They used to be a good resource, but they’ve turned into “Click to find the secret stock that…” clickbait and general spam generation.
I believe he is referring to places where real estate is being bid up by investors (many foreign and looking to stash money) with great returns to be had.
Until the bubble bursts.
This.
Bonds and go for 4/5%. (If you want to be somewhat safe.)
And I’d like a date with Heidi Klum.
IMHO the best investment for relatively liquid long-term gains remains the tried-and-true no-load index fund.
Vanguard is the pioneer in that business and remains great. If you have a brokerage account you can buy index ETFs also.
There’s really no reason to use multiple mutual fund companies, and doing so will likely increase your costs as well as the complexity of your life. (Especially because with a larger investment at once place, you can often get access to funds with lower expense ratios than even the regular passively-managed index funds.)
All the major mutual fund companies have similar offerings, so it’s a matter of picking one that you’re comfortable with, and choosing some good funds that meet your goals and have low expenses.
I think he is referring to speculative real estate investments. $100,000 isn’t enough to even get started in London or many U.S. cities unless you just invest in a REIT (Real Estate Investment Trust). Those can be good investments in a diversified portfolio but they can be risky and aren’t for novice investors.
I would keep it simple and just invest in a very low fee stock index fund. You don’t need multiple ones of the same general type because the diversification is already done for you. You can reduce risk by investing half now and waiting a year (after the elections) to invest the other half. You can reduce risk even more by splitting the $100,000 between a stock index fund and a high quality bond fund. The latter will reduce your expected gains but also reduces your losses in the event of a market crash.
Risk versus reward is what it is all about with the caveat that fund expenses are a hidden anchor that have a very large effect over time as well. That is why passively managed index funds are recommended for all types of investors over actively managed funds. You won’t hit a home run but they cost very little to run so your return is almost the same (plus or minus) as the market as a whole.
The points you cite are correct. But I am not willing to put all my nest eggs in one basket. You never know what is going to happen, and these funds are not FDIC insured.
Black 29 … one spin … 1.8 billion % APR
but risky eh?
I think if you don’t have expertise in the financial markets, the two biggest differences that you can make to your investment returns are:
(1) Tax optimization.
The tax system is irrational and inconsistent, but not so complicated that the average person can’t get to grips with it. Do some work to understand exacatly how and when your investments will be taxed before you touch anything. There are big issues with the taxation of the various retirement funds, and the taxation of some bonds. Long term cap gains rates are lower than income rates.
(2) Minimize fees.
Most financial managers are clueless. If you want help, get a financial advisor and enter into a clear arrangement where their entire compensation is an hourly fee from you. You absolutely do not want stock tips, you probably don’t even want specific fund recommendations. You just want them to review your personal financial situation, suggest broad percentages that you should put in stocks, bonds etc., perhaps give you advice on the tax benefits of different investments (but be sure to verify this). You can then easily do the research yourself on which funds to buy, but for most people the answer will be low-cost diversified funds like Vanguard ETFs.
Yeah, find one in the Yellow Pages. They are no more likely to be honest than anybody else who stands to earn a commission if you do what they advise.
FDIC insurance protects mostly against a risk that fundamentally doesn’t exist when you buy a mutual fund, stock, bond, or ETF. Bank deposits are marketed as riskless, but the banks take your money and buy risky assets like mortgages. If the risky assets lose a little bit of value, then the bank’s shareholders lose money. If they lose a lot of value, then the bank’s shareholders get wiped out. If everyone but the depositors gets wiped out, and there’s still not enough money left, then the FDIC steps in.
When you buy e.g. an equity index fund, you are deliberately accepting that market risk, so that function is unnecessary. There’s still the risk of outright fraud. For an index fund from a well-known manager at a well-known brokerage, that seems almost impossible: there’s no excuse for the secrecy that e.g. Madoff needed to hide his crime. Also, SIPC insurance may cover some losses due to such fraud.
I don’t think it’s unreasonable to split money across multiple managers/brokerages, especially considering the risk of temporary IT failures and stuff. I also wouldn’t consider it necessary, especially if you have other assets (bank accounts, houses, etc.).
In any case, bogleheads.org is good. Edward Jones is bad. The Motley Fool is somewhere in between. Most (but not all) advisors are bad, and safe 10% returns are fantasy.
AT&T is currently paying about 5% in dividends. You can probably count on them for 5% in appreciation, at least over a three or four year span. There’s your 10% and the company isn’t likely to fold any time soon. About as close to safe and 10% as you are likely to find.
Oh Lordy. Safe and decent rate of return around 10% are mutually incompatible. Edward Jones are thieves. Don’t deal with thieves.
What’s your time horizon? What are your plans for that money? Do you have a 401k or 403b?
Without knowing a few more details can’t help much with specific answers.
The folks pointing you towards bogleheads.org are doing you a solid btw.
You can get a quick 25% return on several $1000 by November if you Lay Donald Trump at Betfair. I’m not sure this is a safe bet, but many pundits and Dopers claim to think so.
I really doubt that you can count on them for 5% appreciation. Companies that pay large dividends appreciate more slowly than those that do not - because value (cash) is being taken out of the company. Over the last 5 years, AT&T has underperformed the S&P 500 by an average of 4% per year, while paying out 3% more than average in dividends.
The average historical return on the S&P 500 is indeed the 10% that the OP is looking for. That includes gains, dividends and inflation (average 3%). With today’s low inflation, average returns would be below 10%, and investing 100% in stocks is far from risk-free.
I’ve owned AT&T for years. Nice dividends. But is a flat, non-volatile stock. It doesn’t get 5% gains every year.
I agree that we need to know more. But good base advice is to get the Vanguard Admiralty Index Fund. Over the long term you can expect 8-10% returns - although if you had to pull out your money in 2009 after having only held 3 years, you’d have lost money. Which is why understanding how long your time horizon is and how likely you are to need the money short term, and how important it is that you protect your principle are all important.
You might want to break out some of it and put it into a bond fund or a utility fund
Don’t buy individual stocks unless you know what you are doing or are willing to take risk - or you want a new hobby. For one thing $100k isn’t that much money for individual stocks to get a diversified portfolio and then need to track everything and then have the additional schedules on your taxes every time you buy or sell - unless you enjoy it. I buy stock like other women buy shoes or purses - I enjoy watching what I own, I enjoy reading annual reports. I enjoy owning a little Amazon or Berkshire Hathaway.
BRK.B?
Well, you can’t own a little BRK.A
My father used to say “don’t put all of your eggs in one basket” in reference to financial investments. I recently bought some Apple and Facebook stock, as personally I think tech stocks are a good investment. I bought mine at T. Rowe Price, but Merrill Lynch, Fidelity and other brokerage firms are good, too. Also, I recently bought some Kellogg’s stock, directly from the company. Kellogg’s is a great place to buy stock without a broker, and you can print out their two page application form online.