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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?

#441

Post by coliveira »

vmladenov wrote: post #373
coliveira wrote: post #255

Earlier quoted context omitted.

it's not psychological at all. Dividends give you returns that can be reinvested in whatever you want, so it helps with diversification. Now, in the US companies have muddled the field so good dividends don't mean much, but it is still useful to remember this.

So does an equivalent increase in the share price of the underlying

Not really. Share buyback may be an advantage, but it doesn't necessarily reflect on the price of the stock. In other words, a company can buy its own stock and price can fall anyway (see for example GE). This cannot happen with money deposited on your account.

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

#442

Post by doingmyting »

Justin_K wrote: post #439
icedchai wrote: post #425

Earlier quoted context omitted.

4% is what FIRE folks consider "safe" over long periods of time. It is based on the well-known Trinity study: https://en.wikipedia.org/wiki/Trinity_study

...but it's still worse than market averages.

Yes, that's why it's considered the worst case and a safe bet to withdraw

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

#443

Post by achenatx »

Personally I would hold the cash until there is blood in the streets. That is the time that fortunes are made. We arent quite there yet, possibly next year.

In 2000 investors were screaming at buffet because he was sitting on billions in cash. They were saying he had lost his touch, he should pay a dividend etc.

Then in 2001 the crash happened and he was able to get some great deals.

The time to buy is when everyone else is saying dont buy, things have fundamentally changed.

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

#444

Post by kristopolous »

arcticbull wrote: post #420
rayuela wrote: post #413

Earlier quoted context omitted.

how do you offset the decay?

It's all in the post ("Don't you know that leveraged ETFs are only intended to be held for one day?" section) but there's something we need to clear up before we start. (1) What people refer to as "decay" is just the way the the daily exposure works on these ETFs. To quote the article: "Let's say over five days the daily returns of the index are +1%, -2%, +3%, -4%, +5%, and you start with $100." "At the end of the fi…

Part of what I do is something I'll call "pile of reserve" investing. I'll hold like $X in some leveraged fund but I have 50x in cash on the side so if things go south I can dollar average my way to profitability. This also requires constantly winnowing down profitable investments to insulate from risk. I've been doing this for about 3 years. About a 3x return on my current holdings, which is about 50% of the maximum I've had in.

This will very likely make less money but really, I can pay all my (admittedly very modest) bills with my portfolio and have returns left over + my actual day job income so honestly, why do I care?

I come from a privileged background and I lived that life. I didn't like it and have no interest in returning to it.

People have to find the strategy and mix that works for them.

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

#445

Post by dmoy »

Justin_K wrote: post #440
rabidrat wrote: post #424

Earlier quoted context omitted.

Not anymore.

Based upon what?

It's not 4% ROI, it's 4% withdrawal rate. And even that is not super safe if you're retiring for many decades (the RE part).

You can use a variety of online calculators to back test a 4% withdrawal rate - maybe 80% safe, but 20% of the time you'll go broke before dying.

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

#447

Post by doktorhladnjak »

scarface74 wrote: post #386
arcticbull wrote: post #303

Earlier quoted context omitted.

For what it's worth, at 2.675% interest on a 30-year fixed, buying a house in cash makes very little sense, and a mortgage can counterintuitively earn you money. 1. In general, since the 1970s, house prices have across the United States tracked inflation. The price per square foot on a house, on average, is exactly the same as it was back then (houses are more expensive because the average US house has gotten bigger,…

With the new tax laws the home mortgage deduction is useless for most people. If you are married filing jointly, the standard deduction is $24000. I paid around $10K in interest last year on a $330K mortgage in its fourth year.

If you have no other deductions, you need to max SALT at $10k and owe about $450k on a 3% mortgage before itemizing is worth it

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

#449

Post by Sschellbach »

PascLeRasc wrote: post #378
Sschellbach wrote: post #286

Earlier quoted context omitted.

If you want to secure your current wealth by saving, the fiat standard is not for you. Bitcoin is saving technology

So I have a Coinbase account and from all their free crypto promotions I have around $150 of Eth. I'd like to start adding some more to this to hold very long-term - is there a certain exchange or some other way you'd recommend, like Kraken or a hardware wallet?

Sure. If you have a serious amount of savings, the best approach to balance security and practicality is to protect your coins using multisignature, or multisig. https://en.bitcoin.it/wiki/Multisignature

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

#450

Post by jb775 »

mcndjxlefnd wrote: post #448

The most secure thing you can do with that money is buy gold/silver and pay to have it stored in a secure vault. Honestly, that is more secure than keeping dollars in a bank account or US treasuries. Also, gold/silver are appreciating.

Gold/Silver prices are sky high right now, not a good time to buy them. Not to mention buying physical metals involves high transaction costs, which is frustrating. Precious metals are safe investments, but wouldn't expect them to appreciate much more in the near term.

Also, money in a US bank account is FDIC insured (up to $250k or something), how is that not secure?

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