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Ask HN: I have $450K cash, what should I do to maximize my return?

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Re: Ask HN: I have $450K cash, what should I do to maximize my return?

#171

Post by nodesocket »

adaisadais wrote: post #163

The markets are extremely overinflated as of now. We will see an adjustment by the middle of 2021 at the latest. I would wait until the news starts to sound so horrible you can’t help to do anything but invest. As many have mentioned, placing it in an index fund is a good idea. I would go for that! But just wait until the market has the next downturn, invest, and don’t look back.

> We will see an adjustment by the middle of 2021 at the latest.

I love people who claim they know what the market's going to do, and continuously call for a crash. These are the same people who have been calling for a crash for the last three years. Here's the deal, sure we eventually have corrections, but if you have cash on the sidelines then you just buy more and lower your dollar cost average. I did this pretty aggressively in March / April in peak market overreaction.

Just look at Apple and Amazon stock. Everybody was saying they were way overvalued and not to buy. What happens? Both of them absolutely crush earnings, and Apple the largest company in the world pops 10% in a single day on Friday.

Re: Ask HN: I have $450K cash, what should I do to maximize my return?

#172

Post by KptMarchewa »

mancerayder wrote: post #154
stu2b50 wrote: post #147

Earlier quoted context omitted.

You're conflating index funds with S&P 500 Index funds, though. You can buy an index fund with _zero_ tech stocks. You can buy something like VINIX which has considerably less weight on the BigN tech firms.

The VINIX is down 3% YTD while the rest of the market ballooned. Looks like we "picked stocks" by picking the indexes here, too? I just don't understand the insistence on indexes. We're afraid of picking stocks that go bankrupt? We work in tech, and a lot of us are science nerds. Surely we can pick names based on how we think those technologies are likely to be successful. We have access to a lot more information tha…

S&P500 is also picking stock. Something like MSCI World is considerably less so.

Re: Ask HN: I have $450K cash, what should I do to maximize my return?

#173

Post by maerF0x0 »

Knowing very little of your goals, risk tolerance etc I'd say start with https://rparetf.com/rpar . You can always exit it and do another strategy if you find more tailored advice

Else consider one of the Vanguard TargetDate funds if you have a target date to retire.

Re: Ask HN: I have $450K cash, what should I do to maximize my return?

#174

Post by throw0101a »

polote wrote: post #149
throw0101a wrote: post #29

> I'm not comfortable investing the entirety into an index fund, given the current socio-political climate. Over the the long term there is not really anything better to do with it than equities: the Great Depression, World War 2, gold standard retirement, 1980s inflation, etc. Even if you only invested in the peaks, you'd still do quite well over the decades: * https://awealthofcommonsense.com/2014/02/worlds-worst-m…

> Even if you only invested in the peaks, you'd still do quite well over the decades: This is not true for a 10 years period though https://www.vizlit.com/finance/2020/07/01/sp-performance.htm... You might to add that even though in the past economic growth has always been the case, it doesn't mean it will always be the case, especially now that the energy consumption more or less reached a peak

> This is not true for a 10 years period though

That's for the S&P 500. How would have a portfolio using (say) the Russell 3000 have done? How about adding some international/EM component? What about a portfolio wish some bonds to control for volatility and allow for rebalancing?

That is to say: does diversification help?

Re: Ask HN: I have $450K cash, what should I do to maximize my return?

#175

Post by nodesocket »

csmiller wrote: post #97
hedora wrote: post #4

Cash out refi everything you can. At 3%, 30 year fixed, with fed target inflation rates of 2-3%, you’ll need a If you can’t get that with passive investments over the next 30 years, the banks will have bigger problems than your loan. Despite your risk aversion, consider putting some in a robo advisor (mix of bonds, index, foreign index, etc), to hedge against a spike in inflation, or a crash of just the US economy. T…

I moved my cash from Wealthfront to Marcus, I think their rate is 1.05% right now?

It was way higher before. I got a 1 year cd at 2.25% with Marcus that is expiring next month. Those were the days.

Re: Ask HN: I have $450K cash, what should I do to maximize my return?

#176

Post by cheeze »

mancerayder wrote: post #154
stu2b50 wrote: post #147

Earlier quoted context omitted.

You're conflating index funds with S&P 500 Index funds, though. You can buy an index fund with _zero_ tech stocks. You can buy something like VINIX which has considerably less weight on the BigN tech firms.

The VINIX is down 3% YTD while the rest of the market ballooned. Looks like we "picked stocks" by picking the indexes here, too? I just don't understand the insistence on indexes. We're afraid of picking stocks that go bankrupt? We work in tech, and a lot of us are science nerds. Surely we can pick names based on how we think those technologies are likely to be successful. We have access to a lot more information tha…

If you're looking at YTD% on an index fund during a pandemic, you have the wrong mindset IMO

Re: Ask HN: I have $450K cash, what should I do to maximize my return?

#177

Post by mancerayder »

stu2b50 wrote: post #164
mancerayder wrote: post #154

Earlier quoted context omitted.

The VINIX is down 3% YTD while the rest of the market ballooned. Looks like we "picked stocks" by picking the indexes here, too? I just don't understand the insistence on indexes. We're afraid of picking stocks that go bankrupt? We work in tech, and a lot of us are science nerds. Surely we can pick names based on how we think those technologies are likely to be successful. We have access to a lot more information tha…

Well, yeah, that's absolutely expected. The promise of index funds isn't "you'll always make money!!" over any short-term period, the promise is that if the stock market as a whole increase, which it tends to do, you'll also benefit from that. >Surely we can pick names based on how we think those technologies are likely to be successful. Time and time again, especially now, "fundamentals" has proven to be a poor pred…

Fine, over 20-30 years. I'll be too old in 20-30 years to enjoy that money. I'd rather swing trade and buy myself a new couch. :-)

Re: Ask HN: I have $450K cash, what should I do to maximize my return?

#178

Post by WA »

edoceo wrote: post #160
sushshshsh wrote: post #134

Earlier quoted context omitted.

Ok so say I have enough risk tolerance to put my money in something other than cash, but not more aggressive than a fund that tracks the S&P, what precise steps should I do to live off of my cash stack while doing absolutely 0 work other than sitting on my couch?

You'll need a fund with good dividend payout. SPY is currently at $1.30 and cost $327. If you put $450k into SPY you make $1870 per quarter. So, might need to buy $2MM of SPY. But there are other good dividend funds and/or individual equities.

Dividends are left-pocket right-pocket. Dividends can help you psychologically, but in a way, it’s like forced selling once per year or per quarter.

Edit: if it helps you to invest, by all means, do it. But since dividends are mostly psychological, there is no point in limiting your stock picks to companies with a high dividend.

Re: Ask HN: I have $450K cash, what should I do to maximize my return?

#179

Post by hydroreadsstuff »

throw0101a wrote: post #142
dpweb wrote: post #128

Earlier quoted context omitted.

Stock indexes over the long term are a function of Corporate profits of the large companies and the inflationary nature of the economy, especially over the last 30 years, the willingness of the Federal reserve to print money (create debt). Without restraint nowadays. For instance, in 2020, the massive stimulus by the Fed almost certainly will create a rising stock market. It deviates of course in the short term 6-18…

> the willingness of the Federal reserve to print money (create debt). Without restraint nowadays. Ben Felix, a portfolio manager at PWL Capital in Canada, just released a video explaining why this is completely wrong: * https://www.youtube.com/watch?v=K3lP3BhvnSo > Quantitative easing is a monetary policy whereby a central bank buys government bonds or other financial assets in order to inject money into the economy…

He might mean debt monetization. When the Fed buys treasuries. I think the video didn't touch on that. M2 money supply changes nicely correlate with S&P500 performance. So there is truth to his statement.

I'd also throw out the assumption that the Fed will reduce the balance sheet eventually. They tried and failed in 2019. It's not going to happen. They are in fact "spending" (through the Treasury and their bond-buying programs), even though Powell likes to say that the Fed doesn't have spending power, but has lending powers.

Re: Ask HN: I have $450K cash, what should I do to maximize my return?

#180

Post by mancerayder »

cheeze wrote: post #176
mancerayder wrote: post #154

Earlier quoted context omitted.

The VINIX is down 3% YTD while the rest of the market ballooned. Looks like we "picked stocks" by picking the indexes here, too? I just don't understand the insistence on indexes. We're afraid of picking stocks that go bankrupt? We work in tech, and a lot of us are science nerds. Surely we can pick names based on how we think those technologies are likely to be successful. We have access to a lot more information tha…

If you're looking at YTD% on an index fund during a pandemic, you have the wrong mindset IMO

That's a matter of opinion, wrong mindset. I bought gold miners that ballooned, and swing traded pharma. This turned into money that I can use to buy things like computers and furniture. Or buy even more of the fabled broad index funds.
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