How should a 24 year old invest $400k?

Randy Oldman wrote:

Flagpole wrote:

Age 65 - $14,927,012.79.

Crazy. At age 50 if you took 4% that would be $163,921 annually.

Which will be worth about $83k allowing for 2.67% annual inflation.

Yeah? So? Better than a kick in the pants. Also, if you make sure to have a house paid off and retire with no debt, you can do well on that.

Also, just to clarify, the annual money was from age 50. If we went with the money at age 65 that you left there, then it's $597,080.51 a year. Just didn't want anyone to be confused.

Future Wolf wrote:

Can you comment methods of achieve a higher average annual return (>9%) and the risks involved?

Nah. I don't involve myself in chasing returns better than that. People do so by doing the following:

Individual stocks or commodities

Directly invest in a business or start a business

Real estate

Artwork or collectibles

It's all very risky, and not something I do.

der der der wrote:

First, I have multiple engineering degrees from the two best schools on the west coast.

I did not make that much that quickly by working a salaried job.

Second, if you were serious, you should be asking a reputable professional who has intimate knowledge of your finances and needs rather than asking and anonymous running board.

Third, what is your 1500 pr? This could change everything.

I am in the same boat. I have multiple engineering degrees from the best and one of the best engineering schools in the Midwest.

I also made nowhere close to that much starting out. You also forgot to include student loan debt, which can be a game changer.

Yes, you should be asking a financial adviser, not LetsRun.

My 1500 PR isn't great, but I've run a 2:25 marathon. That still won't pay all of my bills.

Hand you're money over to me and I promise to make it grow exponentially for you. Only small request is that you wire the money to my offshore hedge fund account. I promise to look after it and make you millions.

i din't have tome to read your post. But everything i touch turns to gold, through the markets.

My opinion: You have a TON of cash.

80% or more you should split up into. index etfs.

Let's say you have 325k to set aside.

I would split it up into VTI, VOO and maybe a tech growth ETF as well.

Even just dividing 325 evenly between VTI and VOO sounds fair.

Now you have 75k to have fun with and pick the stocks you like.

Or to play it even safer set aside 350-360k in index etf's and only play around with 10% of your money in stocks you choose.

I you are earning even just 5% (pretty conservative in my view) on 350k and don't touch it, you've made close to 100k in 5 years. Even if the 50k you set aside for stocks of your choice all tank completely to nothing (basically impossible if you diversify with 4 or 5 stocks), you are still up roughly 10% on your 350k investment.

'Your initial investment of $350,000.00 plus your monthly investment of $0.00 at an annualized interest rate of 5% will be worth $446,698.55 after 5 years when compounded yearly.'

Depends on what your goals are. Life plan as well. I.e. kids/no kids. Do you want to buy a house or be a nomad. Living in usa or abroad.

Do you want to retire now, soon, or later. The list goes on and on.

$MVIS yolo

400k is pocket change in my opinion but I'd go with 3 bitcoins, 50k in hive blockchain stock then get hookers and go on trips with the remaining 200k+.

runDirtyrun wrote:

Got Really Lucky wrote:

I would answer that you have no business investing that money yourself. Find the best private client adviser you can get and follow his/her advice.

Ugh. The "private client adviser's" success rate is average. That means an individual could keep the client adviser's fees to reinvest and perform equally well annually, and much better over a decade.

As someone with personal experience in this area, "private client advisers" aren't very useful to many. On probability alone, they do not add value.

Ya that's a waste. Every transaction they take a cut and it can really add up. I think the first time I did investing was with Edward Jones and they took something like 1% from every sale. That's a ton in my eyes. Your investments gain 10%? That means they took 10% of your profits when you sell. Put it in mutual funds on your own and it's almost guaranteed to go up over time.

But really at the posters age I'd buy a house and get a couple roommates. Say it's for a $400k house back then, and paying $330 property tax per month and $120 insurance per month, you're only throwing away $500 per month instead of renting a place, we'll call it $1500 for your rental if you're in a city area with a couple bedrooms. So you're throwing away $1,000 less every month. And then you bring in two roommates, each paying $750, so now you're spending $1000 less, as well as making $1500 more. So this is $2500 net change to your bank account every month, or $30k every year. Now let's say the house appreciates a modest 5%, I think we actually saw much more than this the past few years. So you're not only gaining $30k every year, but that $400k house has appreciated 5% each year which is closer to 10-15% gains each year. This would have been a very safe and great investment. I wonder if this was all hypothetical or if they actually did something.

Others have hit the nail on the head, but you primarily want to park it someplace where it will make you more money. Its not hard you can do it yourself. Don't hire a financial advisor it's a waste of money and I'll tell you everything they will tell you here.

The easiest and most straightforward method is to put it a total market or S&P 500 index fund. Those will perform at about 12% over a long enough time frame. I assume 10% on my retirement accounts. Dollar cost average or not probably doesn't make a difference.

If you want a little more work, I have been told the absolute best investment tier 1 multifamily real estate. Tier 1 cities are New York, Boston, Philadelphia, Washington dc and San Francisco. I don't do this myself, although I intend to do so in the future.

If you are more adventurous you can pick your own stocks and come up with your own strategy. Most people aren't cut out for this (need elite level emotional control) and most people will have a low ROI based on time invested ( I do it myself and over the past couple of years I have beat the S&P by about 1% over the past 10 years since I started--probably not worth the 10+ hours a week I spend reading/listening about business strategy, businesses, etc). On the other hand I would spend those hours learning about business, strategy, investing anyways because I like learning so I consider it a hobby with a positive externalize.

If you're really into gambling, you can move into the crypto space. There are tremendous returns, but lots of risk involved. You better like learning and find good mentors if you want to go into this space.

Next you need to think about protecting your money from people who could try to grab it. The people who will try to grab it are the government, people who would sue you and yourself.

The best means to protect it from all 3 are retirement accounts. These are tax advantaged and typically protected from bankruptcy. You will want a Roth IRA (no taxes on capital gains, won't be taken in bankruptcy (or lawsuit) and you can't take it out until 55). Unfortunately you can only put 6k a year into your Roth IRA.

The next best thing is insurance. Insurance will protect you from e.g. car/home accident/weird bar fight and they have 1/2 million in medical bills. Umbrella insurance is the best (cheapest protection) you can buy. So you want to insure your car and home to the minimum required for to get umbrella insurance and then get 250k-500k of umbrella insurance.

You might be at the point where it is worth talking to an accountant about tax strategies, but I haven't been down that road so I cannot give you any advice.

The final way you can protect your money is crypto. If you buy cryptocurrency peer to peer and put it in a hardware wallet under your control you can avoid KYC so that nobody can prove that you own it. Obviously this is sketchy and I advise you to pay your taxes because you are 100% obligated to do so. This path requires a lot of learning and there is a lot of work figuring out your taxes which which you should do because I don't recommend setting yourself up for the potential of 5-10 years in jail for tax evasion.

In my opinion, it is better to try many ways of investing as you never know which one will have success in the future. However, you should inform yourself and find the best way which is suitable for you. I, for example, don't have time to analyze the market and to read about investing, so I just use the easiest method. I am using a forex trading bot, as they do faster and more effective work and I just earn some extra money every month. https://forexstore.com/free-forex-robots

Future Wolf wrote:

Image if you'd just graduated college, you now have a BS in some engineering field and a MS in either engineering or computer science, both from reputable schools; and/or possibly a Ph.D in a similar field. You've already established yourself in a few reputable engineering organizations via internships during undergrad. You accepted a job with an engineering company at age 23 with a starting salary of $80k-90k. You've produced multiple independent projects in the past showcasing your aptitude for engineering and programming to develop your portfolio, and you plan to pursue similar projects or freelancing in free time for profit (apps, websites, etc.) Now you've just acquired a lump sum of $400k.

What do you do? What options do you have? What are the technical implications?

After rebirth into a wealthy family in the next life , i will tell you.