How would you invest?

[GregT]

This isn't a bad place to get general ideas. Many times the "professionals" will advise you to invest in what they sell.

I think the main thing to decide is what is the money for. Retirement, kids education, recreation etc. Knowing what your goals are will help.
Also how much risk are you willing to take.

This is very much my philosophy -- frankly, I think something can be learned from everybody (including what not to do ) and I'm always curious to hear the comments of others.

Thanks again to all for their suggestions and we will see what he does!

Best,

Greg

 

[Black Diamond]

Invest in the State's IRS 529 college investment program to save for the children's education, $20-50k each. Then look at investing in age-based IRA account, wife and husband based in income, $5500-6500 annually at a discount brokerage firm for own retirement plan. Look at annual max for the 401K, He may be able to use the catch up amount if old enough and invest above the usual limits! Rest $$ save in bank account for 8 months of income for an emergency fund to carry family through tough times in between times.

 

[geekette]

This is very much my philosophy -- frankly, I think something can be learned from everybody (including what not to do ) and I'm always curious to hear the comments of others.

Thanks again to all for their suggestions and we will see what he does!

Best,

Greg

Yes. This is a great cross-section of real people managing their lives.

On the div front, I would recommend an oldie but goodie, The Single Best Investment by Lowell Miller. One has to ignore the timeframes demonstrated and take the teaching. Super digestable and a great primer on div investing. Seeking Alpha dot com div section is the best place for div discussion.

 

[cgeidl]

I would suggest he go to a fee based financial planner with a CFP and have the CFP analyze his goals, risk tolerance, and once all factors are known then the investment vehicles can realistically be chosen to meet his goals. To answer the question much more needs to be done.There are many ideas here that may or may not be fitting. To answer this question would be similar to a person saying he wanted to purchase a new vehicle and then everyone making their suggestions with no further knowledge. One aspect would stay away from is hiring a wealth manager as this can get very expensive for this rather small amount of money.

 

[cp73]

I would DCA into Vanguard Total Stock Market. Maybe some portion of it into Vanguard CA Municipal Bond Fund if he wants to be conservative on part of it.

 

[VacationForever]

I would suggest he go to a fee based financial planner with a CFP and have the CFP analyze his goals, risk tolerance, and once all factors are known then the investment vehicles can realistically be chosen to meet his goals. To answer the question much more needs to be done.There are many ideas here that may or may not be fitting. To answer this question would be similar to a person saying he wanted to purchase a new vehicle and then everyone making their suggestions with no further knowledge. One aspect would stay away from is hiring a wealth manager as this can get very expensive for this rather small amount of money.

I strongly disagree with this last statement. I have wealth management take care of my investment for the past few years and I sleep much better. Before then, I lost 500K, yes, the same amount discussed here, that I managed on my own that I lost.

 

[geekette]

I strongly disagree with this last statement. I have wealth management take care of my investment for the past few years and I sleep much better. Before then, I lost 500K, yes, the same amount discussed here, that I managed on my own that I lost.

I think this is one of those "know yourself" items.

I have been a self-directed investor for over 25 years and have yet to lose any money at all in the stock market; have never consulted a pro. I would be called an aggressive investor since I am always 90%+ equities, don't ever go to cash and rarely let investable cash sit around. I believe time in the market is preferable to timing the market. "Playing the market" can lead to disaster so I instead partner with good companies over the long haul. I keep more of what I invest by not running up the tab on trade fees and gains taxes.

I think that if an individual honestly assesses their interest and aptitude it can be very clear whether or not they should consult a professional. I never will, I'd prefer to study and do it myself, leaving only myself to blame if I get it wrong. My sister has neither interest nor aptitude so has a pro manage her money.

 

[am1]

I strongly disagree with this last statement. I have wealth management take care of my investment for the past few years and I sleep much better. Before then, I lost 500K, yes, the same amount discussed here, that I managed on my own that I lost.

What happens when your wealth manager loses 500k and still charges their fee?

 

[VacationForever]

What happens when your wealth manager loses 500k and still charges their fee?

It is not a matter of wealth manager losing 500K. In any good wealth management company, there are hundreds/thousands of funds managers balancing portfolios, and reviewing/shifting what gets invested. If we have another 9/11 here (or worse), the entire market is going to tank 20% to 30% within a few weeks. I am only paying 0.8 percent in management fees, this is on top of whatever the overhead that is carried by each fund. I am a very satisfied customer.

 

[kwelty]

This article is what I do:
http://www.marottaonmoney.com/marottas-2016-vanguard-gone-fishing-portfolio/
David Marrota is a fee-only financial planner who writes for the Charlottesville paper and a frequent guest on local talk shows. I have attended several of his free financial seminars that are for educational purposes but are not marketing tools for his firm. He has my upmost confidence and if I had the minimal investment requirements to use his firm (1.5M), I would. From the above article:

Marotta’s 2016 Vanguard Gone-Fishing Portfolio

A gone-fishing portfolio has a limited number of investments with a balanced asset allocation that should do well with dampened volatility. The Marotta gone-fishing portfolios are used by many subscribers as a free and simple way of low-cost investing. Last year, we added a version which uses only Vanguard mutual funds. The Vanguard version has an expense ratio of just 0.22% and is comprised of just eight holdings. If your custodian is Vanguard, then these securities also have no transaction cost.

For analysis, we use the recommended asset allocation for a 40-year old. This allocation is comprised of 14.6% bonds and 85.4% stocks. The largest positions are in foreign developed stocks, the S&P 500, and bonds. These three positions comprise 58.4% of the portfolio.

 

[Icc5]

I have managed my own stock portfolio for the past 40 years and luckily have done well. I continue to manage this which I still would be fine if I lost it all. I recently started using a financial company for other funds we have so I feel safer in protecting my wife. Sort of feel we have the best of both worlds.
They balance those holdings while I'm willing to be a lot more riskie. Luckily what I've made over the years in my investing has been enough to be able to do this. My stock portfolio is also my hobby in retirement. Love it when a certain relative brags about making $300 today and I comeback with I made $12,000 today. Then she says proudly "yea, but I worked for mine". I just smile and think to myself, idiot!

 

[Talent312]

I have managed my own stock portfolio for the past 40 years and luckily have done well...

Wow. That's a long time. I've self-managed for 25 years. My average annual return is about 8% over the last 12 years (the period for which I kept statistics). That includes a significant decline in the recession of 2008. As I've aged, I've turned my portfolio more toward capital preservation and now have a 50-50 ratio of equities and bonds.

.

 

[rapmarks]

I can't help but ask, are posters referring to realized gains or unrealized gains. If realized, income taxes must be enormous.


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[bogey21]

Not knowing anything about your friend's age and knowing little about Deferred Annuities I would suggest friend look into using a small portion of the $500,000 to buy Deferred Annuities starting at say age 75, 80 or 85 for him and his wife. I look at the concept as akin to buying insurance against running out of money in old age. It is very possible after "looking into" this friend might reject idea as impractical. Heck I might too, but I would explore it.

George

 

[geekette]

I can't help but ask, are posters referring to realized gains or unrealized gains. If realized, income taxes must be enormous.

Depends on where you have your money. My 401k rollover is my largest asset, concept of gains doesn't apply. Return is another matter, a metric not reliant on a sale. Whatever I siphon off trad IRA is income, whether from sale of stock or divs.

Being a div investor, I get the preferential treatment for what is considered income from taxable portfolio, not gains. I am ok with paying more income tax for increased div payments over the years, just like I have never said no to a raise at work.

If I never have to sell a share, I will never pay any gains taxes. I could also sell some high priced shares with some lower priced shares to offset the gain and control taxation, should I choose to sell any.

 

[rapmarks]

I guess if I made 12,000 a day I would accept the taxes too.


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[dioxide45]

I guess if I made 12,000 a day I would accept the taxes too.


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Can just as easily lose $12,000 in a day.

 

[rapmarks]

Actually you don't have a gain or a loss until you sell, and yes you can sell in an ira etc and not pay anything on it, unless you are in the mandatory Withdrawal stage. I own a stock that had appreciated ten thousand per cent, and now has gone down somewhat, just in last six months, but unless I sell it I have not really made that money


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[DrQ]

WARNING: This is a 3 year old thread.

That said, there was a lively discussion over a year ago on gold vs. crypto. I'm on the side of gold/silver. I can store it and nobody can steal it without breaking into the safety deposit box. I can go to any pawn shop and get close to the sell value of the coin. By buying coins (not appraised) you have a easily negotiated medium on which to exchange value.

 

[Black Diamond]

"then he should look at the 529 plans for that and fully fund them."
In Ohio, there are state income tax advantages to paying into the Ohio College Advantage 529 program.
$3000 tax credit per student account, excess contribution carry forward from one year to the next.

 

[Icc5]

I can't help but ask, are posters referring to realized gains or unrealized gains. If realized, income taxes must be enormous.


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In my case unrealized because I rarely sell anything. I also don't worry much about risk since my house has been paid off for years and both of us have very nice pensions. Now on top of the rest we just had an inheritance of a decent amount which I put into tax free (both free from state and federal) school bonds that give a decent return and some of them are even guaranteed. We are able to live the retirement we want and set up our kids and granddaughter for the future without it affecting us. Started giving our kids money last year as now s days so hard to make it in Silicon Valley without a tech job.
Sort of funny but when I saw my post above (didn't realize I had posted it) I was going to write that the poster sounded just like me then I realized it was me.
Bart

 

[geekette]

Okay I understand that you are a fan of gold/silver. I am still into crypto. There a few bumps on the road though. I know that a lot of people think that bitcoin is going to make them super rich but it won't if you are going to invest without being smart. I have been looking for different ways to earn money and also other ways to save money. I feel like investing is nice but also if you are being irresponsible you will end up without any money at the end of it. I dunno though I might try pharmaceutical shares or Silicone valley or something like that. It seems like something a little bit more safe.

You might consider starting a new thread about crypto. That would probably elicit more conversation than this old thread.

Welcome, by the way!

 

[Beachclubmum]

Vanguard Index Fund for the long run.

If he already has a healthy investment and retirement accounts for himself, I would put part of the money into accounts for each child using the maximum gift allowance.