Investing options for $50-$100k ?

[Russell]

Someone asked me what are their longish term (5yrs) investing options for , say $50k - $100k or even $100k-$200k ?

I wasn't sure how to answer it. I said, for starters put it in the ING or Emigrant account while you're deciding on how to invest it.

Realestate is what I thought of first except you can't buy even a driveway of a house with that money let alone the whole house. Not to mention realestate is over inflated and in the last 4 months the market has stopped growing...I'm thinking it'll be 6 mos to 1 yrs before we see the prices come down.

Index funds is another option but even I'm struggling to find the right funds to invest my Roth ($3500) funds into.

CDs don't seem like a great option right now as the interest rates are sure to climb and you don't want to get locked into a low rate. 1 yr CDs aren't paying much more than ING/Emigrant.

That's about all the things I could think of.

[ken1706]

In addition to an index fund, you might want to consider a balance fund.

I particularly like the Vanguard Wellington fund. Like an index fund, it has low expense fees (0.31%). Plus it has been around forever (1929). And it did particularly well during the 2000-2002 time period. Its only negative year in that period was 2002 when it only lost 6.9%.

[VJW]

Anybody in the stock market right now is nuts. The DJIA would have to be around 12,500 just to be even with where it was in November of 2000 (It closed today at 10,554).

Series I bonds would be a good place for that amount of money over that period of time. They are currently paying 4.8%, they are inflation-protected, and interest earnings are exempt from State and local income taxes.

http://www.treasurydirect.gov/indiv/...nds_glance.htm

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[ken1706]

Yup, the I bonds are a good deal and you can invest $60K in one calendar year now ($30K online and $30K offline). But balanced, diversified, and low cost mutual funds will likely do better over a period of 5 and more years. But I have to admit, it's hard to have faith in the market after the last 5 years.

[BCompDude]

For long term I would invest in equities--whether that was through ETFs, individual stocks, or mutual funds. Of course that depends on your competency, willingness to look at your asset allocations periodically, if you want a hands off approach etc.

If I didn't want to look at the stock market or manage my portfolio myself (and I'm not talking daytrading but taking a look at the end of every 6 months or a year and rebalancing) then I'd go with a good mutual fund that invests in a diverse set of equities--both foreign and domestic, large and small cap etc.--and possibly bonds/money market funds.

I'd be one of those "nuts" that keeps investing in equities through thick and thin because I know eventually it will rise and my money will go up with it. Always has before and I'm willing to take risk to gain a higher rate of return. Its generally best to invest when its low.

[ken1706]

Originally Posted by BCompDude

I'd be one of those "nuts" that keeps investing in equities through thick and thin because I know eventually it will rise and my money will go up with it. Always has before and I'm willing to take risk to gain a higher rate of return. Its generally best to invest when its low.

In the last five years I've realized that this is hard to do. And thanks to all the bears, you sometimes do feel like a "nut". But if you're going to be in the market, you have to be in it for the long haul. Hopefully, I'll be able to convince myself of this if we have another 2002 year....

[VJW]

Originally Posted by ken1706

Yup, the I bonds are a good deal and you can invest $60K in one calendar year now ($30K online and $30K offline).

You can triple-stack them, similar to the method utilized for the FDIC $100,000 insurance, so that would be at least $180,000 that could be invested.

But balanced, diversified, and low cost mutual funds will likely do better over a period of 5 and more years. But I have to admit, it's hard to have faith in the market after the last 5 years.

Indeed.

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[VJW]

Originally Posted by BCompDude

For long term I would invest in equities--whether that was through ETFs, individual stocks, or mutual funds.

I really don’t consider 5 years to be “long term”.

I'd be one of those "nuts" that keeps investing in equities through thick and thin because I know eventually it will rise and my money will go up with it.

That’s what conventional wisdom said five years ago.

Always has before...

But it hasn’t:

1901-1921, real returns averaged 0.2%/year

1929-1949, real returns averaged 0.4%/year

1966-1986, real returns averaged 1.9%/year

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[VJW]

Originally Posted by ken1706

In the last five years I've realized that this is hard to do. And thanks to all the bears, you sometimes do feel like a "nut". But if you're going to be in the market, you have to be in it for the long haul.

But the sentiment on Wall Street no longer supports 'Buy & Hold' over the long-term. Even many of the brokerage houses have now dropped this adage.

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[ken1706]

Originally Posted by VJW

You can triple-stack them, similar to the method utilized for the FDIC $100,000 insurance, so that would be at least $180,000 that could be invested.

Not sure what you mean by triple-stack them?

[VJW]

In the FAQ on the original savingsbonddirect.gov website, they stated you could own I Bonds in your name, a spouse or other relative’s name, and as joint owners, thus allowing you to have three accounts, each with the $60,000 limitation.

This was similar to what people did if they had a sum of money in excess of $100,000 that they wanted to keep in a bank account, but wanted the FDIC coverage.

However, I just checked the Treasury Direct website, and they have modified that to the account you set up with your SS# and a joint account with someone else’s SS#. So that would only be $120,000. Unless you had child with their own SS#, then you could do another joint account.

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[BCompDude]

Originally Posted by VJW

I really don’t consider 5 years to be “long term”.





That’s what conventional wisdom said five years ago.





But it hasn’t:

1901-1921, real returns averaged 0.2%/year

1929-1949, real returns averaged 0.4%/year

1966-1986, real returns averaged 1.9%/year

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I was focusing more on the "longish term"--five years isn't long term for me either. But it wasn't me who made that distinction, to the original poster and/or his "someone" it obviously is.

And again, if you take what I said in wholistic context "I'd be one of those "nuts" that keeps investing in equities through thick and thin because I know eventually it will rise and my money will go up with it. Always has before and I'm willing to take risk to gain a higher rate of return."

Eventually it HAS risen, if I had invested in those years you mentioned and held on, I would have made money--the market has inherent risk, thusly the rewards are also going to generally be higher than those of guaranteed stature. Sometimes the market goes up, sometimes down--for years at a time even--but it has always eventually rebounded.

Edit: And it is also a personal choice. I would rather risk my money for larger returns than have it stuck in a fixed situation, some people would rather not. If I NEEDED that money in 5 years for a house for instance, I would still put it in a well diversified mutual fund for a few years. Could you stick it in bonds etc instead? Sure, but you won't have the capability of generating the returns equities give you. To each his own.

[VJW]

Originally Posted by BCompDude

Eventually it HAS risen, if I had invested in those years you mentioned and held on, I would have made money

Well, but you couldn’t have possibly held on from 1900 to today, and even if you could, you would have still suffered large offsetting losses over the past five calendar years.

The point is that you would have had to buy in at some point, and then later sell at some point, and the bottom line is that the stock market has returned less than 1% for more than 60% of the past century, and returned large negative losses so far in this century. Only someone who successfully timed the market, or was just damn lucky, could have made a lot of money in the broad market, but as everyone knows, even the experts cannot repeatedly successfully time the market.

I already got into this in more detail in this thread:

SAGE ADVICE FOR THE APPRENTICED INVESTOR


And earlier in this section of this thread (Post #32 onward):

MORE MILLIONAIRES

the market has inherent risk, thusly the rewards are also going to generally be higher than those of guaranteed stature.

Not over the 30+ year time frames that most people would be investing.

Sometimes the market goes up, sometimes down--for years at a time even--but it has always eventually rebounded.

Yes, but some of those time periods are QUITE long, and take a VERY long time to recover from. For instance, if you had entered the market in 1966, it would have taken you until 1992 just to get back to even, and that does not account for what you lost because of what you could have earned if the money had been elsewhere.

Edit: And it is also a personal choice. I would rather risk my money for larger returns than have it stuck in a fixed situation, some people would rather not. If I NEEDED that money in 5 years for a house for instance, I would still put it in a well diversified mutual fund for a few years. Could you stick it in bonds etc instead? Sure, but you won't have the capability of generating the returns equities give you. To each his own.

You seem to be operating under a misunderstanding. The argument you are reciting WAS true in the recent past. Prior to 2001, I had been in the stock market for a very long time, in one form or another. But I’m not referring to what HAD been the case, I’m referring to NOW.

:]

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[lukkyb22]

For only 5 years, I would put it in a MMA. available and earning interest, but with the market doing what i think it will in the next 5 years, it is going to be a good time to be cash rich.

[VJW]

Wow, this thread is a blast from the past, eh ?

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