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Sir Basil Goulding
$25,000 to invest 12/15/2011 9:02AM Reply | Return to Index | Report Post
I put this out to the personal finance geeks on Letsrun.

I have $25,000 cash to invest in 2012. This is approx 10% of a self managed retirement account - the rest is in equities. I also have a defined benefit pension from my employer. I am 41 with a high risk tolerance. I plan on retiring at 60. I have a managable mortgage and less than 5k personal debt.

Tell me what to do with the 25k.
Benjamin Graham
RE: $25,000 to invest 12/15/2011 9:16AM - in reply to Sir Basil Goulding Reply | Return to Index | Report Post
I'm sure Flagpole will tell you to dollar cost average it into an S&P 500 index fund, and hold it till you reach retiring age.

My best advice is to educate yourself on finance, and start investing on your own. Pick up the Intelligent Investor, and if you like that, then read Security Analysis. If you are still intrigued, then I'd recommend picking up Equity Asset Valuation. Between those three books you should have a pretty good idea of how to value a company, and select choice securities that can outperform their peers.

The worst thing you can do is take stock picks from strangers. If you're not willing to put in the work to pick stocks and assets, then Flagpole is right. Put the money into an S&P 500 index fund and forget about it till retirement.

Best of luck to you.
gn1tmac
RE: $25,000 to invest 12/15/2011 9:30AM - in reply to Sir Basil Goulding Reply | Return to Index | Report Post
you have 250k in 401k/ira? 225k is in equities? why not buy 25k worth of gold or just leave it in cash? gold is where cash tends to go when interest rates are negative in real terms. this will not change any time soon. gold could double, if or when real rates become positive.... gold will not go anywhere but lower

my 2c

i like the ag complex, beans, wheat, corn, and rice. stay away from the softs.... cotton and coffee are still way too high imo. you could buy a commodities fund or you could play it through equities. mon, syt, cf, pot, mos, or de

the other thing you could do is buy options or futures on the long end of the treasury curve. if stock markets go lower, deflation is going to be the reason, and you want to own the longest end of the treasury curve.
Adam Smythe
RE: $25,000 to invest 12/15/2011 9:35AM - in reply to Sir Basil Goulding Reply | Return to Index | Report Post
VIX, then once the S&P has bottomed out, gold bullion.
agip
RE: $25,000 to invest 12/15/2011 9:35AM - in reply to gn1tmac Reply | Return to Index | Report Post

gn1tmac wrote:

you have 250k in 401k/ira? 225k is in equities? why not buy 25k worth of gold or just leave it in cash? gold is where cash tends to go when interest rates are negative in real terms. this will not change any time soon. gold could double, if or when real rates become positive.... gold will not go anywhere but lower

my 2c

i like the ag complex, beans, wheat, corn, and rice. stay away from the softs.... cotton and coffee are still way too high imo. you could buy a commodities fund or you could play it through equities. mon, syt, cf, pot, mos, or de

the other thing you could do is buy options or futures on the long end of the treasury curve. if stock markets go lower, deflation is going to be the reason, and you want to own the longest end of the treasury curve.


yes, yes, turn this guy into a metals and commodity trader, yes, yes, good idea!

Cripes!
Sir Basil Goulding
RE: $25,000 to invest 12/15/2011 10:32AM - in reply to Sir Basil Goulding Reply | Return to Index | Report Post
While there's no merit in ignorance, "buying options on the long end of the treasury curve" may be a little too sophisticated for my taste!
gn1tmac
RE: $25,000 to invest 12/15/2011 10:37AM - in reply to Sir Basil Goulding Reply | Return to Index | Report Post
i'll simplify it.... sell put spreads on TLT, you can manage a decent return doing this
whiteboywasted
RE: $25,000 to invest 12/15/2011 10:42AM - in reply to Sir Basil Goulding Reply | Return to Index | Report Post

Sir Basil Goulding wrote:
I am 41 with a high risk tolerance. I plan on retiring at 60. I have a managable mortgage and less than 5k personal debt.



In light of the above, may I suggest paying down your personal debt, going to Las Vegas, and betting $10 hand on craps until you hit a hot streak, then go balls deep.

Also, try to get white boy wasted while your there, you only live once, and you might already be past the halfway point.
Flagpole
RE: $25,000 to invest 12/15/2011 1:45PM - in reply to Sir Basil Goulding Reply | Return to Index | Report Post

Sir Basil Goulding wrote:

I put this out to the personal finance geeks on Letsrun.

I have $25,000 cash to invest in 2012. This is approx 10% of a self managed retirement account - the rest is in equities. I also have a defined benefit pension from my employer. I am 41 with a high risk tolerance. I plan on retiring at 60. I have a managable mortgage and less than 5k personal debt.

Tell me what to do with the 25k.


1) Get rid of the personal debt.

2) Invest the other ~$20,000 in a non-retirement mutual fund; you can invest in aggressive growth funds if you like.

That's what I would do.
Some lunatic
RE: $25,000 to invest 12/15/2011 1:49PM - in reply to Flagpole Reply | Return to Index | Report Post
Frozen concentrated orange juice futures.
Lady Monckton
RE: $25,000 to invest 12/15/2011 2:02PM - in reply to Some lunatic Reply | Return to Index | Report Post
Basil you made your money from fertilizer you should stay with fertilizer, is there a Cricket Feces Futures Market you can invest in?
Some lunatic
RE: $25,000 to invest 12/15/2011 2:14PM - in reply to Lady Monckton Reply | Return to Index | Report Post

Lady Monckton wrote:

Basil you made your money from fertilizer you should stay with fertilizer, is there a Cricket Feces Futures Market you can invest in?



If there isn't, I'll make a market in it.
Sir Basil Goulding
RE: $25,000 to invest 12/15/2011 3:29PM - in reply to Lady Monckton Reply | Return to Index | Report Post
Well done Lady Monckton. My cover is blown.

Feel free to call me The Wing Commander.

Lady Monckton wrote:

Basil you made your money from fertilizer you should stay with fertilizer, is there a Cricket Feces Futures Market you can invest in?
action, man.... action
RE: $25,000 to invest 12/15/2011 4:46PM - in reply to Sir Basil Goulding Reply | Return to Index | Report Post
I would personally consider the following:

1.) pay off the $5k personal debt. Makes no sense to have that.

2.) follow your current investment strategy and asset allocation. Unless you don't have one.

3.) If you don't have one, you could get a lot of bang for your buck by using that 10% to diversify your heavy equity holdings and smooth some volitility. You wouldn't sacrifice long-term gains, especially with occasional rebalancing. The best options in my opinion would be a) TLT (long-term US treasuries), or b.) GTU (gold). GTU could be bought now (it's nearly 20% off its highs); TLT is near all-time highs, so I'd either dollar-cost average in or give it 3-6 months to drop back down around $100. See the effects here: http://etfreplay.com/combine.aspx.

4.) Have you considered trying to develop an additional income-stream? Like a rental property? In my area, starter-single family homes are extremely affordable, and can produce very nice positive monthly cash-flow. That's where I'm looking right now. I would only buy something that is positive cash flow. Nothing else (stocks, bonds, gold, farmland) looks cheap now. Gold in the $1200-1500s is probably worth a look, and if silver gets down to $20-25 range, I'd consider speculating there too.

5.) Keep it in cash, until something jumps out at you as a huge bargain. There is a big advantage to keeping some cash for when things go on sales (stocks, etc...).
scottdye
RE: $25,000 to invest 12/15/2011 5:38PM - in reply to Sir Basil Goulding Reply | Return to Index | Report Post
From your post, I assume this is still in the retirement account, so all those suggestions regarding paying off debt or investing in a non-retirement fund are out of the questions, because at 41 you would have to take it out of the plan, pay taxes and penalties to do those things.

Since you have a high risk tolerance, stay in equities, but step out on a limb. You are young have lots of time to recover if you make a bad move and you are only talking about 10% of your fund and you also have your employers fund. European stocks are under valued at this time and higher risks would be in Chinese. Consider DANG the Chinese equivalent of Amazon, but not quite developed or XIN a Chinese developement company building residential housing, always a need for that in China.
scottdye
RE: $25,000 to invest 12/15/2011 5:55PM - in reply to Flagpole Reply | Return to Index | Report Post

Flagpole wrote:

1) Get rid of the personal debt.

2) Invest the other ~$20,000 in a non-retirement mutual fund; you can invest in aggressive growth funds if you like.

That's what I would do.


So you would take it out of a retirement plan, pay Federal and State taxes, as well as penalites for a premature distribution? Depending on tax rate and state in which he lives, he could end up with less than half of it to invest. Good move.
agip
RE: $25,000 to invest 12/15/2011 5:58PM - in reply to scottdye Reply | Return to Index | Report Post
just put 2/3 in to the Vanguard total world stock index and 1/3 into the Vanguard total bond market index. Boring as warm milk, but you will beat almost everyone else with that.
Sir Basil Goulding
RE: $25,000 to invest 12/16/2011 7:13AM - in reply to agip Reply | Return to Index | Report Post
Thanks for the input.

The balance of $225k is currently all in mutual funds China (MCHFX), India (MINDX), US (SWPPX) etc and all distributions are being reinvested.

Any individual stocks that stand out for 2012? Yes - I will do my own due diligence, but just trawling opinion.
Flagpole
RE: $25,000 to invest 12/16/2011 7:23AM - in reply to scottdye Reply | Return to Index | Report Post
My bad. I read that as the money was just 10% of what he had invested, not that it was IN there.

He can not of course take that out without penalty (unless it is a Roth and that was his contribution amount). Assuming not, then yes, he needs to leave it in a fund...either roll it into something else, or whatever.

He does need to find a way with his income to get rid of that personal debt though.


scottdye wrote:


Flagpole wrote:

1) Get rid of the personal debt.

2) Invest the other ~$20,000 in a non-retirement mutual fund; you can invest in aggressive growth funds if you like.

That's what I would do.


So you would take it out of a retirement plan, pay Federal and State taxes, as well as penalites for a premature distribution? Depending on tax rate and state in which he lives, he could end up with less than half of it to invest. Good move.
scottdye
RE: $25,000 to invest 12/16/2011 10:41AM - in reply to Flagpole Reply | Return to Index | Report Post
Getting rid of the personal debt may or may not be a good idea. If it is a low interest rate and by investing the same amount and earning a better return, he would probably be better off to invest. However, if the interest rate on the debt is high, then obviously paying it off is a good move, equivalent of earning the same return as the interest rate he is paying off.
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