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Ask HN: I've saved up $80k USD. What should I do with it?

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Re: Ask HN: I've saved up $80k USD. What should I do with it?

#41

Post by headmelted »

Myce wrote: post #8

I would prefer to buy property any time. People will always need housing. So while the price of the property is pure speculation, rent is a nice steady source of income.

This is true, but it's worth considering that investments in individual stocks or in index funds (I would avoid actively managed funds) are incredibly liquid.

If I decide the housing market isn't for me or I need to raise cash quickly, I could be forced to wait anywhere from 8 weeks to 18 months, or longer to get any of my investment back (even longer if I don't want to lose money through desperation to sell).

If I need to raise money from stocks or index funds I can get market value for those investments instantly during business hours.

Re: Ask HN: I've saved up $80k USD. What should I do with it?

#42

Post by keiferski »

neilgodwin wrote: post #36
keiferski wrote: post #17

Do you have any interest in building a startup yourself? If so, $80k will last you 4-5 years for bootstrapping if you move to a low cost area and don’t have any dependents or other expenses.

I sure am, but as mentioned in one of the replies, I would need an idea that I believe enogh in. Would you do it differently? How do you know if something is worth it?

Maybe keep the current job, don’t touch the 80k, and spend your free time coming up with a good idea that you can see yourself working on for 5+ years? That’s my advice.

Re: Ask HN: I've saved up $80k USD. What should I do with it?

#43

Post by DSingularity »

neilgodwin wrote: post #29
stevekemp wrote: post #23

Earlier quoted context omitted.

Even if there were to be a massive freefall in housing it would take the banking system months, and probably years, to get round to processing all the mortgages which were in arrears. Foreclosure is a slow, slow, slow process even at the best of times. People can avoid paying their mortgages and still be living in a property for many years. If you're imagining something that covers a significant amount of property th…

So, you're saying no fall in prices in the short to mid term is expected?

Not necessarily. People are still buying houses. Interest rates are low.

Re: Ask HN: I've saved up $80k USD. What should I do with it?

#44

Post by glofish »

keiferski wrote: post #17

Do you have any interest in building a startup yourself? If so, $80k will last you 4-5 years for bootstrapping if you move to a low cost area and don’t have any dependents or other expenses.

not such a great idea, you would risk both your time and your savings

- an investor would on risks money

- another team members risk only time

you would do both

Re: Ask HN: I've saved up $80k USD. What should I do with it?

#45

Post by orbifold »

Pick one or two ETF and set up a monthly amount to invest into them. You don’t need to invest everything at once and the monthly commitment averages out short term effects. If you want to be more active with a part of your money, you can also commit to buy a couple of stocks monthly. If you get rid of poorly performing stocks regularly and rebalance the portfolio you can declare them as capital losses that will count towards any future capital gains.

Re: Ask HN: I've saved up $80k USD. What should I do with it?

#46

Post by forgingahead »

I would actually keep holding it in cash -- that is maybe 2 years of emergency funds if you are married/have a family?

Keep it in cash, pretend you don't have it (create a separate account that is just this sitting there), continue earning and saving. Anything extra you earn after this 80k base you can invest (simple things like index funds, dollar cost average in slowly).

Re: Ask HN: I've saved up $80k USD. What should I do with it?

#48

Post by andrewmatte »

I used to be a stock broker. But right now I am not your stock broker. This is not advice.

Great fundamental wisdom is that you can't (consistently) time the market but you should try to Buy Low, Sell High. That said, we experience a massive COVID crash. It's a great time to buy, but we don't know how long it will last or whether it will be long recession afterwards.

Index investing through ETFs is a great way to get diversity in a single financial instrument such as the S&P (large companies), NASDAQ (tech), or the Russell (small companies.) The NASDAQ has largely recovered but the Russell still has a long way to go back to February prices.

I have an old friend whose parents sold their home recently and gave him a sum. He's putting in 10% per month for the next 10 months, all in the S&P.

Re: Ask HN: I've saved up $80k USD. What should I do with it?

#49

Post by DSingularity »

neilgodwin wrote: post #24
ForHackernews wrote: post #2

https://www.schwab.com/resource-center/insights/content/does... Just invest in a broadly diversified index fund. Start here if you're a total beginner: https://www.bogleheads.org/wiki/Getting_started

Thanks.

That’s a great low risk way to proceed, but is lazy in my opinion.

For one, those stocks include weapons manufacturers and other poisonous companies that maybe you wouldn’t want to support.

Second, it detached you from your underlying investment. In my opinion the ability to evaluate businesses is itself worth investing in.

Go pick a sector you are interested in. Compile a list of small - mid cap companies (I.e. companies worth hundreds of millions to a few billions). Read up as much as you can on them. What’s their business model? Who leads them? What’s their current state? Invest in the ones that stand out!

Not many people will tell you this because “investing in the index fund will give you amazing returns after 30 years and Warren Buffet said some!!”.

Re: Ask HN: I've saved up $80k USD. What should I do with it?

#50

Post by bko »

sneak wrote: post #10

Short answer: Dump it all in VFIAX and ignore it for about 30 years. Alternately, wait for the housing market freefall that is scheduled to hit about 180 days from now, and buy a foreclosure or two. EDIT: Cosigning the above recommendation about maxing out a Roth IRA each and every year as well, and of course maxxing out any company-matched 401(k) options.

Your short answer suggests you cannot time the market but over the long run, stocks generally go up so they're a good long term investment. Also this answer touts the benefits of passive liquid investments with transaction costs associate with it.

Your second answer goes completely the other direction. The answer suggests to time an investment in real estate, the least liquid investment with the highest transaction costs a typical investor could buy.

No one knows what housing market will be like 180 days from now, no matter how many times they're interviewed on CNBC.

I like your first answer better.

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