What would you do with extra $100k dollars? How to get at least 5 percent return

Which measure of inflation are you trying to beat?

What's time horizon?

How much do you expect to lose?

I wouldn't be thinking "put $100k into one thing and get 10% gross/5% net" out of it if I were you.

I also wouldn't expect to make any reasonable return on any paper investments with a buy-n-ride objective, either. Take the S&P this year for ex. If you bought the SPY and let it ride and sold, you're down at least 4% using official CPI-U inflation measures because it closed exactly where it opened. However if you measured it's performance against it's 200 day moving average and sold it all when it got above 10% and bought it back at the same measure, you'd be up 21% (before inflation).

I'd tell you what I'd do with it, but then most here would have memetic brain surge reflex and tell me I'm an idiot. Making a ton of money is easy when you learn how to manage greed, fear and sentiment.

The only thing I can think of is a stock portfolio of dividend paying stocks.

13% US Stocks

13% Foreign Stocks

4% Bonds

14% Real Estate

14% Commodities

19% Private Equity

23% Hedge Funds

Expected Return (after inflation): 6.3%

Expected Risk (volatility): 12.4%

Quote from barnz008 : I'd tell you what I'd do with it, but then most here would have memetic brain surge reflex and tell me I'm an idiot.

Because it's true chicken little. Just let it out, you know you want to tell him to blow it all on gold and silver because the world is coming to an end.

Quote from travathian : Because it's true chicken little. Just let it out, you know you want to tell him to blow it all on gold and silver because the world is coming to an end.

I was going to tell him to buy an almond farm. USDA organic almond butter is $20/lb!

I hope the world doesn't end. I want to watch the gold line drop off the chart, out the bottom of my monitor and hit the floor....

http://www.caseyresearch.com/site...chart2.png

Plus it's entertaining to watch paper schmucks like you wander aimlessly lost in their diluted state of hopium. But I digress; miracles happen everyday. Go long bibles.

I'm interested in this thread as a hypothetical scenario, but I'm a complete newbie so please be gentle...

Are any of the suggestions "set it and forget it" methods? Is it possible to use a "set it and forget it" method for this amount of money that isn't a CD?

Quote from impact1400 : I'm interested in this thread as a hypothetical scenario, but I'm a complete newbie so please be gentle... Are any of the suggestions "set it and forget it" methods? Is it possible to use a "set it and forget it" method for this amount of money that isn't a CD?

There's no one size fits all answer to that. It depends a lot on how long you're willing to leave that money alone and how much risk you're willing to accept.

If you were putting this money into a retirement account and could let it sit for 20 years then a target-year mutual fund would be a set and forget option with good returns and reasonable risk. If you might need all that money next year then you'd need to stick with something very safe like a money market, where the only risk is that inflation will erode the value faster than interest adds to it.

Quote from Samstag : There's no one size fits all answer to that. It depends a lot on how long you're willing to leave that money alone and how much risk you're willing to accept. If you were putting this money into a retirement account and could let it sit for 20 years then a target-year mutual fund would be a set and forget option with good returns and reasonable risk. If you might need all that money next year then you'd need to stick with something very safe like a money market, where the only risk is that inflation will erode the value faster than interest adds to it.

Thanks for the reply, understood. What would you say is a reasonable amount to risk when investing this kind of money? I'm the type of person that hates to risk losing money due to uncontrollable factors, which is why I have no stocks or other investments...

Could you clarify these categories for me in terms of what additional types of investments are available?


1. Having access to money with no penalty (i.e. checking/savings accounts)
2. Having access to money with penalty (i.e. CD -- being broken prior to maturity if necessary)
3. NOT having access to money whatsoever for X amount of time (I don't know of any examples of this)

Buy 5 $50k houses and rent each for 700/month? even letting some company manage them i bet you would still clear a nice profit every month

Quote from eddiehaskell : Buy 5 $50k houses and rent each for 700/month? even letting some company manage them i bet you would still clear a nice profit every month

Where did he get the extra 150k?

Quote from impact1400 : Thanks for the reply, understood. What would you say is a reasonable amount to risk when investing this kind of money? I'm the type of person that hates to risk losing money due to uncontrollable factors, which is why I have no stocks or other investments... Could you clarify these categories for me in terms of what additional types of investments are available? 1. Having access to money with no penalty (i.e. checking/savings accounts) 2. Having access to money with penalty (i.e. CD -- being broken prior to maturity if necessary) 3. NOT having access to money whatsoever for X amount of time (I don't know of any examples of this)

1. Money markets vary in nature but generally you can think of them as a savings account that pays better interest but may restrict you to a certain amount of withdrawals per month and may let you write checks. If they're FDIC insured they're just as safe.

2. In addition to CDs, US treasuries (savings bonds, t-bills, etc) are similar in some ways to a CD. I recommend looking into series I savings bonds which are locked up for 1 year but afterwards are more flexible and right now pay better interest than most other low-risk investments. You can only buy $5000 in I bonds per year.

2.5 Investments that are relatively low risk but are best held onto for a few years: High-grade corporate bonds or bond mutual funds.

3. I'm changing #3 to investments you can get access to at any time but don't want to be in unless you're willing to let them sit long enough that long-term gains offset short-term risk. That would mainly be stocks/commodities/precious metals. You need to be willing to accept that the market will sometimes take a dive and you could see big paper losses. If you can commit that money for 10 or more years then the big dips won't be as important as the long term gains. Also in #3 is any money in a 401k or standard IRA. If you withdraw that money before you're 59.5 years old you pay a 10% penalty in addition to being taxed on the withdrawal amount.

4. Investments that you could be stuck with even if you're willing to take a loss. Real estate is the most common example and you can see it happening right now. It's a real bad time to try to sell a house. Annuities are in this category but don't worry about them unless someone tries to sell you one and then just run the other way.

With $100k to play with you'd probably want to take care of any high-interest debts first, then divide the money up into all 5 categories in a way that meets your long and short-term goals. For example, if you have a job making $40k, no credit card debt, and you rent an apartment, you might use your money like this:

$5-7k in category 1 for immediate emergencies
$5-10k in category 2 as reserve in case of job loss, medical expenses, etc.
$30-40k in category 4 for down payment on a house
The rest in category 2.5-3, preferably in retirement accounts, with a mix between stocks/bonds appropriate for the risk you're wiling to accept (bonds being the safer part of the mix).

But these are all simplifications and generalizations just to give you an idea of what's out there. The important thing to take away from this is that there are a lot of options available. They all have their upside and downside, and the hot items of this year might not do so well next year. That's why it's important to understand at least a few of the different investment options and spread your money around to get it working for you.

You can get a lot more information at investopedia.com [investopedia.com]

Quote from vaultaddict : Where did he get the extra 150k?

20k down on each house. pay them off in about 10 years and you have a steady stream of about 3k month coming in.

Quote from eddiehaskell : 20k down on each house. pay them off in about 10 years and you have a steady stream of about 3k month coming in.

So the answer to how to invest wisely is....

Go into debt!