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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?

#271

Post by krn »

sushshshsh wrote: post #134
nknealk wrote: post #123

Surprised not to see this mentioned anywhere. In finance, we don’t look at maximizing total return but rather risk adjusted return. Buying a lotto ticket has amazing total return if you hit the jackpot but really bad risk adjusted return. The thing you should spend some time doing is deciding what your risk tolerance is and how much variance in your portfolio you can stomach. Then you can start talking investment str…

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?

> what precise steps should I do to live off of my cash stack while doing absolutely 0 work other than sitting on my couch?

I would put X% in Vanguard 500 Index Fund[1], and in Y% Vanguard Total International Bond Index Fund[2].

X% should represent the amount of money you can afford not to touch during the entire economic downturn.

Y% should represent the amount of money you want to be able to cash out at any point during the economic downturn.

Another alternative to S&P-500 for putting X% in is Nasdaq-100[3]. It has performed much better over the years, but it's significantly more tech-focused:

> The table below and the charts above display historical performance figures for both the Nasdaq-100 TR and the S&P 500 TR between Dec. 31, 2007 and June 30, 2020. Despite recent overall market volatility, the Nasdaq-100 TR Index has maintained cumulative total returns of approximately 2.5 times that of the S&P 500 TR Index.

[1] https://investor.vanguard.com/mutual-funds/profile/overview/...

[2] https://investor.vanguard.com/mutual-funds/profile/overview/...

[3] https://www.nasdaq.com/articles/when-performance-matters%3A-...

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

#272

Post by conchy »

overcast wrote: post #11
janandonly wrote: post #10

1. Read this: https://medium.com/@100trillionUSD/bitcoin-stock-to-flow-cro... 2. Buy and hold Bitcoin for a while. (longer is better).

Any mention of Bitcoin or cryptocurrency investing should be banned on HN.

Continue to ignore the best investment of the last decade? Good idea.

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

#274

Post by ifdefdebug »

qorrect wrote: post #68
Tiktaalik wrote: post #38

Buy land in Portugal or Malta and leverage it to get a EU Passport.

Visit them first! I really did not like Malta, I would 100% go with Portugal, or Spain/Madeira.

Madeira is not a country, it's part of Portugal.

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

#277

Post by Supermancho »

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…

> the willingness of the Federal reserve to print money (create debt). Without restraint nowadays

> 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 to expand economic activity

You implied this would be wrong, but it looks exactly right. Nobody is confused about how this works, which is why you response is just puzzling.

> (b) roll the debt forward by issuing new debt to pay the old debt.

There's no question as to what happens here (a) vs (b) false choice. It's printed money that is accounted for as new debt, as per the original assertion.

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

#279

Post by simonebrunozzi »

This is my advice: make sure to spend enough time to educate yourself about financial investments. My rule of thumb is to spend one hour per $1,000 you have in assets.

So, with $450k in cash, dedicate 450 hours of the next 1-2 years to build a solid education for yourself. Don't simply follow the specific advice that you feel makes more sense.

If you think this is a lot of time... 104 weeks in 2 years = you need to spend ~4 hours per week to educate yourself. Read 2 hours for 2 evenings per week. That's it.

Too much? Ok, cut it in half. 225 hours in two years. Still a great effort that will pay you back for the rest of your life.

This is above any specific tactical move or decision you can make.

If you are not willing to do this, then accept the fact that whatever decision you will make, you will have a higher chance to regretting it.

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

#280

Post by arcticbull »

BbzzbB wrote: post #261
nemild wrote: post #146

Earlier quoted context omitted.

One more to add is Reddit's Personal Finance, where this question gets asked a lot. The wiki (second link, search for Windfall) esp has a number of great articles on topics like this. https://www.reddit.com/r/personalfinance/ https://www.reddit.com/r/personalfinance/wiki/index

PF will say the same thing as always (not that it's wrong), i.e. SPY if you're risk-tolerant, some Vanguard I don't recall (VOO?) if you're less so.

VOO and SPY are basically the same thing, SPY is older and structured as a trust, VOO is an ETF. Both track the S&P 500. They'll probably recommend some combination of equity and bonds, probably a split between VOO (slightly lower fees and more efficient payout of dividends -- I do mean slightly) and TLT (20+ year treasuries).

VOO and TLT have limited correlation as treasuries are seen as a safe-haven. We've seen huge spikes in treasury funds recently, since they go up in value when interest rates go down. It's a bit unintuitive, but treasury funds have to cycle through their holdings over time to track the index, so when interest rates on new issues go down, older issues command a premium in the amount of pre-paid interest.

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