I'll give you a proper Hacker News answer:
Invest it in software companies who develop in Haskell and Rust.
Ask HN: I have $450K cash, what should I do to maximize my return?
241–250 of 509 posts
Re: Ask HN: I have $450K cash, what should I do to maximize my return?
#242Earlier quoted context omitted.
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.
On the other hand, companies with long histories of sustained and rising dividend payments also tend to outperform the S&P500 in terms of total return (dividends + capital gains), and do so with lower volatility. Reasons include having a business that is profitable and stable enough to sustain such payouts and a management culture that appropriately balances shareholder interest (by paying dividend) against the long-term viability of the business (and can therefore continue its dividend payments over multiple decades).
Re: Ask HN: I have $450K cash, what should I do to maximize my return?
#243Earlier quoted context omitted.
> 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…
You realize that this strategy isn't going to work indefinitely? People like you will be blown out in the future. Sorry if that sounds awful, but it always astounds me how people think investment managers are tantamount to tea leaf readers, and that they've figured it out by simple dollar cost averaging. I just don't understand the mindset
Clearly it won’t work in the long term. No one knows what the market might do tomorrow. We might think we know but no one can ever truly know (legally speaking).
What I’m advocating for is mainly based on the timing: the market corrects, on average, every 8-12 years. Right now, many Robinhood investors (like you probably are) are extremely bullish and are inflating the market.
When the bubble pops I will see you at the bottom. And I damn well hope I am wrong.
Buckle up.
Re: Ask HN: I have $450K cash, what should I do to maximize my return?
#244> 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…
I'm an index fund skeptic. What would happen in a world where everyone invested in index funds? Capital allocation would go haywire. You can't create value out of nothing. ISTM that the more people push on index funds, the more overvalued equities in the index become relative to those outside the index. I'm not sure that retrospective analysis saying index funds are the best applies going forward in a world where ind…
While I don’t agree with your skepticism, there is a fund who goes off that theory that an S&P 500 index fund would become top weighted, or that the companies that have shown the most past growth are more heavily weighted, instead of focusing on future growth. It’s RSP, and it holds equal positions in all 500 companies equally.
Re: Ask HN: I have $450K cash, what should I do to maximize my return?
#245So $450K is both a lot of money and not a lot of money. Yes you could maybe buy a house with it, but with the current economic climate of foreclosures just over the horizon, I would probably wait for the market to bottom out to do it.
If it were me, I would start looking for vacation properties which are selling as a steal. Then when the real estate market recovers, sell it. And enjoy the wealth that comes with it.
Re: Ask HN: I have $450K cash, what should I do to maximize my return?
#246Just skimming some of the replies here makes me think you will get better advice on the Bogleheads forum [1]. Despite the minimalist appearance it is actually a great place to get sensible financial advice. I would start with the wiki page on managing a windfall [2], then search through older replies to similar questions. This kind of question gets asked there a lot, so there should be some recent threads. [1] https:…
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
I'd probably recommend https://old.reddit.com/r/FatFIRE over /r/pf as it's more likely to have people that have experienced getting a large lump sum like this.
Re: Ask HN: I have $450K cash, what should I do to maximize my return?
#247So $450K is both a lot of money and not a lot of money. Yes you could maybe buy a house with it, but with the current economic climate of foreclosures just over the horizon, I would probably wait for the market to bottom out to do it. If it were me, I would start looking for vacation properties which are selling as a steal. Then when the real estate market recovers, sell it. And enjoy the wealth that comes with it.
I am in a similar financial position but in Europe. I considered buying a property, expecting prices to collapse, but instead prices are going slightly up - the EU overall has a 10% GBP drop compared to the IS’ 30%. Cynical as it may sound I was expecting a sharper downturn. Seems like people are back to work and thus there is no collapse in sight.
Re: Ask HN: I have $450K cash, what should I do to maximize my return?
#248Earlier quoted context omitted.
We are in unprecedented times (Lowest bond yields, highest debt, Crazy P/Es). Back-testing is only so useful. And only 20 years even less. We just had a GDP drop which is the largest since WW2 for some, or since 1929 for the U.S. Look at Japan's stock market index e.g. for what the future could look like. Historically low bond yields: The room for rates to go lower is low. I would suggest to be careful with investing…
I've seen that gap mentioned a few times in this thread. I checked out the visual in the thread [1] and I have a question since time makes everything complicated. This is definitely an example of a worst case scenario, exactly as you mentioned. How do we calculate that in the total risk assessment? For this outcome to be true, you would have had to invest all of your money in a 6 month period and then tried to exit i…
From my point of view, as someone who is invested into an all-world blend like VT or VFFVX, it has been 2.5 years somewhat flat, and we still seem to be at a peak.
https://www.multpl.com/shiller-pe .
I cannot really gauge risk in a systematic like you'd like to.
I'm generally pessimistic, because GDP growth is low, central banks have rates in a choke hold promoting misuse of capital. (In theory many existing companies shouldn't exist. Many are unprofitable, but they get by on cheap loans. Thereby taking away resources/people from potential/future profitable businesses). The ECB couldn't even raise rates in a supposedly economic growth period. The Fed did in 2019 while reducing the balance sheet, and it ended in a correction and lower rates and a restart of QE. Low rates also put a lot of pressure on banks and local banks. Economies and the world are increasingly financialized. The financial market adds little value to the real world aside from "productive" (think GDP-increasing / not consuming) lending. Consumer loans are awful. Buying your first house/land on a loan is good, though. Interest payments reduce economic output in the present. Individuals spend income of the future now, and depress future spending. E.g. interest payment of the U.S. are ~300bil/year right now ~10% of the budget. And for many economies and governments there is no end in sight. Ultimately this can only be solved by reducing spending (which doesn't seem likely for many governments), inflating it away, keeping rates at 0% forever effectively spending printed money, i.e. inflating it away. Also central banks can buy assets in the open market at face value to lower yields and swallow the coming defaults (which again means inflating it away, and also sending the clear signal that everyone will be bailout, perhaps again in the future). One aspect of this dynamic is currency demand through e.g. being an important world currency or having export surplus. Some countries can print money better than others.
When I say "inflate" I don't only mean according to CPI. If all the money goes into assets like equities or real estate, it is inflating that.
The stock market feels like a ponzi scheme more than anything.
I'm simplyfing here. Some countries are better than others. Perhaps a valid investment strategy would be to invest into indexes of good countries.
That felt a lot like rambling, but I hope you get some value from it. I'm interested in your thoughts.
Re: Ask HN: I have $450K cash, what should I do to maximize my return?
#249Earlier quoted context omitted.
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.
Do not do this. Dividends are not a good way to pick stocks. Dividends and buybacks are fungible, except that buybacks are more tax efficient. All equities should have the same risk-adjusted expected total return (i.e. including dividends, if markets are efficient), so you should not be picking stocks based on their dividend yield alone. If you want income from your equity portfolio, just periodically sell shares.
If you make less than 38600, you pay ZERO dollars in taxes on the first $75k of qualified dividend income
Re: Ask HN: I have $450K cash, what should I do to maximize my return?
#250Since people are handing out general investment advice, is it possible to invest in a country? e.g., if I think Central African Republic is going to be the next South Korea over the next 20 years, how would you invest to reflect that without just investing in a specific business operating in CAR?
I imagine there are ETFs for this purpose.