If you had $100,000, how would you invest?

[laserpat]

I'm not talking about buying cars and motorcycles, thats spending. I'm talking about investing. Stocks, bonds, realestate ?

[Chrisj CMA]

realestate

[~ Timbrwolf]

. . ....Real Estate would be the number one investment (over the long term) for your money. Unfortunately, I think you would need more then 100K to invest, unless you would be willing to take on a mortgage and I wouldnt recommend that. As far as the market, it,s also a good time to invest. Mutual Funds would probably be your safest move, although that would also be a long term investment.

[Davemn]

20% Common stock
50% Mutual Funds (include international)
30% Bonds

[bassman]

A few questions / thoughts....

1.  Is this the ONLY money available for investment?
2.  How would you feel or it affect you if it were ALL lost?   (to some this is a LOT of money but to others it's a drop in the bucket - think Donald Trump, Oprah, etc)
3.  What are your goals for this money?
4.  Will you need it soon or is it something you won't touch for a while -Short term ( a year or less) versus Long term (at least 3-5 years)?
5.  What is the mix of other investments, if any?
6.  Are you still working?
7.  Are you retired?
8.  Do you have outstanding debt - other than a mortgage (i.e., credit cards, car loans, student/education loads)
9  What is your risk tolerance?
10.  Do you have an emergency fund (usually quick access to CASH) set aside equal to at least a years annual income (some are saying in todays economy it should be 1 1/2 - 2 years salary)?
11.  What is you age?  The younger you are when you start investing the greater your chance to do well in the market or able to recover from a downturn.
12.  Do a little research on your own either online, bookstores, internet, VRCC Board and draw knowledge from their research.
13.  I'm not saying to follow them blindly but rather gain insight on the process. There are MANY "formulas" advisors use to recommend investment instruments for clients.
14.  Avoid outrageous claims of quick or large returns.
15.  DIVERSIFICATION and Rebalance regularly
16.  DIVERSIFICATION and Rebalance regularly
17  .DIVERSIFICATION and Rebalance regularly
18.  DIVERSIFICATION and Rebalance regularly
19  .DIVERSIFICATION and Rebalance regularly
20.  DIVERSIFICATION and Rebalance regularly

[alph]

Many people think that having money is easy.  Sometimes keeping it is harder then making it!!  I don’t care what investment you make, there is always a chance of loss.  With that being said, I myself would diversify my investments, don’t put all your eggs in one basket, invest in a way that you “win-win”.  For example, invest in fossil fuels as much as you would renewable fuels.  If you buy “Pepsi” stock, get “Coke” also……..  Real estate is an excellent investment.  The only problem with it is that unless that real estate makes money, you’re loosing money too taxes.  I don’t like bonds or mutual funds.  Only because I don’t understand them, they’re probably good investments, but for long term, once again, I’m ignorant to them. 

Be frugal.  Pay your bills, don’t go buying junk, (like a hardly). 

[Valker]

Pay off credit cards. That's a 20% to 30% return right now.

[Davemn]

More money has been made in real estate than any other investment.
More money has been lost in real estate than any other investment.
Timing is everything!
Has it hit bottom?
Depends.

[Bama Red]

More money has been made in real estate than any other investment.
More money has been lost in real estate than any other investment.
Timing is everything!
Has it hit bottom?
Depends.

Yep, with the aging baby boomer demographics, investing in Depends might be a smart move!

[Bama Red]

More seriously, I'd consider splitting it 50-50, gold & real estate.

[Davemn]

Hugh Hefner was asked what he plans to do on his honeymoon. He said "Depends"

[custom1]

Real estate.   I think if you're losing money in real estate you're speculating or flipping not investing. If you buy positive cash flow property you don't really care about the base value as much as the cash flow. If it's making money you can hold on to it till the value rebounds. But then you are a landlord and that is not for everyone.

Bassman has a lot of good questions. It's good to know your perspective and goals.

Valker is exactly right. It makes no sense trying to invest to make 8% if you have outstanding debt at 20%

[Davemn]

I wouldnt call losing 40% of my initial investment good no matter what the cash flow is. Yikes.
Unless you are a very savy investor in real estate....stay away.
The big question is......what is your goal with this money?

[bigfish_Oh]

Pay off credit cards. That's a 20% to 30% return right now.

that's the first thing.

I guess I am straying, I'm confusing "investing" with making money and investing in my future

  that's not enough for real estate, I'll buy and sell, go to auctions, be at the right place, right time with the cash. I'll trust what I know not a bean counter that makes money no matter what. I'd be looking at 20-40% every 30-90 days. Now with about 400K, that can be right at a million profit in 24 months or sooner, but I need help from China. That's why the rich get richer.
     I have not had the same job long enough to have built a big plan of any kind. I am working now back where I started at in 1978. Many of the same guys are still there and many lost big 5 figures in their investment plan. What I never understood, is why they had a mortage at 8-18% and could have borrowed their 401 at 2-4% and it came right back out of their check. same with cars and credit cards. then they would never have lost. maybe they had super returns for awhile. I can not leave my little bit in their to earn -5% to 12%(luck) when I can borrow it for 4%, buy and sell(farm toys, cars, tractors) making 30-40% plus I bought my Valk.  overtime goes away at work and people cry because they can not pay bills, yet they could borrow it out at 4% instanly online and pay those 20% cards

[f6gal]

bigfish, there are several flaws in your 401k theory.

many lost big 5 figures in their investment plan.

Hindsight is always 20-20... had they known they were going to lose, they would surely have made different choices.

they had a mortage at 8-18% and could have borrowed their 401 at 2-4%

Who the heck has a mtg at 8-18%?  When mtg rates were that high, 401k rates were much higher also.  401k loans are not tax deductible, which more that makes up for the rate difference (for most ppl).  Also, most 401k's limit the amount you can borrow (for instance, mine is limited to 50,000... no matter how much you have in there).

same with cars and credit cards

most 401k's limit the number of loans you can make (mine is limited to 2... combined total cannot exceed the 50,000 limit).

then they would never have lost. maybe they had super returns for awhile.

Had they not earned that money in the 401k, they would never have had it to lose or borrow in the first place... which brings us back to hindsight.  Taking it out (borrowing it) after the fall is ludicrous.  The market is almost back to where it was before the fall; while that does not entirely mitigate the losses, it's a lot closer than if money had been withdrawn (borrowed) when market funds were down.  
Personally, I kept socking more into the 401k when the market was down... so I have more than recovered my losses.

One other downside to taking out a 401k loan... if you should leave or lose your job while you have a outstanding loan, the IRS will consider it a taxable disbursement.  So you would have to come up with the money to pay the taxes (33% for most ppl), and if you're under 59 1/2, you have to pay 10% early withdrawal penalty on top of that.    

Ummm, I think I'll keep my 5.5% mtg.

[¿spoom]

To the original question, there is no one universal correct answer. It will depend on your goals, age, available flexibility, etc. If I were 20 and renting, for example - I'd advise use it for a down payment in a "motivated seller's" duplex and move into one side. If I was 75 I'd probably get 6mo. certificates of deposit. I'm 55 and if you just gave it to me (but I had to invest it all) I'd leverage most of it on the best possible rental unit and the rest on 30 to 90 day certificates.

[Tundra]

ETF's

[laserpat]

Interesting responses. I'm 59 and have a small construction co. which pays the bills but offers little chance of retiring. My investing goals are to keep the bulk in low risk investments and some "play" money for high yield investments. The temptation to buy toys is great but I already have 2 Valks (now it's Valk related!) What else do I need?

[Jess from VA]

I'm almost 58, and took an early retirement (from the Fed) last May.  Having maxed out my TSP (401k) (including over-50 catch up contributions) and IRAs over the years, and having lost over $35K in the market failures in recent times (and one third of my home value), at the time I retired I got almost completely out of various mutual funds, ETFs, stocks (never did bonds), and moved everything into cash reserves.  I'm not making diddly, but am making steady small gains. 

I also am not daily watching my investments going thru extreme volatility up and down, causing me great  personal distress, as I had been over the last five years.  The market was supposedly back 11% this year (on average), and I may be losing out on possible decent earnings if I was to stay in broadly diversified mutual funds and ETFs, but:

1) I can't stand the grief and worry anymore.... and since I retired, my primary goal has to be to protect what I have... not make more. 

2) Although the market has weathered everything including the great depression for many decades, and the US market is reportedly up 11% this year, I personally feel the risk remains too great in light of failing world economies, multiple pending US State defaults, a failing US job market, unscrupulous and self interested banks and Wall Street, socialists still in power in DC, to have any significant money in equities. 

If I was younger with 15-20 plus years (minimum) to go toward retirement, I'd still be in the market.... as carefully as I could be.   

You can make money in real estate, but I would never, ever deal with renting-tenants as part of my life investment plan.  Non-paying, house destroying tenants have been given way too many rights under landlord-tenant laws.  Flipping selected homes could be good business for a small contractor, if you live where any homes at all are selling.

Gold may yet turn out to be a fantastic investment (actually gold mining stocks, and precious metal funds and etfs), especially if we ever go back to a gold standard.  I did poorly in these investments  over the last five years, and gold is now at all-time highs, and buying in at the top is always troublesome.

[bigfish_Oh]

bigfish, there are several flaws in your 401k theory.

many lost big 5 figures in their investment plan.

Hindsight is always 20-20... had they known they were going to lose, they would surely have made different choices.

they had a mortage at 8-18% and could have borrowed their 401 at 2-4%

Who the heck has a mtg at 8-18%?  When mtg rates were that high, 401k rates were much higher also.  401k loans are not tax deductible, which more that makes up for the rate difference (for most ppl).  Also, most 401k's limit the amount you can borrow (for instance, mine is limited to 50,000... no matter how much you have in there).

same with cars and credit cards

most 401k's limit the number of loans you can make (mine is limited to 2... combined total cannot exceed the 50,000 limit).

then they would never have lost. maybe they had super returns for awhile.

Had they not earned that money in the 401k, they would never have had it to lose or borrow in the first place... which brings us back to hindsight.  Taking it out (borrowing it) after the fall is ludicrous.  The market is almost back to where it was before the fall; while that does not entirely mitigate the losses, it's a lot closer than if money had been withdrawn (borrowed) when market funds were down.  
Personally, I kept socking more into the 401k when the market was down... so I have more than recovered my losses.

One other downside to taking out a 401k loan... if you should leave or lose your job while you have a outstanding loan, the IRS will consider it a taxable disbursement.  So you would have to come up with the money to pay the taxes (33% for most ppl), and if you're under 59 1/2, you have to pay 10% early withdrawal penalty on top of that.    

Ummm, I think I'll keep my 5.5% mtg.

their's some things I was wondering about, thank you. ( I am not a bean counter)
high mort rates for people that could not refinance when rates went down, their were 18% for excellent credit people in early eighties.
Of course you will keep your'e low one, dah
I'm not happy earning -5 to 8 % when I can borrow it and get 30-40% having fun and have something tangible that will not depreciate as sharply as market and come back as slow
one loan at time, probably 50K limit
I will never sock more in to earn less than I can when it is in pocket
maybe 100K in one bite would cause a little more caution, but what is really safe?

I had a 90 day repurchase agreement once at a S & L.(1981). I needed the same amount money for an emergency. I got a 90 day note at my bank. I made more interest than what the loan cost ?!

thanks for your input, the only answers I ever got from those holding on were, "it's my nest egg", no strategies, no thinking, just because.

[shortleg]

 I made and lost some money on Harley stock.
That being said, I got300 shares of Ford at 2.25 a share
when they all looked real bad. I am now glad that I showed
some faith in an old company.
          Shortleg[Dave]

[Curley Wolf]

Guys and Gals, don't forget to interject the relative value of the dollar.  You may have more dollars but have less net worth.  Inflation is almost a certainty (and probably at high levels) meaning dollars will be worth considerably less.  I'm currently living primarily on real estate investment income from properties acquired over 20 years ago but upkeep and tenant maintenance is a real factor.  Additionally, the tremendous uncertainty in the real estate market and the potential volatility in the U.S. taxation situation create some real risks there.  I feel that precious metals (gold, silver, etc.) offer protection against coming inflation and merit somewhere around a 20-30% portion of a person's savings.

WHOA!!!  I AM NOT AN INVESTMENT COUNSELOR  AND DON'T FEEL THAT I'VE PARTICULARLY SCORED WELL IN THE INVESTMENT ROUNDS BUT God has blessed me and I depend upon Him to continue to be my protector.  

[laserpat]

Guys and Gals, don't forget to interject the relative value of the dollar.  You may have more dollars but have less net worth.  Inflation is almost a certainty (and probably at high levels) meaning dollars will be worth considerably less.  I'm currently living primarily on real estate investment income from properties acquired over 20 years ago but upkeep and tenant maintenance is a real factor.  Additionally, the tremendous uncertainty in the real estate market and the potential volatility in the U.S. taxation situation create some real risks there.  I feel that precious metals (gold, silver, etc.) offer protection against coming inflation and merit somewhere around a 20-30% portion of a person's savings.

WHOA!!!  I AM NOT AN INVESTMENT COUNSELOR  AND DON'T FEEL THAT I'VE PARTICULARLY SCORED WELL IN THE INVESTMENT ROUNDS BUT God has blessed me and I depend upon Him to continue to be my protector.  


Good point Curley. If fuel cost go through the roof, everything get more expensive and the value of the dollar is less. Thanks everybody for your feedback, It's interesting to get many perspectives.

[¿spoom]

Another thing to consider is the current near-record low interest rates. There's no way they will stay there and that will wreck havoc on a lot of folks who throw everything into "safe" investments like Treasury Bills. When interest rates go up, T-Bills go down.

[¿spoom]

Interesting responses. I'm 59 and have a small construction co. which pays the bills but offers little chance of retiring. My investing goals are to keep the bulk in low risk investments and some "play" money for high yield investments. The temptation to buy toys is great but I already have 2 Valks (now it's Valk related!) What else do I need?

Pretty much the same here, at least I have some decent 401k bankrolled from a previous life. Toys and even your home isn't wealth unless it produces income, and very few toys can ever be sold for more than they cost you. I sold a '64 Avanti I'd had for years, and did well. But when you add up the 20-something years of insurance, storage and other costs it wasn't an income-producer compared to if I'd put the initial funds into other things. Economics 101-Opportunity Cost is real karma.

 I will say one thing I learned from the owner of a very large and successful company, "don't cheat on your taxes by nor reporting income. Someday you will want to get rid of that company and wish you had reported every dime so you can get top dollar when you sell".

[Jess from VA]

LazerPat, one other thing I'd mention (may seem obvious but..). 

While you are still working with regular income, and saving all you can, buy those things you really want or need while you are still working and have some liquidity, because when you retire and stop having income you may never be able to afford them.   For me, this was a 2d Valk, additional tools, certain gear, an AR15 M4 carbine, new computer.  Make a bucket list of stuff you've always wanted, but never got around to, then frugally get the things you can afford before the poverty of retirement.  Actually, my list was not very big since I had most of what I wanted. 

[Kidd]

Valker is exactly right. It makes no sense trying to invest to make 8% if you have outstanding debt at 20%

Yes , it does make sense

[stormrider]

If you're in the construction business, (builder?), build a duplex. Maybe for retirees. Rental income around here is $5-700 a month. Muliplied by 2 isn't too bad a return. Course that depends on land costs where you are. I'm a carpenter and could afford to take off enough time to build a 2000 square foot duplex for less than $50. a foot here. I do plumbing, electrical, can do sheetrock if pressed, paint, trim, you name it. The idea is to keep labor costs down. Anyway, good luck.
Oh, there is a company that builds cell phone towers. Can't recall the name, but they are expected to build thousands of towers over the next couple years. They are the largest out there and their stocks are expected to soar.

[czuch]

The house next door went for 50k. The "Supermall, Passages of Tucson" is slated to go in 500 feet from my house. I'd buy a couple of properties in my neighborhood and hope for the best. This could be biggish.