Each amount if it were free money?
10,000
100,000
1,000,000
10,000
100,000
1,000,000
How would you invest......
12,299 Views |
144 Replies |
Last: 4 yr ago by Tumble Weed
Amount doesn't matter. I would invest all 3 the same. S&P 500.
Vtsax
Would you put in the lump sum or dollar cost average over time?Tumble Weed said:
Amount doesn't matter. I would invest all 3 the same. S&P 500.
How old are you?
When do you need the money?
How would you feel about losing 30% of that?
What's your tax situation?
What do your other investments look like?
A few things to consider before taking any advice...
When do you need the money?
How would you feel about losing 30% of that?
What's your tax situation?
What do your other investments look like?
A few things to consider before taking any advice...
Dollar cost averaging is statistically a negative effect (most periods are up and the up outweighs the down). It's simply a psychological tool. You might win, but odds are squarely against you.
What to invest in.. depends on various factors. But I'm a fan of spreading it around. Too many think simply the S&P500 is the answer, but small and mid cap, as well as real estate are historically the best asset classes as far as returns are concerned, and international (large cap) hasn't led in a long time, but you never know when that could break out and everything else goes flat.
Diversification isn't always about maximizing the up side, it's about maximizing returns overall by minimizing the down and participating in the up. It's especially important when you factor the possibility that at any moment you just might need the money. What if that day were in 2008 in the midst of 50+% drop in SPY?
So buy some of all of that. Of course, this is all assuming you were coming armed with stock market appropriate risk tolerance and long term horizon... And not some other criteria.
What to invest in.. depends on various factors. But I'm a fan of spreading it around. Too many think simply the S&P500 is the answer, but small and mid cap, as well as real estate are historically the best asset classes as far as returns are concerned, and international (large cap) hasn't led in a long time, but you never know when that could break out and everything else goes flat.
Diversification isn't always about maximizing the up side, it's about maximizing returns overall by minimizing the down and participating in the up. It's especially important when you factor the possibility that at any moment you just might need the money. What if that day were in 2008 in the midst of 50+% drop in SPY?
So buy some of all of that. Of course, this is all assuming you were coming armed with stock market appropriate risk tolerance and long term horizon... And not some other criteria.
Also, I would definitely invest differently as the dollar amount grows. Then the questions asked by Square One above become increasingly critical.
Lump sum due to my time horizon. I recently considered moving some stock to cash (around 25%) in anticipation of the recession, but couldn't talk myself into it. I just love watching my money make money. It is one of my favorite hobbies.DouglasPearce said:Would you put in the lump sum or dollar cost average over time?Tumble Weed said:
Amount doesn't matter. I would invest all 3 the same. S&P 500.
In another 20 years, I will probably put in 10% stop loss on a portion of it.
I guess I'm a little bit confused. You're considering de-risking your portfolio using elements of market timing (investing the lump sum and moving stock to cash), but then you're talking about moving to cash to stock.Tumble Weed said:Lump sum due to my time horizon. I recently considered moving some stock to cash (around 25%) in anticipation of the recession, but couldn't talk myself into it. I just love watching my money make money. It is one of my favorite hobbies.DouglasPearce said:Would you put in the lump sum or dollar cost average over time?Tumble Weed said:
Amount doesn't matter. I would invest all 3 the same. S&P 500.
In another 20 years, I will probably put in 10% stop loss on a portion of it.
My post is poorly worded. I need another cup of coffee.SquareOne07 said:I guess I'm a little bit confused. You're considering de-risking your portfolio using elements of market timing (investing the lump sum and moving stock to cash), but then you're talking about moving to cash to stock.Tumble Weed said:Lump sum due to my time horizon. I recently considered moving some stock to cash (around 25%) in anticipation of the recession, but couldn't talk myself into it. I just love watching my money make money. It is one of my favorite hobbies.DouglasPearce said:Would you put in the lump sum or dollar cost average over time?Tumble Weed said:
Amount doesn't matter. I would invest all 3 the same. S&P 500.
In another 20 years, I will probably put in 10% stop loss on a portion of it.
The internal debate for me is always how much cash to keep on hand. I want to have it all in the S&P 500, but I understand that keeping some cash around would be nice during the next recession. I have decided to not 'time the recession' and leave it all in.
What I was trying to convey was that my strategy today, at age 43, is different than it will be when I am 63.
Right now I am in growth mode, and may be more risk adverse as the years tick by.
As an aside...
People...especially people here...seem to be absolutely enamored with the S&P.
I'm not touting Mutual Funds as the sole pony people should be riding, rather just using it as a benchmark.
Since 1934 (the inception of American Funds's Investment Fun of America), the average annual return to Nov 2015 (when the particular article I quickly found) is 12.05%, to be fair, it carries an expense ratio of .58%
During the same time period, the S&P returned 8.26%.
It's easy to simply say an S&P index is the way to go, especially during the longest economic expansion in history, but long term, a diversified and slightly actively (SLIGHTLY) managed portfolio may suit you better.
Investopedia's 10 American Funds with long performance
People...especially people here...seem to be absolutely enamored with the S&P.
I'm not touting Mutual Funds as the sole pony people should be riding, rather just using it as a benchmark.
Since 1934 (the inception of American Funds's Investment Fun of America), the average annual return to Nov 2015 (when the particular article I quickly found) is 12.05%, to be fair, it carries an expense ratio of .58%
During the same time period, the S&P returned 8.26%.
It's easy to simply say an S&P index is the way to go, especially during the longest economic expansion in history, but long term, a diversified and slightly actively (SLIGHTLY) managed portfolio may suit you better.
Investopedia's 10 American Funds with long performance
There are definitely people that can choose funds that will outperform the S&P 500. If a person has a business degree ( I do ) and studies the market, then by all means he or she should choose the best vehicle.SquareOne07 said:
As an aside...
People...especially people here...seem to be absolutely enamored with the S&P.
I'm not touting Mutual Funds as the sole pony people should be riding, rather just using it as a benchmark.
Since 1934 (the inception of American Funds's Investment Fun of America), the average annual return to Nov 2015 (when the particular article I quickly found) is 12.05%, to be fair, it carries an expense ratio of .58%
During the same time period, the S&P returned 8.26%.
It's easy to simply say an S&P index is the way to go, especially during the longest economic expansion in history, but long term, a diversified and slightly actively (SLIGHTLY) managed portfolio may suit you better.
Investopedia's 10 American Funds with long performance
My wife is educated and works in the health care industry. While she is accomplished and well compensated, she does not grasp basic fundamentals of finance.
I need to have a fund in place so that if I die unexpectedly, everything will continue to tick along as planned. I feel that an index fund works best for this scenario. A full 25% of funds will outperform my choice, but that also means that 75% will not. It is kind of like getting par on every hole. No birdies, no bogies, and I can live with that.
1) Find a real estate play that you can invest in getting 10% distributions if you know people who are inteligent enough to do this. You also must trust them.
2) Wait for a stock like Apple or Amazon to tank and then throw the whole thing in and let it ride... Had you done that in December of last year, your $1M would be almost $2M in a year.
2) Wait for a stock like Apple or Amazon to tank and then throw the whole thing in and let it ride... Had you done that in December of last year, your $1M would be almost $2M in a year.
If you want something that keeps ticking along as planned, I'd highly suggest not just choosing S&P 500. Btw, index fund vs managed is not the same as S&P vs broader allocation. You can still utilize a full market index fund if you don't want to pay for, or believe in, active management.
Look at the following: https://novelinvestor.com/asset-class-returns/
The question, using your example...look at the chart at the bottom of that link with best, worst, and average years for each class. How would your wife react to each of those scenarios? How would you react (you already indicated you are fighting with how to react out of concern for economic downturns). And, as I mentioned earlier, look at any point and ask what if she needed that money at that moment. You know, since you're dead and all, she's a Cougar now and her new young boyfriend has his eyes on that new hot rod!
These numbers also looked a lot different 3 years ago. S&P is up over 50% 2016 - 1H 2019.
Look at the following: https://novelinvestor.com/asset-class-returns/
The question, using your example...look at the chart at the bottom of that link with best, worst, and average years for each class. How would your wife react to each of those scenarios? How would you react (you already indicated you are fighting with how to react out of concern for economic downturns). And, as I mentioned earlier, look at any point and ask what if she needed that money at that moment. You know, since you're dead and all, she's a Cougar now and her new young boyfriend has his eyes on that new hot rod!
These numbers also looked a lot different 3 years ago. S&P is up over 50% 2016 - 1H 2019.
Very interesting chart. Thanks for sharing.
Which asset class did the best over the 15 year time frame?
Which asset class did the best over the 15 year time frame?
Tumble Weed said:There are definitely people that can choose funds that will outperform the S&P 500. If a person has a business degree ( I do ) and studies the market, then by all means he or she should choose the best vehicle.SquareOne07 said:
As an aside...
People...especially people here...seem to be absolutely enamored with the S&P.
I'm not touting Mutual Funds as the sole pony people should be riding, rather just using it as a benchmark.
Since 1934 (the inception of American Funds's Investment Fun of America), the average annual return to Nov 2015 (when the particular article I quickly found) is 12.05%, to be fair, it carries an expense ratio of .58%
During the same time period, the S&P returned 8.26%.
It's easy to simply say an S&P index is the way to go, especially during the longest economic expansion in history, but long term, a diversified and slightly actively (SLIGHTLY) managed portfolio may suit you better.
Investopedia's 10 American Funds with long performance
My wife is educated and works in the health care industry. While she is accomplished and well compensated, she does not grasp basic fundamentals of finance.
I need to have a fund in place so that if I die unexpectedly, everything will continue to tick along as planned. I feel that an index fund works best for this scenario. A full 25% of funds will outperform my choice, but that also means that 75% will not. It is kind of like getting par on every hole. No birdies, no bogies, and I can live with that.
There's no need to pick funds or do research or build out a "fund of funds" if your sole objective is long term growth. That single fund right there beats the S&P. The S&P gets murdered during downturns.
I understand...but that's also why i said numbers looked different 2-3 years ago. Numbers at the end of 2015 put REITs and small and mid cap quite a bit ahead of the S&P (like 2%-3% average per year over the past 20).Tumble Weed said:
Very interesting chart. Thanks for sharing.
Which asset class did the best over the 15 year time frame?
That's sort of the point, we can always pick a point to prove a case, but there are lots of points it moves away. Asset allocation definitely reduced volatility.
I didn't move the goal posts. I didn't choose 15 years or choose the article.cjsag94 said:I understand...but that's also why i said numbers looked different 2-3 years ago. Numbers at the end of 2015 put REITs and small and mid cap quite a bit ahead of the S&P (like 2%-3% average per year over the past 20).Tumble Weed said:
Very interesting chart. Thanks for sharing.
Which asset class did the best over the 15 year time frame?
That's sort of the point, we can always pick a point to prove a case, but there are lots of points it moves away. Asset allocation definitely reduced volatility.
I understand confirmation bias, and I enjoy the discussion on this board to make sure that I am not stuck in a rut.
I'd give it to my financial advisor. He mixes among ~15 ETFs and some other things. As mentioned, go lump sum.
10,000--mutual fundsag0207 said:
Each amount if it were free money?
10,000
100,000
1,000,000
100,000--mutual funds
1,000,000--mini-storage/boat & rv storage/rv park
ORAggieFan said:
I'd give it to my financial advisor. He mixes among ~15 ETFs and some other things. As mentioned, go lump sum.
Why ETFs?
SquareOne07 said:ORAggieFan said:
I'd give it to my financial advisor. He mixes among ~15 ETFs and some other things. As mentioned, go lump sum.
Why ETFs?
Easiest way to diversify, minimal fees.
ORAggieFan said:SquareOne07 said:ORAggieFan said:
I'd give it to my financial advisor. He mixes among ~15 ETFs and some other things. As mentioned, go lump sum.
Why ETFs?
Easiest way to diversify, minimal fees.
What type of account is it in? Lower fees do not always equate to better long term performance. The tax status of the account is important when considering ETFs vs Mutual Funds...I assume your advisor has ran through that with ya.
SquareOne07 said:ORAggieFan said:SquareOne07 said:ORAggieFan said:
I'd give it to my financial advisor. He mixes among ~15 ETFs and some other things. As mentioned, go lump sum.
Why ETFs?
Easiest way to diversify, minimal fees.
What type of account is it in? Lower fees do not always equate to better long term performance. The tax status of the account is important when considering ETFs vs Mutual Funds...I assume your advisor has ran through that with ya.
Mostly traditional IRA. Small amount Roth and a bit more 401k.
That said, I don't think it changes if not in a tax advantaged account, but curious what implications that would have to ensure it is addressed.
ETFs are, in my experience, better suited in taxable brokerage accounts because of their relative tax efficiency compared to mutual funds...there's less "activity" to pay taxes on.
Since you're working with an advisor, I'd certainly ask, if for no other reason than your own understanding, why he/she recommends ETFs over MFs in your IRA and how your tax situation is taken into account in that decision.
Since you're working with an advisor, I'd certainly ask, if for no other reason than your own understanding, why he/she recommends ETFs over MFs in your IRA and how your tax situation is taken into account in that decision.
loans
loans
loans/vtsax
loans
loans/vtsax
SquareOne07 said:
ETFs are, in my experience, better suited in taxable brokerage accounts because of their relative tax efficiency compared to mutual funds...there's less "activity" to pay taxes on.
Since you're working with an advisor, I'd certainly ask, if for no other reason than your own understanding, why he/she recommends ETFs over MFs in your IRA and how your tax situation is taken into account in that decision.
This is a reason to consider using ETF over mutual funds in non qualified accounts, but certainly not a reason to not use them in a tax sheltered account. Tax efficiency has no impact on actual investment return, only net return to the investor.
10,000 - dick around or pay down car note with half then dick around with rest
100,000 - pay off car note and fully fund 529s
1,000,000 - put in account with family wealth planner to invest so that I can retire 5-10 years earlier
100,000 - pay off car note and fully fund 529s
1,000,000 - put in account with family wealth planner to invest so that I can retire 5-10 years earlier
10,000: pay off law school loan.
100,000: some combination of buying 1-2 vacation condos (25% down, 175-225k purchase price, my 3 current condos in this range net a combined ~48k plus another 50+k conservatively in appreciation/principal/tax savings), investing a little in the stock market, and making sure my annual SEP IRA gets 45-50k.
1,000,000: Probably 1/3 to 1/2 real estate (buy 2-4 condos at current rates, maybe buy an office building & maybe pay off 1-2 of lowest-balance current condos... would run numbers to see what makes the most sense), make sure my annual SEP IRA gets 45-50k, probably start a small business, put a decent amount in the stock market, and look for good investments.
100,000: some combination of buying 1-2 vacation condos (25% down, 175-225k purchase price, my 3 current condos in this range net a combined ~48k plus another 50+k conservatively in appreciation/principal/tax savings), investing a little in the stock market, and making sure my annual SEP IRA gets 45-50k.
1,000,000: Probably 1/3 to 1/2 real estate (buy 2-4 condos at current rates, maybe buy an office building & maybe pay off 1-2 of lowest-balance current condos... would run numbers to see what makes the most sense), make sure my annual SEP IRA gets 45-50k, probably start a small business, put a decent amount in the stock market, and look for good investments.
VSMAX - everyone loves the fun of a little more volatility in their index funds.
ag0207 said:
Each amount if it were free money?
10,000 - online savings account
100,000 - rental properties
1,000,000 - something dull, boring, and very safe. Retire immediately. Plus Mavs season tickets. And a Corvette.
SquareOne07 said:
There's no need to pick funds or do research or build out a "fund of funds" if your sole objective is long term growth. That single fund right there beats the S&P. The S&P gets murdered during downturns.
so you were able to look back and pick one fund that beat the S&P out of however many, conceptually how is that much different than looking back at the last lotto and saying if you had just picked those numbers you would have come out on top?
or are you telling us past performance is and indicator of future results, which means anyone that invests should easily be filthy rich right?
EliteZags said:SquareOne07 said:
There's no need to pick funds or do research or build out a "fund of funds" if your sole objective is long term growth. That single fund right there beats the S&P. The S&P gets murdered during downturns.
so you were able to look back and pick one fund that beat the S&P out of however many, conceptually how is that much different than looking back at the last lotto and saying if you had just picked those numbers you would have come out on top?
or are you telling us past performance is and indicator of future results, which means anyone that invests should easily be filthy rich right?
My point wasn't that there's a single investment out there that beat the S&P. My point was that the S&P isn't the golden goose and standard many tout it to be. That if one values long term sustainable growth, a well balanced fund/investment held for an extended period of time will, and has, beat the S&P.
The fund I picked is a balanced fund - not entirely comprised of the 500ish stocks in the S&P.
My example wasn't like picking the last lotto winner, or perhaps more appropriately a "hot stock" that did well over an extended period of time. The fund that I referenced has been around since the 1930s and has nearly 96,000,000 in assets, so it's not some flash in the pan.
You seem a little bit adversarial about this...
Ok but couldn't anyone look back and pick which balanced fund beat the SnP? But how many balanced funds didn't?
Featured Stories
See All
40:58
22h ago
5.8k
20:40
1h ago
459
Baseball Thoughts: Aggies ascend to No. 1 after Commodore crushing
by Ryan Brauninger
10:49
44m ago
381
AgDad121619
Report: Texas A&M Has Contacted Indiana RB Trent Howland
in Billy Liucci's TexAgs Premium
37
SoTx Ag
Report: Texas A&M Has Contacted Indiana RB Trent Howland
in Billy Liucci's TexAgs Premium
34
1/2 Man 1/2 Amazing
Report: Texas A&M Has Contacted Indiana RB Trent Howland
in Billy Liucci's TexAgs Premium
29