How to invest 100K

As much detail as you gave you said nothing about what you do and what you make now.

Get a bigger or a nicer house.

Start some business that you would be interested doing.

Don't invest it someone else.

You can buy my student loans....excellent investment opportunity.

know nothing of investing wrote:

If you inherited 100K, how would you invest it in this kind of scenario.

You and your spouse have solid, stable full-time jobs.

Debt-free (house paid off, cars paid off, no credit card debt).

Already contribute to the max on 401k.

Already have some other emergency savings.

2 teenage kids, but college expenses are already taken care of.

Age 45.

Is it possible to earn 8% or 10% annually with investments that aren't too risky? If so, which ones?

First of all, congrats on being in such a great position. ALMOST nothing that you do with that $100,000 will be bad...hell, even blowing it all on some fun wouldn't be bad considering the position you and your wife are in.

IF though you want to make some more money, then I would suggest either of the following two things:

1) Buy some NON-retirement mutual funds. These should be 100% stock funds, and you should mix them up a bit...small cap, mid-cap, large cap, and international. About 25% in each would be fine.

OR

2) Invest in some individual stocks. I almost NEVER recommend this, but you are in the position to be able to. Anyone who is maxing out their 401k and has no debt including a paid for house and already has college paid for for their two kids can afford to take a little risk for the potential reward with individual stocks. If you go this route, continue to fully-fund your 401k account. When you buy individual stocks, you should NEVER buy fewer than 5 at a time, and they should not be more than ~20% in any one sector of the market, so you buy one in manufacturing, one in food, one in telecommunications, etc. The reason you don't buy fewer than 5 is to limit risk. If one of them goes bad, you can sell and buy something else. Best to buy "best of breed" when buying individual stocks. Does take a little more of your time to monitor when you buy individual stocks, so you may opt for #1 above for a more hands-off approach.

I see that someone mentioned buying some bonds. That's not a horrible idea, but what you could ALSO do is to keep ALL of your invested money in stocks and then make sure to have 3 YEARS of expenses socked away in liquid (cash, Money Market Account, or CDs). The purpose of that money is NOT to make money but to use if the stock market goes down so that you don't have to deplete your stock funds. 3 years is usually enough time for the stock market to come back, and when you combine that with future Social Security income, you might be able to make it 5 years or more if there is a big stock market crash. Let's say you retire at age 62 with $2 million dollars in stocks. You take 4% of that a year for 3 years and then at age 65 you still have $2 million dollars (due to returns), but the market tanks. Let's even say it cuts your money to $1 million. Well, stock markets recover. Now, you use the 3 years of expenses and Social Security income until the market recovers. Let's say it takes 5 years. Well, $2 million dollars at age 70 is better than 2 million dollars at age 65 because you are only going to live so long...plus you still have your Social Security money. If you can, you slowly replenish the money to be used in case of a stock market crash, OR you just figure you will live 20 more years MAX and start taking 5% a year from the stocks and live it up.

Good luck. You are in an enviable position.

life-applicable threads like this paired with informative discussions about injuries and training is why Letsrun, despite some trolling now and then, is the best running website on the internet.i said it.

Mojo Jerkin wrote:

Assuming you have no need for the cash for quite some time, here is what I would do.

Put it in two funds at Vanguard. One should be a US broad based index fund and one a foreign broad based index fund. Probably 2/3rds of it in the US one.

Then, go to your 401K and tweak your allocation there towards bonds a little.

The reason is bonds are relatively tax inefficient, so hold those in your tax-deferred space.

This is in essence what I do. 3-fund portfolio across all retirement money, but get the bonds in the tax deferred part if you can.

You won't make 8-10% with this, but you'll do well taking moderate risk. I'd guess you'll do 5-7% long term.

Thanks, flagpole. I was hoping you would reply. Good things to consider. My parents amd my in-laws always lived debt free so thats the way my wife and I were raised. We never wasted money on interest. Financial freedom is a very peaceful thing.

I disagree that you should invest this in individual stocks. The only way to be a market return (that you can be guaranteed with index funds) with individual stocks is if 1) you know something everyone else doesn't, or 2) luck.

I would almost always say when you win by doing this it is luck and not intelligence. You are very unlikely to have knowledge that the army of MBAs working at Wall St. firms don't already have.

I'll give you a case in point. About 10 years ago I worked for a small, public company. I was a senior executive there, and was privy to almost all of the financial information. Much more than is made available publicly. Further, I knew everything there was to know about the future strategy of the firm. I didn't make those decisions, but I was in meetings all day long with those who did.

I had as much inside information as you can have about a company. And, I will truthfully tell you that I couldn't predict our stock price to save my life. We could buy into the stock, try to time our options trades, etc., and I got it wrong way more than I got it right.

That experience solidified me as a index investor.

wrote:

4runner wrote:

I second Wealthfront.

I used to do my own investing, but I started earning more money doing other things. Wealthfront was the answer. Just deposit your money and forget about it.

How does Wealthfront compare to Betterment.com? Looks like they are very similar. I have about 30k in betterment, and 70k in Vanguard (VFIAX, VEMAX, and a few individual stocks 10k).

i'm not familiar with Betterment.com. The selling point to me for Wealthfront is the tax lass harvesting. this strategy is guaranteed to slighty outperform the SP 500 index over time, something very few hedge fund managers can do.

i just checked out betterment.com. from just the quick overview is seemed very similar to wealthfront.

Know nothing of investing wrote:

Thanks, flagpole. I was hoping you would reply. Good things to consider. My parents amd my in-laws always lived debt free so thats the way my wife and I were raised. We never wasted money on interest. Financial freedom is a very peaceful thing.

Oh brother!

Frozen concentrated orange juice futures

Betterment does tax loss harvesting too. I haven't turned it on yet as I have some overlap with my Vanguard account as far as fund types, I don't want to be accused of a wash sale. Could that even happen, or how is that regulated?

I agree that there is an element of luck or insider knowledge with regard to individual stocks (some luck with index funds too), but he's in a position to take that risk if he wants. Most people are not. Also, you can involve yourself in investor calls and do some research about which individual stocks to buy, so if you want to spend some time, it's not ALL luck. BUT, just buying some funds is a good option too, which is why I also said he could do that. Also, with individual stocks, you COULD just buy some solid blue chips that typically return a little and give some nice dividends. I know some people who live off their dividends only. BUT, again, you could buy funds that do that for you too. He has options.

I really don't get why people are so enamored of the big casino called Wall Street. Go ahead, buy some mutual funds, see if you can get anywhere near 8% total return, year after year. I doubt it. Assuming you can, your $100,000 investment will be worth $317,000 in 15 years. Congratulations. More likely, you will find that these are just "gateway drugs" that get you watching MSNBC and hearing about the big winners taking the big risks and away you go down the path to losing money to the brokers, who like the "house", never lose.

How about this. Given your financial situation, you can easily qualify for a mortgage to buy a $400,000 4-unit multifamily property. Look around for a while and make sure you find one with strong rentals that returns at least 20% more than your monthly mortgage payment after expenses. You'll need that cushion for the inevitable repairs and months without tenants. Be sure to include 10% for your property manager because you don't want to deal with those shitty tenants yourself. Get a 15 year mortgage, put 25% down. (example: Rentals = $4000/month less $400 tax, $100 insurance, $200 utilities, $400 management, $400 maintenance, net income:$2500; mortgage of $2100 = $400/month left over cash.)

If you do your homework and cover your mortgage payments by at least 20%, you will not have to think about this much for the next 15 years at which time your $100k will have turned into something like $625k that you own outright (with property appreciation) and you will have a monthly income that is probably returning 7-8% on your asset's value )$45-50k/year).

Cant believe this thread is so old and nobody has given the correct answer yet:

50% hookers

50% blow

King Charlie wrote:

Cant believe this thread is so old and nobody has given the correct answer yet:

50% hookers

50% blow

Not sure if you're trolling? Regardless, onlywaytogo posted this on page 1.

passive lazy investor wrote:

wrote:

How does Wealthfront compare to Betterment.com? Looks like they are very similar. I have about 30k in betterment, and 70k in Vanguard (VFIAX, VEMAX, and a few individual stocks 10k).

i'm not familiar with Betterment.com. The selling point to me for Wealthfront is the tax lass harvesting. this strategy is guaranteed to slighty outperform the SP 500 index over time, something very few hedge fund managers can do.

passive lazy investor: 'splain it to me like I'm a four-year-old. How does Buy Hi / Sell Lo (tax loss harvesting?) make me money? Genuinely curious. What happens when/if losses far outstrip gains? I know about the $3000 capital loss against ordinary income write-off.

I want:

1. Someone to tell my parents

2. The camera to be removed

3. And investment deal to make up for what was done to me

4. Agreement to not hurt my business in any way

You get:

1. No papzi

2. No lawsuit

3. No public knowledge of what you did

4. Agreement to not hurt your business in any way

dsdas wrote:

King Charlie wrote:

Cant believe this thread is so old and nobody has given the correct answer yet:

50% hookers

50% blow

Not sure if you're trolling? Regardless, onlywaytogo posted this on page 1.

Heavens no. Not trolling here. Whenever anyone mentions hookers and blow around these sacred halls of LR, they state it with reverence and out of sincere earnestness. It's a subject first discussed by Pheidippides and has been embedded in the heart of the core running values of ever since. Rumor has it that while performance gains may have been realized, ultimately it contributed to his early demise.