say to take all the investment advice you know along with the ones given and then LOOK AT YOURSELF AS AN ASSET. Are you appreciating or depreciating? I say this because I have many friends and clients who make TONS of cash in Silicon Valley, San Francisco and I also have broke ass friends who are English teachers in Asia and ya know what? My English teacher friend's lives are way more exciting and fun. They have multiple girlfriends, (or a single HOT girlfriend), party every week, play in bands/write/(stick in whatever passion) whereas all my baller friends waste a few hours everyday in traffic, DONT get pussy, or at best, sporadically and usually with girls who are not that hot, shop at Costco and live boring mundane lives. Okay, some of them develop apps, whoopty doo! That's changed civilization for the better but I would say to try allocating part of that cash and living life on your own terms.

If you are already doing this, my apologies and I'll shut up. But if not, please consider.

As a point of reference, I'm in commercial real estate and one of the biggest lessons I learned after many years of being in this business is it's all numbers. It's all NUMBERS. It's just a return on your investment and time. But I rarely see people discussing returning ROM, RETURN ON ME.

Good luck man!

As for me personally I want to live off my investments and live somewhere in the caribbean partying every week and fucking various girls.

Post: #23

(12-16-2014 08:10 PM)peterthephoenix Wrote:  I'd look at using an online service like Wealthfront

I'd also second looking at wealthfront or betterment. I just signed up for both. I forget which one of them does tax harvesting at 50k one is 50 the other is 100 but your not too far off of that.

It's also pretty liquid in that you can sell and get your money quickly. I'd recommend not just sitting on the money, I've been saying I'm gona buy a property for over a year and just havn't come across anything yet so all this time my moneys just been sitting.

At the very least open an ally account and you can get soemthing like 0.87% which is about as good as you can hope for but I'd recommend throwing it in wealthfront or betterment.

If you use someone on this sites promo code which I know many members on here are using one of those two you can get like 6 months free management and so do they

Post: #24

(12-16-2014 10:21 PM)Onto Wrote:  

(12-16-2014 08:42 PM)edtf Wrote:  2 questions for you:
1. How much time can you spend overlooking your investments
2. How willing are you to stay in the same location for the next 10-20 years?

If you're going to stay put and don't mind doing some handyman work, I would suggest investing in some real estate.

As a first time homebuyer you can qualify for FHA home loans, which give interest rates at 3.75%, which is decent. This is assuming you can put about 5% down on the property.

If you buy a small 2 bedroom or small 1 bedroom (~$100,000) property, you are probably able to rent it out for around $1000 per month (I'm assuming you live in the US and live in some suburb area). The payment on this should be about $439.96/month assuming a 30-year mortgage. Therefore your gross income per year is (1000-439.96)*12 = $6700. Factoring into account property tax, which is about 500$ per year, and repair costs, which should be about 500$ per year, the net income should be about $5700 per year.

Which would mean with an initial payment of $5000, you now have at the end of the year $5700 plus ownership of an apartment. The year after this, you would make another $5700, and after 30 years, this investment would have yielded the following:

30 years x $5700 = $171,000 from rent
Initial Property Value + Increased Value of Property ~ 4%/year x 30 years = $324,339
Total = $495,339

Not bad for an initial down payment of 5000$.

Where in the US can you buy a $100,000 property with property taxes of $500/year?

If you're buying a condo there will be HOA fees on top of your $500/year maintenance cost (which is not realistic in my 13 year experience). Those HOA fees can easily be $2k-$5k/year on top of property taxes which on the low end will be $3,000/year.

If it's a single family house instead of a condo then the maintenance costs skyrocket. Not $500/year, more like $3,000- $5,000/year on avg. Some years less, some much, much more.

If you have a specific example definitely post a link, because that would be a pretty sweet deal. Also if you're only putting 5% down you have to pay Mortagage insurance so the monthly mortgage payment is actually higher than $439. If they get wind it's an investment property instead of primary residence than you will need to put down 20-30%

Finally keep in mind that rental property is not a passive investment. Not only is it work, but you have to deal with the general public and that can really suck.

You also need to deduct selling fees, depreciation taken and capital gains from that end profit after 30 years and that's not a small amount.

Property taxes can vary pretty greatly. My current house property taxes are 12k a year which is insane, it's probably worth 400k, about 3000sq ft. I also have a duplex a town over which is about 100k, property taxes were $3800 I think they've recently dropped a bit. That said my whole payment property taxes, pmi and mortage is around 800 give or take and I rent it for $1200, could get $1400 but have reliable tenants so letting it stay where its at.

My parents live in south carolina, my dads boss has a mansion on the water and his property taxes are like 3k a year, granted they have very shitty schools and services but low taxes.