Real estate bubble
Socialist government-
foreclosure moratoriums,
Irrational laws
Probable 401k/estate theft coming, etc.
Massive inflation
Totally irrational/illogical stock market valuation


Where are the safest bets to put money to work at this point?

I don't know anymore. I'm continuing to plow away with our normal savings strategy (Match wife's 401k + max IRAs + max HSA). I'm putting my sporadic income into taxable accounts because we've neglected that a little over the years.

However, we are sitting on an uncomfortable amount of cash. Most people will tell you that is stupid because of inflation which I get. At the same time, we may be making a major life change this year so I'm holding it on the sideline for cash flow to get us through a worst case scenario of sporadic/no income for a spell. Once we figure that out I'll then need to solve where to put all that cash.

So, I'm kind of in no man's land right now.

Inb4 the Bitcoin Nazi

Hookers & Blow

Vegas seems to be as good as the market and real estate (which both seem ripe for a crash).
I am sitting on a nice stack right now as well. If you need, I can add yours to mine so to free up your stress.

Serious question: How can you say Real Estate Bubble and Massive Inflation at the same time?

Quote:

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I don't know anymore. I'm continuing to plow away with our normal savings strategy (Match wife's 401k + max IRAs + max HSA).

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This.

Do this.

Bc I firmly believe that most Americans with savings goals are doing the same.

And that tells me one thing: We all still believe.We believe that through good and bad administrations/policy/eco times, that America will persist, and that our financial savings and sacrifices will be rewarded.

Real estate bubble - driven by historically low interest rates, underinvestment for several years, and transitory increases in building materials due to COVID; if these are "fixed" in a few years, do you expect housing prices to remain at their current levels?

Massive inflation - driven by unprecedented fiscal stimulus and sustained low interest rates; I'm not fully convinced yet that the concerning trend will continue, but I haven't ruled out the possibility of significant inflation either.

Not OP, but what am I missing?

YouBet said:

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I don't know anymore. I'm continuing to plow away with our normal savings strategy (Match wife's 401k + max IRAs + max HSA). I'm putting my sporadic income into taxable accounts because we've neglected that a little over the years.

However, we are sitting on an uncomfortable amount of cash. Most people will tell you that is stupid because of inflation which I get. At the same time, we may be making a major life change this year so I'm holding it on the sideline for cash flow to get us through a worst case scenario of sporadic/no income for a spell. Once we figure that out I'll then need to solve where to put all that cash.

So, I'm kind of in no man's land right now.

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If you don't mind holding for a year (I understand may not be able to based on what you posted here), I Bonds can be a good alternative to keep up with inflation, or closer to than just straight cash. You're locked in for a year, but after a year you can sell for ~6 months of interest as the "fee".

I use them as part of my EF. Some are earning ~3.5-4%. The ones I bought in May are the ones earning 3.5% right now.

Something to consider if you can weather 1 year. I'm moving 90% of my EF over to I Bonds.

Pendragon12 said:

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YouBet said:

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I don't know anymore. I'm continuing to plow away with our normal savings strategy (Match wife's 401k + max IRAs + max HSA). I'm putting my sporadic income into taxable accounts because we've neglected that a little over the years.

However, we are sitting on an uncomfortable amount of cash. Most people will tell you that is stupid because of inflation which I get. At the same time, we may be making a major life change this year so I'm holding it on the sideline for cash flow to get us through a worst case scenario of sporadic/no income for a spell. Once we figure that out I'll then need to solve where to put all that cash.

So, I'm kind of in no man's land right now.

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If you don't mind holding for a year (I understand may not be able to based on what you posted here), I Bonds can be a good alternative to keep up with inflation, or closer to than just straight cash. You're locked in for a year, but after a year you can sell for ~6 months of interest as the "fee".

I use them as part of my EF. Some are earning ~3.5-4%. The ones I bought in May are the ones earning 3.5% right now.

Something to consider if you can weather 1 year. I'm moving 90% of my EF over to I Bonds.

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Yes, I actually just discovered these and started a thread on them. Ha.

I will probably park the max in one but that is small portion of the total. Not humble bragging. We just had a very rare confluence of events happen that made us flush with cash and I'm in wait and see mode on some major career / moving decisions where we may need to tap into it. Hopefully we don't and I can just start layering it back into investments.

invest half of it in low risk mutual funds and then take the other half over to my friend Asadulah who works in securities...

NoahAg said:

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invest half of it in low risk mutual funds and then take the other half over to my friend Asadulah who works in securities...

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No way! Putting it all into whole life.

Red Pear Realty said:

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Serious question: How can you say Real Estate Bubble and Massive Inflation at the same time?

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i get that real estate is a classic inflation hedge. but there is nothing classic about the current things going on.

the entire regulatory environment and concepts of real property ownership are not only no longer guaranteed, some have already been thrown out the window. Between that, appraisals failing to track the market, commodities/raw materials costs outpacing land costs, etc., my gut tells me that real property is hardly the inflation hedge it used to be.

Commercial surely seems a bad bet. Rental residential is risky with landlord's rights eliminated. residential real estate pricing has never been so fixed by the government before. no matter how fantastic a property is, its max price is determined by incompetent appraisers and lending rules.

if interest rates do spike, or incomes tank, property values have to tank, at least in residential.

As mentioned above, I am still maxing out 401k/IRA but I've stepped up my purchases of silver and gold the last 24 months.

This is not investment advice. Do your own homework.

FWIW, these are how our 3 buckets are set up at the moment for a husband in his 40s and wife in her 30s. At some point, I'll break it out further.

1. We're both blessed to have small pensions. These are managed outside of our control.

2. Our collective income is too high for Roth/Regular IRAs but we each contribute the maximum annual amount to our 401(k) (currently $19,500/person/year). I keep both in low-cost S&P 500 index funds.

3. I manage our respective Rollover IRA accounts as one portfolio. In this bucket, I'm currently 16% cash (I try to keep cash in the 10-20% range for dry powder and to avoid undue risk), about 4% in a convertibles fund, and the rest is in stocks with current mix of 11 in growth stocks and 12 in value or dividend stocks). As I hit my price targets and exit, I'm likely going less growth in the mix...at least as of today.

Once our house is paid off (yes, we have a nice low rate, but cash flow is king, imo), I'll look at other investment vehicles with the surplus.

We also have about one year of my take-home salary saved in cash not included in those buckets. At some point, after the house is paid off, I'll reduce the savings cash exposure and invest some of it more aggressively.

Your mileage may vary (and probably should)

I'm 29, I'm investing in retirement like an ostrich with my head in the sand.

For my taxable investments I continue to invest into VTI:BND in a 2:1 split. I figure keep it simple means keep it simple.

You need to turn off the nightly news and get off the Politics board. Look back at history. There is ALWAYS an apocalypse de jour, no matter when you look.

I don't like some of the stuff going on just as much as anyone else on here, but our economy is in good shape. The great companies that make up that economy will continue to innovate, grow earnings, and adapt to changing consumer demands, just like they always have.

In the simplest terms, If you're letting headlines and current events guide your investment decisions then you're ****ed.

Dill-Ag13 said:

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I'm 29, I'm investing in retirement like an ostrich with my head in the sand.

For my taxable investments I continue to invest into VTI:BND in a 2:1 split. I figure keep it simple means keep it simple.

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Why would a 29 year old own a bond? Are you saving for a down payment on a home or something?

Buy CLOV!

Because some money guy said to take 100, subtract your age, and put your age as a percentage of bonds and the remainder in index funds. Adjust annually until you retire.

ehrmantraut said:

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You need to turn off the nightly news and get off the Politics board. Look back at history. There is ALWAYS an apocalypse de jour, no matter when you look.

I don't like some of the stuff going on just as much as anyone else on here, but our economy is in good shape. The great companies that make up that economy will continue to innovate, grow earnings, and adapt to changing consumer demands, just like they always have.

In the simplest terms, If you're letting headlines and current events guide your investment decisions then you're ****ed.

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How dare you.

SoupNazi2001 said:

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Here are some unpopular takes.

Economy is incredibly leveraged today compared to 70s and can't tolerate much higher rates as everything is financed today. Rates will never be north of 6-7% unless Fed loses complete control.

Fed knows this and also knows longer term stock market declines would wreck pensions, insurance companies, etc.

Stocks and real estate have been rich in price for a long time but we are still the best house in a bad neighborhood compared to the rest of the world with lots of wealthy foreigners investing here.

There really is no "safe" place to invest anymore so I keep more cash on hand than most as a buffer.

If things fall apart, the Fed has lost control and all bets are off. Another Covid like event and similar government reaction would absolutely wreck us.

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Kind of the other reason I'm holding a lot of cash as well.

Even Ben Graham, Warren Buffet's professor and mentor, recommended 25-75% bonds, depending on market conditions and to keep from excessively speculating.

Today's equivalent range is subject to debate, especially in the era of "play money", but my comments in my "buckets" post above reflect Prof Graham's advice, albeit using cash since rates are near zero.

Guides, not absolutes, should be the mantra of any actual investor.

Scimitar said:

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Even Ben Graham, Warren Buffet's professor and mentor, recommended 25-75% bonds, depending on market conditions and to keep from excessively speculating.

Today's equivalent range is subject to debate, especially in the era of "play money", but my comments in my "buckets" post above reflect Prof Graham's advice, albeit using cash since rates are near zero.

Guides, not absolutes, should be the mantra of any actual investor.

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To add onto this, some of the big firms have adjusted their risk profiles in the last couple of years to move more conservative overall. Even Goldman's High Risk profile has 15%+ in bonds.

And I should add that I also have a convertibles fund in bucket 3 that's 4% of said bucket, so I de facto have 20% in bonds and cash

This is just hypothetical, but I can't think of a single reason on earth to own a Coca-Cola bond over Coca-Cola stock

To be honest, I haven't looked at any Coca Cola securities in a long time. I have my metrics and know my limitations. In this case, I would pick a bond fund to manage that portion of the allocation

See my post above on guides and absolutes.

It was just example. Why own BND over VOO or VTI unless that's where you're holding cash reserves?

Long term avg real returns of mainstream stocks are more than double of investment grade corporate bonds. The dividend of the S&P pays about the same as the yield on a avg investment grade corporate bond right now, and that dividend continues to grow year after year.

All of that not even to mention that any bond you own right now has zero chance to appreciate in value. Go get you a bond at a historically low fixed rate, or buy BND so you can voluntarily sign up for negative real returns and a falling NAV price. Just have trouble making sense of it unless it's cash reserves

I'll say it again,

Divorce later in life is the greatest financial risk for most people.

Nobody wants to talk about this fact.

ehrmantraut said:

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Dill-Ag13 said:

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I'm 29, I'm investing in retirement like an ostrich with my head in the sand.

For my taxable investments I continue to invest into VTI:BND in a 2:1 split. I figure keep it simple means keep it simple.

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Why would a 29 year old own a bond? Are you saving for a down payment on a home or something?

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Yes

Dill-Ag13 said:

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ehrmantraut said:

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Dill-Ag13 said:

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I'm 29, I'm investing in retirement like an ostrich with my head in the sand.

For my taxable investments I continue to invest into VTI:BND in a 2:1 split. I figure keep it simple means keep it simple.

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Why would a 29 year old own a bond? Are you saving for a down payment on a home or something?

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Yes

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Maybe he has an 8 figure portfolio and planning to retire in the next couple years

Scimitar said:

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Even Ben Graham, Warren Buffet's professor and mentor, recommended 25-75% bonds, depending on market conditions and to keep from excessively speculating.

Today's equivalent range is subject to debate, especially in the era of "play money", but my comments in my "buckets" post above reflect Prof Graham's advice, albeit using cash since rates are near zero.

Guides, not absolutes, should be the mantra of any actual investor.

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Graham died in 1976 and his and Buffett's investment goals are to not just match the market, but beat it. Most people are not equipped to do that, and over the long term won't.

Buffett has dictated that his money left to his widow be invested 90% in index funds, 10% in short duration government bonds, at this point that's basically keeping your money in cash. That is the mix he suggests to amateur investors.

I'm not devoid of safe money, but that comes in the form of cash holdings as an emergency fund and paying off my house early (I bought low, converted a high risk, very profitable trade into the mortgage payoff + some temporary pull out of index funds, my overall after tax portfolio is at the same level as before I made my gamble that paid off).

The vast majority of the rest is going into index funds and then about 5% will get funneled into companies or managed funds that I individually like as either a drag or boon to my portfolio (depending on how well I pick them).

Don't see any reason for a person that's 29 to hold bonds long term. Buying a bond fund to help save for a home is fine (as mentioned), but it just seems overly cautious over a 30 year time horizon to have 30% in a bond fund with that bond mix increasing every year.

Stat Monitor Repairman said:

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I'll say it again,

Divorce later in life is the greatest financial risk for most people.

Nobody wants to talk about this fact.

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I'm trying to get MDMA marriage counseling mainstreamed so lawyers don't keep fleecing generational wealth.

TikkaShooter said:

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Quote:

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I don't know anymore. I'm continuing to plow away with our normal savings strategy (Match wife's 401k + max IRAs + max HSA).

---

This.

Do this.

Bc I firmly believe that most Americans with savings goals are doing the same.

And that tells me one thing: We all still believe.We believe that through good and bad administrations/policy/eco times, that America will persist, and that our financial savings and sacrifices will be rewarded.

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I agree with this logic but I'm afraid the amount of Americans with real savings goals is a sad minority.