Just as some general advice, imo that’s enough money to visit with a fee-only financial advisor for some planning. I don’t think my numbers are wildly off for location but you could probably spend like a grand (.22%) to get a solid plan in place that you can ride for a while. Or like others have said, roboadvisor. I don’t think target date fund makes sense outside of a retirement vehicle but maybe that’s an option.
Ask HN: I have $450K cash, what should I do to maximize my return?
201–210 of 509 posts
Re: Ask HN: I have $450K cash, what should I do to maximize my return?
#202Earlier quoted context omitted.
If it’s all in the market, most wisdom says you can take out 4% a year and never run dry. Is 4% of your stash enough to live on? Congratulations you are financially independent. You can read through mr money mustache if you want more depth..
The current risk free rate is absurdly low, which would suggest a much lower sustainable draw down than 4% for the next 10-30 years, probably only around .5 to 1.5% at most.
I agree the 4% rule is too aggressive nowadays. But every .25% increment lower means a huge improvement in sustainability, so even adjusting down to 3% is profoundly more conservative than the original rule. At 1.5% you are going lower even than endowment funds aiming for perpetual maintenance of principal (they often use 2%-2.5%).
The 4% rule of thumb was calculated to minimize risk of running out of money during the time period. 1.5% * 30 years = 45%, so an investment that simply keeps up with inflation would leave you with more than half your cash after 30 years.
And note that the stock market almost always has positive real returns over periods as long as 30 years (see William Bernstein’s book Deep Risk), so the assumption “just keeps up with inflation” is already very pessimistic.
Re: Ask HN: I have $450K cash, what should I do to maximize my return?
#203Earlier quoted context omitted.
This has been true for the US markets till now but I am always scared to think of a scenario where they go the way of UK markets have done in the last decade. Look at one[1] of the FTSE 100's Index fund returns. They stand at 3.58% annualised, i.e your money is now 1.4x of the original amount. This is considering the fact that we are looking at returns from Aug 2010 levels when the FTSE index was already 20% down fro…
Hmm, is that with dividends reinvested? UK firms tend to pay out higher dividends for various reasons. It seems that with dividends reinvested, you would have made approximately double your money before the crash [0], which took the value down by around 19% today, so you'd end with around 1.62x today in 10 years, nearly exactly 5% annualized including the effects of Corona. That said, I would not make the UK stock ma…
It should be with dividends reinvested, in absolute index value I think FTSE 100 is still 10% down from 2008 peak. The difference in return might be because the fund hasn't tracked the index well.
I gave the example of UK as UK was precisely a power in the past and lost the lead somewhere and never recovered well. I think US is sound for foreseeable future but with the rising geopolitical tension and the sort of signals coming from China, if they become stronger in the future and have the ability to influence more markets, we might see influence of US waning as well.
Re: Ask HN: I have $450K cash, what should I do to maximize my return?
#204Earlier quoted context omitted.
I agree with the (downvoted) guy who said, I'm an index fund skeptic. Something is true with index funds that was less true historically, which is the concentration of a few large companies in the largest indexes - as in, the amount of percentage of capital they have. Fact, FAANG make up 10% of the s&p 500 index, tech makes up 20+ %. It's NOT at all averaged out in the way the Bogleheads might think it is. Is it a "b…
The historic worst case for the inflation-adjusted S&P 500 is not being up from 1929 - 1987 - 58 years. https://www.macrotrends.net/2324/sp-500-historical-chart-dat... Edit: This ignores dividend reinvestment as ummonk noted. https://www.officialdata.org/us/stocks/s-p-500/1900 suggests 1929 - 1944 was probably the longest time. We are in unprecedented times. Highest debt, lowest bond yields, crazy P/Es, historic GDP…
Any examples of those mining lenders you mentioned?
Re: Ask HN: I have $450K cash, what should I do to maximize my return?
#205Earlier quoted context omitted.
The historic worst case for the inflation-adjusted S&P 500 is not being up from 1929 - 1987 - 58 years. https://www.macrotrends.net/2324/sp-500-historical-chart-dat... Edit: This ignores dividend reinvestment as ummonk noted. https://www.officialdata.org/us/stocks/s-p-500/1900 suggests 1929 - 1944 was probably the longest time. We are in unprecedented times. Highest debt, lowest bond yields, crazy P/Es, historic GDP…
I tend to agree with this and I'm also long several gold miners, and I've swing traded some of them (one was a value buy with a long-standing issue with the Greek government that I was watching the news on for years). It baffles me how this Bogleheads philosophy has taken tech people. People can't wrap their heads around the idea that gold goes up in times of trouble, or that work from home tech is likely to go up, o…
How many years have you been doing this?
Re: Ask HN: I have $450K cash, what should I do to maximize my return?
#206[deleted]
Re: Ask HN: I have $450K cash, what should I do to maximize my return?
#207If you seek out average advice, expect average results.
You are going to get a bunch of people talking about equities, Bogleheads, bla bla bla. Read the book “Expected Returns” and start pulling threads.
Re: Ask HN: I have $450K cash, what should I do to maximize my return?
#208Earlier quoted context omitted.
That can't possibly be true in the limit though. A market with no active management would allocate capital arbitrarily, without an eye to returns. A company burning money on making millions of unwanted skunk-scented bouncy balls would be as likely to attract capital as one that made, say, food or medicine. Resource allocation would break down if nobody made active capital allocation decisions. The question is how hig…
Yes, and not only that, but the index funds a skewed towards entities with large market caps. Someone could make their own "index fund" with 10% of it allocated to FAANG, maybe 20% of it in the largest tech names overall, and then a distribution of the largest market cap names, and lo and behold, one has an s&p 500 "index fund". Tesla's about to be added to the S&P 500. There are strong opinions on both sides - it's…
Index funds are strongly a momentum investment strategy. I don’t see this appreciated so often.
But of course, a properly diversified index fund portfolio contains much more than just the S&P500. Mine has some thousand global stocks, on the order of 5000.
Re: Ask HN: I have $450K cash, what should I do to maximize my return?
#209Wait for the next crash and then buy up stocks and rental properties (apartment buildings) at a discount. See 2008 for reference. While you are waiting for the crash, you could put some of your cash into gold, which will do well when the US economy crashes.
Re: Ask HN: I have $450K cash, what should I do to maximize my return?
#210Without knowing more about you - age, health, goals, risk tolerance, other obligations, etc - it's all just random suggestions from the internet. My random suggestion here is diversify in to a few different equities areas. US, international, etc. I mostly have a few 'general market' funds, but a couple that are focused on tech companies, and they've outpaced the general market over the last several years. Keep some i…
If you do use a financial advisor, use one that charges hourly. The ones that charge a percentage win regardless of your outcome. I have been very unimpressed with their work when I have seen it in action. The flat fee ones are incentivized to give you less than what they would do in the same number of hours. Probably you can set up an initial allocation and learn about rebalancing, and you’ll only occasionally need…
"use one that charges hourly" - that's what I'd meant by "meeting with a fee-only advisor", but perhaps my term isn't the best phrase to keep in mind. yes, keep a fixed fee (hourly, whatever) - just don't tie a % of your portfolio as a fee for someone to 'manage' your money. Or... don't do it without careful consideration.