How should a 24 year old invest $400k?

Future Wolf wrote:

Image if you'd just graduated college...

Imagine if you'd just STFU.

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.

This is all hypothetical.

2 girls at the same time

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.

I would hire a Financial Advisor. Give them the $400K minus down payment on a starter home. Have him/her invest it for you.

Max out the match on a 401k, Make sure he/she starts a Roth IRA for you. Pay down a mortgage while aggressively paying off student loans for a few years. Any extra money can go to the Financial advisor.

By the time you pay of your student loans, you should have enough equity in your home to upgrade and start a family.

I should add that you do not have any debt of any kind.

Personally, I would blow at least $100,000 on crazy parties, trips, fancy dinner dates. Then I would ask my dad or some other finance guy what to do with the rest.

If you have that much money by 24, spend some of it while you can. Sounds like much more will be rolling in.

Save a little more and spend a few months researching hedge funds. Winning hedge funds are the number one way to invest your money on a risk adjusted basis. Nobody knows about them because they have to be secretive by law. You may be able to invest in some with $500k. Do some serious digging and you will find gold.

Future Wolf...Wolf? People actually believe that fantasy??? Some Wolf if you come to an athletics forum to seek hypothetical financial advice. How about you invest all of it in the proposed Track & Field league...

Jack jj wrote:

Save a little more and spend a few months researching hedge funds. Winning hedge funds are the number one way to invest your money on a risk adjusted basis. Nobody knows about them because they have to be secretive by law. You may be able to invest in some with $500k. Do some serious digging and you will find gold.

Hedge funds do no better than standard mutual funds on average BEFORE fees. After fees they are worse.

Finding a WINNING hedge fund? To borrow heavily from Will Rogers:

Don't gamble; take all your savings and put it all in a WINNING hedge fun and ride it all the way up, then sell it. If it don't go up, don't buy it.

Multiunit apartment bldg.

yeahyeahyay wrote:

Multiunit apartment bldg.

Elaborate?

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.

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.

OP is believing the stories.

You will likely get a job that will pay above average. Your first job will most likely be a release date death march environment until you get some experience.

If OP really has 400,000, then one choice would be an income property where you "rent" one of the apartments. Hire a manager if you want some space between you and tenants. You could do a simple diversification strategy across a couple of mutual funds if you don't want to own an income property.

Blow it all then blame your parents.

Donate to Donald Trump's campaign.

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?

Man. That's quite a thing.

So many ways to go about this. You could buy a house outright and then just have that done so that your income is used to build wealth through investing (sounds like a good idea, but I'm not sure that's what I would do). OR, you could invest in some non-retirement mutual funds (and plan not to use the money until retiring).

Let's look at milestones if you NEVER invested another penny.

If you got just 6% annual average return:

Age 30 - $601,452.10

Age 40 - $1,077,109.11

Age 50 - $1,928,938.37

Age 55 - $2,581,354.67

Age 60 - $3,454,434.84

Age 65 - $4,622,813.07

Without adding to it, you could EASILY retire at age 55 (assuming you managed to be debt free by then including owning your house outright). Take 4% of 2,581,354.67 and that is $103,254 in income a year, and then as early as age 62 you can take Social Security if you want. Pretty good.

Let's see what 9% annual return would get you:

Age 30 - $7,312,15.64

Age 40 - $1,731,053.36

Age 50 - $4,098,032.85

Age 55 - $6,305,331.51

Age 60 - $9,701,534.11

Age 65 - $14,927,012.79

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

I realize just hypothetical, but that's a good situation. Too many people would waste that money.

TAA wrote:

2 girls at the same time

+1