What would be a good place for investing $100,000?
I’d like it to be safe but earn a decent rate of return of around 10%.
Should I go stocks? mutual funds?
Also does anyone recommend Edward Jones or the Motley fool?
I would talk to an expert. Find an adviser to talk to.
Financial advice is best suited to IMHO.
Colibri
General Questions Moderator
“I’d like it to be safe but earn a decent rate of return of around 10%”
If by “safe” you mean that you don’t risk losing principal that’s pretty hard to do. US Banks and other financial institutions which are considered safe won’t give you anywhere near 10% for a paltry $100K. A balanced portfolio of stocks, bonds and cash can be relatively safe, but there’s always the chance of losing money and there’s certainly no guarantee you will get a 10% return.
A certified financial adviser will assess your risk aversion and come up with plan that reduces, but doesn’t eliminate, your risk. In some years you may make 10% return, but over the long term your average return will be closer to 5-6%, which is still a lot better than a CD at today’s rates.
Do you currently pay rent, or do you live in property you own? How liquid do you want these assets to be?
These objectives are incompatible with inflation so low; and they are always incompatible if you mean real rate of return accounting for inflation. There is no free lunch.
The primary considerations are your tolerance for loss and the timeframe of your investment. The easiest way to describe this is to specify what you expect to need the money for.
Good luck with that. I’d like a unicorn.
You could probably go and join the masses of gamblers who are helping turn homes into big fuck off casino chips.
Try London although you will have to stand behind the russians, chinese and arabs.
Also, if you do do that: fuck you.
Pardon my french.
I’ve heard good things about the Motley Fool, but YMMV. Shop around for someone you can trust. Ask your wealthier friends who they use. I’ve also heard that a chimp and a dart board can do almost as well as any professional stock picker.
As someone already said, there’s no such thing as a free lunch. You can’t expect reward without at least some amount of risk. If someone promises you high reward (e.g 10% return) without correspondingly high risk, turn around and run the opposite direction.
Hmmm … you want low risk and high returns … I’m not sure that exists … ask AIG what happens if you believe it does.
Best you can do is pick which risk you want to avoid and invest accordingly. For example, if you want to avoid risk of default, you’ll want corporate bonds issued by a Blue Chip corporation, like IBM, GE or Boeing. If the company goes bankrupt, generally the bond-holders are paid in full before the shareholders get a dime.
Bond ladders are known to avoid interest rate risk … real estate is the very definition of liquidity risk …
Is your house paid off? Is your retirement plan max’ed out?
Technically, that’s German …
bogleheads.org recommends a three-fund portfolio. It doesn’t have to be Vanguard mutual funds. The page lists are well-known (and respected) funds groups as well (Schwab, Fidelity, T. Rowe Price, etc.).
Whatever the case, low-risk and high returns is the Bernie Madoff fallacy.
Well, technically technically, that’s germanic …
Seconded. When you’re talking about investments, “safe” and a 10% return are mutually exclusive. If you’re hand-picking individual stocks after a lot of research, you might (with a good sprinkle of luck) be able to get 10%. But you’re not likely to find a mutual fund that will average 10% per year over the next decade or so - and if you do, it’s going to be pretty risky, i.e. any one year could be very bad.
If you invest in an S&P 500 index fund, you might expect an annualized return of 6% over the next decade - and there might be a market crash the year before you need to convert your investment back to cash.
If you invest in a savings account, your money will be safe, since it’s insured by the FDIC - but you can expect a return of less than 1% per year.
I don’t see that anyone asked; how and when will you need the money? Do you need it for a child’s college education and the kid is presently a high school freshman? Do you need it for retirement at the age of 75, but you’re currently 25? Are you planning to buy a house in three months?
I’d also recommend that forum to lurk and read for awhile, eventually ask some questions there if, with due respect, a person is so unfamiliar with investing as to say ‘I’d like to get 10% pretty safely’.
As mentioned 10% is entirely unrealistic now as an expected long term return, unless you use leverage (more than 100% stock, I wouldn’t recommend it to anyone without professional or very extensive amateur experience). Could you get 10% in any given year? Sure. Might the realized return on stocks be that high even for the next 20 yrs? Yes, but not likely, and your midpoint expectation should be lower. I’d say 4-5% plus inflation: some reasonable people think that’s too optimistic or too pessimistic as a planning number. And 100% stocks is quite risky. One recurrent debate you’ll see at Bogleheads is whether it’s really that risky in the long run…but no site community is perfect and this is a blind spot of BH forum community IMO. Just because stocks ‘have always bounced back’ in the US in a reasonable time over the last 100 yrs or so doesn’t mean they always will. In other countries and earlier periods they often haven’t. Too many people there downplay the risk of very poor stock performance for a long time, IMO.
But you can only judge this yourself once you familiarize yourself with informed discussions or references on long term risk. You’ll find them there in various threads.
But as broad side of barn, something like the old fashioned ‘age in bonds’ (a 30 yr old would 30% bond, 70% stock, a 50 yr old 50-50 and so forth) is not ridiculous IMO. Many think that’s too conservative but it depends not only on the person’s strength of stomach, but how many more $100k’s are coming down the pike in future earned income. And first time investors can’t know how they’ll deal with a sudden downturn, emotionally.
I would absolutely do it with low cost mutual funds and few of them. I think the BH philosophy is incontrovertible on that point, if it’s financial asset investments one has in mind. Where you hold those funds is secondary, the point being whether you pay for professional advice to shift things around constantly: don’t.
Riemann hinted at it in post #6
Could you please explain what you are referring to?
If you are just going to let it ride for 5+ years, I’d split it between two or three different mutual fund companies (Fidelity, Dreyfus, and Vanguard are the ones I use) and pick funds at each company that specialize in a diverse selection of stocks.
If you *are *going to need it within five years, and therefore can’t afford to wait out a possible downturn, I’d invest half of it as above, and the rest in some safe money market or bond funds from the same companies.