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

I enjoy how /biz/ and HN mixes together.

Step 1: Choose a diversified equity index based on your time horizon and risk tolerance. You can also choose a mix of indices.

- underlying principles: Diversification, reduction of exposure to idiosyncratic risk (as opposed to systematic risk), Modern Portfolio Theory

Step 2: Invest $8,653.85 a week for the next year in your indices of choice.

- underlying strategy: dollar cost averaging

Step 3: If the market tanks in September because school re-openings ravage the country, invest the rest of your money at an accelerated rate.

Step 4: Continue to reinvest income steadily for the rest of your life. Never liquidate a diversified index because of a recession (this ruins the whole investing strategy).

Step 5: Gradually readjust your portfolio into lower risk indices before/during retirement based on your risk tolerance. Warning: Even if you have low risk tolerance, you must have a strategy to live off your earnings for the rest of your projected life span. Generally speaking, the lower your risk tolerance, the longer you have to wait before retiring (because bonds are guaranteed to provide low returns) or the larger your portfolio needs to be upon retirement.

Ever since John Bogle created the first index fund about 50 years ago, the advice of simply put your money in, don't try to time the market, and divide between an allocation of stocks and bonds based on your risk tolerance has performed far better than anything else. This includes periods where the market has been very over-inflated. If you had the worst possible timing and put your money in around the absolute peak before the 2008 recession, held throughout the crash, and left it in for a while, you would have more than doubled it a little over a decade later.

It may be hard to realize, especially at times like this when the market doesn't seem to reflect reality, but when investing on a long time frame the best advice is always simply to put your money in and to not try to time the market. On a long enough time frame, it will all come out in the wash.

The key, of course, is "on a long enough time frame". If you think there's a reasonable chance you might need the cash in two or five years, then you should either significantly reduce your exposure to equities like the S&P 500 or eliminate it entirely. The question then, of course, is what do you put your money into? Well, there are plenty of options. While the S&P 500 returns around 9% before inflation, you have a number of options that are lower returns, lower risk. For that, you have the entire spread from a savings account (1% right now) to short term Treasuries (2%ish right now) to various kinds of bonds. The simplest way to get, say, 50% of the reward for 50% of the risk is to have (for example) 50% in SPY and 50% in Treasuries.

Whatever you do, good luck, and I highly recommend the Bogleheads forum for good advice on any situation.

I agree that Bitcoin isn’t a smart investment due to volatility. However would someone be similarly criticized for suggesting someone start or work for a startup? To me they have a similar risk profile.

We're currently printing, and will be printing more money. This is not investing advice. I'd put it in crypto or gold, or foreign stocks which are not undermining their dollar.