# If you had $75,000 to invest today... **URL:** \ **Category:** In My Humble Opinion\ **Created:** [September 27, 2012, 11:45pm UTC](https://boards.straightdope.com/t/if-you-had-75-000-to-invest-today/636074 "2012-09-27T23:45:23Z")\ **Posts on this page:** 8\ **Page:** 2
**Author:** ![emacknight](https://avatars.discourse-cdn.com/v4/letter/e/3ec8ea/32.png) [@emacknight](https://boards.straightdope.com/u/emacknight)\ **Post date:** [September 29, 2012, 3:28pm UTC](https://boards.straightdope.com/t/if-you-had-75-000-to-invest-today/636074/21 "2012-09-29T15:28:53Z")
> [@Southern\_Yankee](#): > > How would you do it? The first question you need to answer is, “How much are you willing to lose?” Because the first rule is to never invest money you aren’t willing to lose. Keep in mind that right off the bat you’re going to lose to inflation. So your $75,000 now will be worth about $59,000 in 10 years, that’s what happens if you leave it in cash. If you go for something as safe as possible that earns 3%, you’ll be taxed on that 3% and then lose to inflation. Means you need to find something closer to 6% to beat inflation, pay taxes, and still have the $75,000 you started with. ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [September 29, 2012, 4:34pm UTC](https://boards.straightdope.com/t/if-you-had-75-000-to-invest-today/636074/22 "2012-09-29T16:34:25Z")
> [@smithsb](#): > > Here’s some specific recommendations for categories to consider and actual investments - std disclaimer, not a certified financial planner, not your financial planner, only a financial planner for my investing illiterate extended family. YFHMV (your financial health may vary). > > Recommend a equal weight of thess or similar: > > PFF - Preferred stock Exchange Traded Fund (ETF). Captures preferred stock dividends from a basket of companies. Preferred stocks pay dividends prior to funds being available for common stock dividends. The dividends may also accumulate (not all do, but if the company has hard times, it must pay off the accumulated dividends to the preferred stock holders before any other dividends). Current annual yield around 5.70%. > VPU - Vanguard ETF for publically traded utilities. Invests in large public utilities with primary goal of income. May also provide long term growth opportunities. Current yield 3.59% > VLTC - Vanguard ETF for long term corporate bonds. Invests in bonds of large corporations, primay goal of income. Current yield is 3.90%. > SDY - S&P 500 Dividend Achievers ETF. Invests in large S&P companies that pay substantial common stock dividends and have paid them continuously over decades. Primary goal is dividend income with some expectation of asset growth. Current yield 4.28% > > All of these would be considered moderately conservative. ETFs and Vanguard in particular have lower expense rates (management fees) than most mutual funds so you get to keep more of your money. All of these spread the risk over a number of companies. > > Do your own research. Invest long term. Those that got out of the market during the early Bush II recession and late great recession lost big. Had you held firm - you’d be ahead handsomely now. Read about Warren Buffet and his strategy. All winners - no, but a large percentage. This. Also, don’t dump $75k into the market at once. Invest $1000 in each of these funds (or funds like this) initially, then $500 (or something) into each fund every month or so. That way, if the market crashes tomorrow, you aren’t “starting” from underwater. (you don’t get as much upside if it keeps climbing, but its less risky). Buffet and Munger don’t likely have many years left, but a few hundred dollars in Berkshire Hathaway B shares gets you a pass to their annual meeting - which is worth going to to hear about their strategy. ---
**Author:** ![pulykamell](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pulykamell/32/3166_2.png) [@pulykamell](https://boards.straightdope.com/u/pulykamell)\ **Post date:** [September 29, 2012, 9:23pm UTC](https://boards.straightdope.com/t/if-you-had-75-000-to-invest-today/636074/23 "2012-09-29T21:23:17Z")
> [@Dangerosa](#): > > This. Also, don’t dump $75k into the market at once. Invest $1000 in each of these funds (or funds like this) initially, then $500 (or something) into each fund every month or so. That way, if the market crashes tomorrow, you aren’t “starting” from underwater. (you don’t get as much upside if it keeps climbing, but its less risky). I’ll have to look them up, but the studies I’ve seen have said that if you have a windfall, dumping it in all at once is a better strategy than dollar-cost-averaging. I just did a quick Google search, and [this came up.](http://www.doughroller.net/investing/dollar-cost-averaging-versus-lump-sum-investing/) I dollar-cost average, but that’s only because I want to be continually investing and socking away my money. If I came into a big pool of cash, I’d put it all the market at once (minus keeping behind any cash I need for other things.) ---
**Author:** ![pulykamell](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pulykamell/32/3166_2.png) [@pulykamell](https://boards.straightdope.com/u/pulykamell)\ **Post date:** [September 29, 2012, 9:34pm UTC](https://boards.straightdope.com/t/if-you-had-75-000-to-invest-today/636074/24 "2012-09-29T21:34:56Z")
Actually, let me pull the relevant info from that link. From Vanguard: > [@](#): > > We conclude that if an investor expects such trends to continue, is satisfied with his or her target asset allocation, and is comfortable with the risk/return characteristics of each strategy, the prudent action is investing the lump sum immediately to gain exposure to the markets as soon as possible. But if the investor is primarily concerned with minimizing downside risk and potential feelings of regret (resulting from lump-sum investing immediately before a market downturn), then DCA may be of use. Of course, any emotionally based concerns should be weighed carefully against both (1) the lower expected long-run returns of cash compared with stocks and bonds, and (2) the fact that delaying investment is itself a form of market-timing, something few investors succeed at. ---
**Author:** ![Dangerosa](https://avatars.discourse-cdn.com/v4/letter/d/22d042/32.png) [@Dangerosa](https://boards.straightdope.com/u/Dangerosa)\ **Post date:** [September 30, 2012, 12:39am UTC](https://boards.straightdope.com/t/if-you-had-75-000-to-invest-today/636074/25 "2012-09-30T00:39:06Z")
> [@pulykamell](#): > > Actually, let me pull the relevant info from that link. From Vanguard: Well, that’s the issue - its September and there are a lot of signs of a cooling economy. I’d never put a huge lump sum into the market in September or October in any year, but especially not in an election year, with Iran misbehaving, the Eurozone in eternal issues, and gas prices going up. I’d never do it in any circumstances - too risky, but right now, no way. Not that I didn’t just invest a few grand last week, but to me $75k is above my “stick a lot of money in” threshold. ---
**Author:** ![pulykamell](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pulykamell/32/3166_2.png) [@pulykamell](https://boards.straightdope.com/u/pulykamell)\ **Post date:** [September 30, 2012, 12:59am UTC](https://boards.straightdope.com/t/if-you-had-75-000-to-invest-today/636074/26 "2012-09-30T00:59:46Z")
I agree with your caution; I’d probably only put half that amount in one lump sum in the market to hedge my bets. I don’t believe in any [“September effect”](http://articles.businessinsider.com/2010-09-01/markets/29993417_1_returns-worst-month-stock-market) or timing the market in that way (look at that part of the year onward for the last 3 years in the S&P, for instance. Not much effect in 2011, but 2010 and 2009 you would’ve lost out significantly on waiting. Of course, in 2008 you would’ve gotten royally screwed [not so much in October], but that was particularly brutal, like last year’s July.) It does feel to me like we’re at another peak, but if I went with my gut, I would’ve lost out on a lot of gains along the way. ---
**Author:** ![pulykamell](https://sea3.discourse-cdn.com/straightdope/user_avatar/boards.straightdope.com/pulykamell/32/3166_2.png) [@pulykamell](https://boards.straightdope.com/u/pulykamell)\ **Post date:** [September 30, 2012, 1:13am UTC](https://boards.straightdope.com/t/if-you-had-75-000-to-invest-today/636074/27 "2012-09-30T01:13:54Z")
At the end of the day, it all comes down to your risk profile. I feel that I have a fairly conservative risk profile but, like I said upthread, I also have a much longer investment horizon, so I pretty much go “by the book” in regards to index investing style, including not timing the markets, lump sum investing when I have the opportunity, but also dollar cost averaging every two weeks. ---
**Author:** ![Mama\_Zappa](https://avatars.discourse-cdn.com/v4/letter/m/71e660/32.png) [@Mama\_Zappa](https://boards.straightdope.com/u/Mama_Zappa)\ **Post date:** [October 1, 2012, 8:43pm UTC](https://boards.straightdope.com/t/if-you-had-75-000-to-invest-today/636074/28 "2012-10-01T20:43:18Z")
> [@Cat\_Whisperer](#): > > We’d invest it in the employee stock options in the employee-owned company my husband works for - they are returning about 30-40% per year (the highest point was 62%). Be careful not to put too many eggs in one basket though (we know people who were wiped out in the Enron disaster). If they have any debts, use the money to pay those down but keep making the payments to their savings account or other investment vehicle. Guaranteed X rate of return (where X is the interest rate on the debt). If they’re not maxing out their retirement vehicles, use the cash to do that - i.e. bump up their withholding rates, and use the money to cover the cash shortfall. [Previous page](https://boards.straightdope.com/t/if-you-had-75-000-to-invest-today/636074.md?page=1)