PDA

View Full Version : Investment advice...



WMR
05-25-2010, 09:14 PM
I've got about 100k that I'm looking to invest for a period of 1-2 years.

I want something SAFE.

I'm thinking about GOLD right now...

anyone have any advice? I'm meeting with a financial 'guru' later in the week but I'd like to have some ideas to bounce off him when we sit down.

Thanks.

Kingspoint
05-25-2010, 09:26 PM
Advice #1:

Don't pay anyone any money to invest it for you.

It's proven over the last 60 years that an "investor" doesn't earn any higher of a percentage for you than you could do for yourself, and you instantly earn whatever money you would have paid that person and any interest off of that money, too.

WMR
05-25-2010, 09:28 PM
Advice #1:

Don't pay anyone any money to invest it for you.

The guy who I'm meeting with is a family friend... he won't be charging me for the advice he gives. In the end it will be my decision...

edabbs44
05-25-2010, 09:41 PM
Gold could be in a bubble right now.

Even though there has been some bad publicity about the sector in general, I'd look towards some "safer" municipal bonds. Make your interest over the next few years tax free and then you are out.

WMR
05-25-2010, 09:43 PM
Gold could be in a bubble right now.

Even though there has been some bad publicity about the sector in general, I'd look towards some "safer" municipal bonds. Make your interest over the next few years tax free and then you are out.

Could you explain what you mean by 'in a bubble'? Thanks for the advice.

Do you have any bonds in particular that you would recommend?

Kingspoint
05-25-2010, 09:50 PM
Gold could be in a bubble right now.

Even though there has been some bad publicity about the sector in general, I'd look towards some "safer" municipal bonds. Make your interest over the next few years tax free and then you are out.


I agree.

BuckeyeRed27
05-25-2010, 11:01 PM
I've got about 100k that I'm looking to invest for a period of 1-2 years.

I want something SAFE.

I'm thinking about GOLD right now...

anyone have any advice? I'm meeting with a financial 'guru' later in the week but I'd like to have some ideas to bounce off him when we sit down.

Thanks.

1-2 years is far far too short of a time frame to invest in almost anything if the number 1 criteria is you want safety.

Gold is anything but a safe investment and is at an alltime high which is rarely if ever a good time to buy something. Infact the long term return of gold is slightly better than that of cash/risk free with roughly 12.5X the volatility.

If you absolutely have to have 100k an no less in that time frame than honestly the best thing to invest in would be a CD in that time frame. If you can accept moderate risk than you could consider a short term bond fund. There is the possibility of losing money, but it is a fairly low possibility.

BuckeyeRed27
05-25-2010, 11:03 PM
Advice #1:

Don't pay anyone any money to invest it for you.

It's proven over the last 60 years that an "investor" doesn't earn any higher of a percentage for you than you could do for yourself, and you instantly earn whatever money you would have paid that person and any interest off of that money, too.

Can you please provide a link or some more evidence of this "proof"?

RedsManRick
05-25-2010, 11:51 PM
Call me crazy, but if you're just looking for safe, why not just go with a CD or something similar -- take your 2% or whatever and wait for the financial markets to settle down. With the Greece situation, the potential for a double dip recession, and the China currency showdown, it's hard to go wrong with limiting your downside.

http://www.ally.com/raise-your-rate-cd/index.html?CP=ppc110041&gclid=CPfDi4fz7qECFdlB5godem-MKQ

I think sometimes people overcomplicate investing worrying about a few percent on the upside while not properly valuing the possibility of significant downside. In any short period (say <5 years), just about any single asset class has a decent chance of dropping big time.

Rojo
05-26-2010, 01:22 AM
Gold could be in a bubble right now.

Bear in mind people have been saying this since it hit $800.

Anyhow, I wouldn't put it all in one place and I'd expose a minimum to the market.

Kingspoint
05-26-2010, 04:20 AM
Can you please provide a link or some more evidence of this "proof"?

Sure.

I'll send you a pm, tomorrow.

bucksfan2
05-26-2010, 10:47 AM
Bear in mind people have been saying this since it hit $800.

Anyhow, I wouldn't put it all in one place and I'd expose a minimum to the market.

Yep and now it stands at 1213. Gold may be "safe" but if it truly is in a bubble then you can lose quite a bit of money on it.

CD's are the safest but they aren't yielding anything of note.

You may want to look at bond funds.

Of you could break up your money into certain percentages. Put a high percentage in safe, low yield CD's. Put another percentage in more stable equities, some in bond funds, and use a small percentage to play more risky but more rewarding equities.

oneupper
05-26-2010, 11:12 AM
Gold is a myth. It is intrinsically worthless. Here's my blog on it.

http://dalmady.blogspot.com/2009/12/all-that-glitters.html

It makes for fun trading, though.

If it's really just for 1-2 years, I'd probably look at some bond funds which deal with shorter (not too short or you won't get much yield) maturity corporate bonds.

If this is a big part of your investable assets, you'd be wise to diversify a bit in different asset classes (or sub-classes) and certainly not just one fund.

It helps to assess your risk tolerance. Ask yourself how much of the 100k you can tolerate to lose, instead of how much return you'd like to have. You'll probably find you can tolerate more risk than you originally thought and that will put you in a position for some better returns.

I wouldn't put anything in equity with a short time horizon like this.

Ghosts of 1990
05-26-2010, 11:32 AM
You mean putting it all on the Reds right now to win the World Series isn't a safe investment of 100K?

If they win, you can buy a fraction of them ;)

I'm kidding. I'm getting advice following along the thread.

Rojo
05-26-2010, 11:47 AM
Gold is a myth. It is intrinsically worthless. Here's my blog on it.

So is currency. And as far as people not "needing" it, since when is that important? People don't need BMW's, Coca-Cola or Coach handbags.

I admit that gold's a hard call right now. Turmoil's usually good for gold. But that turmoil may result in a rush to the dollar (the TED's up) which would bring gold down. Inflation's dead.

Falls City Beer
05-26-2010, 12:16 PM
Invest in a mattress to sew your money in.

15fan
05-26-2010, 12:22 PM
Powerball tonight is $190 million.

WMR
05-26-2010, 03:48 PM
Thanks to everyone who chimed in. This is the first time I've ever handled an investment on my own and it's a little intimidating.

Redlegs23
05-26-2010, 11:18 PM
I second the municipal bond funds. Pretty safe investment as long as you're not dumping it all into one or two bonds, and it's tax free which is my favorite part.

You can find a savings account that pays about the same as a CD right now, and you don't have to wait for any expiration date to get your cash. I believe ING savings is around 1.5%, you might be able to find one for 2%.

Redlegs23
05-27-2010, 10:53 AM
Speaking of investing, anyone else see a huge market crash coming in the next few years? $13,000,000,000,000 is a lot of debt. Our national debt is now 92% of our national GDP, not a good sign. Seems like we had a small bubble burst with the credit crisis but to try and repair the bubble we created a monster. Somehow someone will have to pay for this, and my guess is it ain't gonna be pretty. I'm still young and typically young people are encouraged to be about 80% in equity, and for the past few years I have been, but I'm going to do a bit of re-aligning. Maybe 30% equity until I feel better about this debt problem. Not real sure just what I'm going to do yet, but I'm going to do something. Anyone else have some thoughts on this?

Falls City Beer
05-27-2010, 11:17 AM
Speaking of investing, anyone else see a huge market crash coming in the next few years? $13,000,000,000,000 is a lot of debt. Our national debt is now 92% of our national GDP, not a good sign. Seems like we had a small bubble burst with the credit crisis but to try and repair the bubble we created a monster. Somehow someone will have to pay for this, and my guess is it ain't gonna be pretty. I'm still young and typically young people are encouraged to be about 80% in equity, and for the past few years I have been, but I'm going to do a bit of re-aligning. Maybe 30% equity until I feel better about this debt problem. Not real sure just what I'm going to do yet, but I'm going to do something. Anyone else have some thoughts on this?

Much more worried about a lost decade(s) from underemployment and unemployment. People working = debt shrinks.

bucksfan2
05-27-2010, 11:29 AM
Much more worried about a lost decade(s) from underemployment and unemployment. People working = debt shrinks.

Yea more workers = more taxes.

Hoosier Red
05-27-2010, 11:31 AM
Speaking of investing, anyone else see a huge market crash coming in the next few years? $13,000,000,000,000 is a lot of debt. Our national debt is now 92% of our national GDP, not a good sign. Seems like we had a small bubble burst with the credit crisis but to try and repair the bubble we created a monster. Somehow someone will have to pay for this, and my guess is it ain't gonna be pretty. I'm still young and typically young people are encouraged to be about 80% in equity, and for the past few years I have been, but I'm going to do a bit of re-aligning. Maybe 30% equity until I feel better about this debt problem. Not real sure just what I'm going to do yet, but I'm going to do something. Anyone else have some thoughts on this?

I'm curious what connections you are making between the equity market and the US debt. If the problem is too much debt, where are you redistributing the additional 50% of your investments to? The Bond Market? International? Gold? Mattresses?

This is going to get sent over to the Peanut Gallery soon because it's impossible to rationally discuss economic issues like 92% debt to GDP without bringing in the evil spector of politics, but I agree with FCB, the bigger problem is the slow moving economy and the high unemployment.

oneupper
05-27-2010, 12:14 PM
Speaking of investing, anyone else see a huge market crash coming in the next few years? $13,000,000,000,000 is a lot of debt. Our national debt is now 92% of our national GDP, not a good sign. Seems like we had a small bubble burst with the credit crisis but to try and repair the bubble we created a monster. Somehow someone will have to pay for this, and my guess is it ain't gonna be pretty. I'm still young and typically young people are encouraged to be about 80% in equity, and for the past few years I have been, but I'm going to do a bit of re-aligning. Maybe 30% equity until I feel better about this debt problem. Not real sure just what I'm going to do yet, but I'm going to do something. Anyone else have some thoughts on this?

No crash is coming in the near future (i.e. this year). We just had one, remember? Doesn't mean we're all clear, but I wouldn't worry about crash.

The situation you mention basically forces you to take sides between deflation and inflation. If you think deflation, you want to be in bonds. If inflation, you want to be in equity or hard assets (although the 70s weren't pretty). What determines which? Policy. So basically, we don't know right now.

In any case, the US public's love affair with the stock market has gone sour in the last few years. Hard to think the enthusiasm or confidence of yore will come back quickly. I'm very skeptical about the stock market for the next two or three years.

Everyone's been taught that you "have to be in equity for the long run". It's been drilled into the collective psyche. I see a rebellion against that taking root.

I'm heavily invested in bonds at the moment (mostly corporate borderline IG and below) and very happy with that allocation. It can be volatile, but not as much as stocks.

I still play the stock market, but just trading in a few names I like and conservatively. It is still rough out there (it usually is).

Redlegs23
05-27-2010, 03:13 PM
I'm curious what connections you are making between the equity market and the US debt. If the problem is too much debt, where are you redistributing the additional 50% of your investments to? The Bond Market? International? Gold? Mattresses?

The book "This Time is Different: Eight Centuries of Financial Folly", written by a couple economists talks a lot about national debt vs. GDP. Basically it says history tells us that when national debt hits 90% of GDP it has always resulted in a bubble burst shortly after with either a recession or depression. In the past month it has hit and at times exceeded that limit. Obviously nobody has a fail proof method to predict a recession, but this seems to be a pretty solid leading indicator IMO.

As far as what I will move my investments to, not real sure just yet. Trying to figure that one out. Any suggestions?


This is going to get sent over to the Peanut Gallery soon because it's impossible to rationally discuss economic issues like 92% debt to GDP without bringing in the evil spector of politics, but I agree with FCB, the bigger problem is the slow moving economy and the high unemployment.

Sorry to derail the thread, I certainly don't want this to turn into a political debate, just a discussion to try and gather others thoughts on where the market is heading and to see what kind of confidence everyone has in equity investments.

bucksfan2
05-27-2010, 03:24 PM
I don't really think the debt is a political topic. It could morph into a political debate but right now it is a reality.

I think there are some very good equity buys right now. There are some good companies thats stock has been hammered over the past two years that are at attractive rates. I heard the other day Jim Cramer describing a stock as an "accidental high yielder" and it did make sense. Right now you can buy some good utility stocks and get a 4-5% yield when savings and cd rates are right around 1-2%.

Rojo
05-27-2010, 03:47 PM
Everyone's been taught that you "have to be in equity for the long run". It's been drilled into the collective psyche. I see a rebellion against that taking root.

Certainly taken root with me.

Rojo
05-27-2010, 04:01 PM
Our national debt is now 92% of our national GDP, not a good sign.

We're turning private debt into public debt where it will be paid back. very. slowly.

Why don't we all just declare bankruptcy and call it a day?

http://en.wikipedia.org/wiki/Jubilee_(Christian)

redsfanmia
05-27-2010, 04:26 PM
Invest in a mattress to sew your money in.

Rusty Mason Jars buried in the yard is very safe as well.

mdccclxix
05-27-2010, 08:16 PM
I don't know much about investing, but google has a nice Finance portfolio feature if you sign up for a google account. You can "buy" stocks and watch them go. I started Feb of 2009 when the apocalypse was upon us and did well following this one simple rule: buy stocks that will be doing well in 6 months. So, I bought a bunch of car repair stuff and cable channels thinking everyone will be too broke in August to buy cars or go out for entertainment...and it may have worked out. My "investment" is worth 67% more today. Wish I had that in real cash...Buying low was eminently simple in Feb 2009.

15fan
05-27-2010, 10:32 PM
Warren Buffett says "When people are greedy, be scared. When people are scared, be greedy."

I think we're in between the two now.

Personally, I think we're due for a bit of a market pullback - unemployment is still as high as it has been in over a generation. That translates into weakness in consumer spending. Until that unemployment figure comes down, I think treading water is going to be about as good as it gets for the average investor.

Edit: The offshoot of weak consumer spending is continued declining tax revenues. Uncle Sam can print up money, but cities, counties, and states can't. In the upcoming fiscal year, you are going to see a lot of state and local budgets continue to shed employees due to drastically declining tax collections. That's not going to help matters.

Kingspoint
05-27-2010, 11:01 PM
Warren Buffett says "When people are greedy, be scared. When people are scared, be greedy."




Warren Buffet also said about a year-and-a-half ago that the United States will never again in it's history be out of debt, and that their economy will always be dependent upon the World's economy. Gone are the days where we can control our own future.

Rojo
05-28-2010, 01:25 PM
Warren Buffet also said about a year-and-a-half ago that the United States will never again in it's history be out of debt, and that their economy will always be dependent upon the World's economy. Gone are the days where we can control our own future.

Not so sure. The dollar's still the reserve currency and it doesn't look like that's going to change any time soon.

Kingspoint
05-28-2010, 04:30 PM
Not so sure. The dollar's still the reserve currency and it doesn't look like that's going to change any time soon.

Absolutely.

The "doubt" in China's economy has a lot to do with the fact that they don't have enough U.S. Treasury securities backing up their economy (as opposed to Japan, who has a solid percentage).

But, that still doesn't change Buffet's statement, that speaks matter-of-factly that the U. S. will be permanently in debt and that they will never again be fully in control of their own economy's swings and cycles.

Rojo
05-28-2010, 06:30 PM
But, that still doesn't change Buffet's statement, that speaks matter-of-factly that the U. S. will be permanently in debt and that they will never again be fully in control of their own economy's swings and cycles.

But my point is that we largely will as long as we maintain the dollar reserve currency status. We don't have to pay anyone back in anything other than dollars -- that we print.

Buffet and his ilk are going to hammer on the debt theme. That's fine, nobody likes debt. But you can also make a case (a better case, imo) that we're worse off not deficit spending when unemployment is so high.

Kingspoint
05-28-2010, 08:05 PM
But my point is that we largely will as long as we maintain the dollar reserve currency status. We don't have to pay anyone back in anything other than dollars -- that we print.

Buffet and his ilk are going to hammer on the debt theme. That's fine, nobody likes debt. But you can also make a case (a better case, imo) that we're worse off not deficit spending when unemployment is so high.

Sure. I wasn't saying I agree with him or disagree with him. Personally, I'm not sure, yet.

Just saying what Buffett "said" he believes.

If you want to hunt it down it was from a Charlie Rose episode. He's been on so many times, though, it's kind of difficult to find. I tried to find which one, but after listening to about 15 minutes of a couple of interviews, I gave up. There's still over an hour and a half of interviews to look through.

As far as Buffett, every time he gets on television, he's trying to sell something to someone. I still enjoy listening to him though, even if I disagree with his politics.

Rojo
05-28-2010, 10:39 PM
Sure. I wasn't saying I agree with him or disagree with him. Personally, I'm not sure, yet.

Just saying what Buffett "said" he believes.

And he may truly believe it. And, FTR, I have a weird respect for Buffett that I don't have for a lot of rich people.

I don't know what's going to happen either. I suspect that there will be cries for a Bretton Woods II to figure out the currency thing -- an imploding Euro, undervalued Asian currencies, overvalued dollar. I also suspect that the US will resist.

paulrichjr
05-29-2010, 12:14 AM
I've got about 100k that I'm looking to invest for a period of 1-2 years.

I want something SAFE.

I'm thinking about GOLD right now...

anyone have any advice? I'm meeting with a financial 'guru' later in the week but I'd like to have some ideas to bounce off him when we sit down.

Thanks.
I am a CFP and therefore advice is what I do for a living...for the past 18 years. Gold would be one of the least safe investments in my opinion. It is like tech stocks in 2000 right now. That doesn't mean it won't go to $5000 an ounce though. Usually "bubbles" don't burst until they get much much bigger than they should. Over the past 20 years gold has actually been one of the worst investments you could have made while stocks and real estate earned virtually the same and were the best performing investments. (Gold was around $800 an ounce in 1980 and was in the $200s in the early 2000s. That can happen again...Doesn't sound real safe to lose 75% of your money) The next 20 years could be much different. Many people already chimed in but you should not invest in long term investments money that you will need in a couple of years. Taking 10% - 20% of it and buying some long term investments isn't going to be a big deal but I would certainly suggest a CD or as some others have suggested a short-term bond fund. Muni bonds aren't for everyone. Many people suggest them because the interest is tax-free but you HAVE to know the tax bracket of the investor first. A tax free bond usually (not always) pays less than a taxable bond. Getting 2% in a tax-free bond while avoiding taxable bonds that pay 3% makes no sense at all if your tax bracket is 10%. Now if your tax bracket is 40% (state/federal/local) that 2% bond looks real good because your net return is going to be more.

Summing it up...If you need it safe... Buy a CD or short-term bond fund. Duration of the bond fund is very important. (Shorter for you is better) You can look this up on Morningstar.com...

paulrichjr
05-29-2010, 12:19 AM
Warren Buffett says "When people are greedy, be scared. When people are scared, be greedy."



Sir John Templeton - Bull markets are born on pessimism, grow on skepticism, mature on optimism and die on euphoria.

LoganBuck
05-29-2010, 12:21 AM
Investment advice: Don't buy a $100K Cow. I know several people who are losing their mind in this market right now.

WMR
05-29-2010, 05:36 AM
Thanks again to those who have responded.

Gold was suggested to me by someone but after reading the posts here, discussing it with my financial guy, and doing my own research, it is definitely not the investment for me. Much, much too speculative. It could double in the next year or it could drop 400 dollars.

My guy told me he has 4 different muni bonds 'groups' that he puts all his people in for safe, short-term investments. Diversifying between those and CDs seems a reasonable strategy given my goals.

bigredmechanism
05-29-2010, 10:09 PM
Something my father taught me that has always stuck with me:

"Buy low, sell high."

Trust me. I've worked this so many times it's not even funny anymore.

Rojo
06-08-2010, 06:55 PM
Gold's up $30/oz since the original post. Ok, so NOW it's peaked.

Reds4Life
06-08-2010, 07:08 PM
Gold's up $30/oz since the original post. Ok, so NOW it's peaked.

That's only about 2-3% increase. It's generally not a good idea to buy something when it's at historic highs.

Kingspoint
06-08-2010, 09:08 PM
Something my father taught me that has always stuck with me:

"Buy low, sell high."

Trust me. I've worked this so many times it's not even funny anymore.

Also, "You can never lose if you always take a profit."

Rojo
06-09-2010, 02:10 PM
That's only about 2-3% increase. It's generally not a good idea to buy something when it's at historic highs.

<devil's advocate> The early 80's was the historic high and were not there yet. We're in a rare economic period. The international currency system looks shakey, etc...</da>

I wouldn't be comfortable about buying gold at this price. Yet I wouldn't be suprised if it went higher.

Dom Heffner
06-11-2010, 08:15 PM
I'm not sure what all these peolpe think they are going to do with their gold.

oneupper
06-11-2010, 11:11 PM
I'm not sure what all these peolpe think they are going to do with their gold.

King Tut had the right idea. Take it with you!

fearofpopvol1
06-12-2010, 12:37 AM
If you buy gold, it shouldn't be more than 10% of your total savings. So, to invest $10K in gold (assuming you only have $100K) would be a good idea.

Rojo
06-12-2010, 01:41 PM
I'm not sure what all these peolpe think they are going to do with their gold.

FTR, I'm not a gold bug but....what are you going to do with mortgage-backed-securities and credit-default swaps?

That's the upside to precious metals, you always have something. It's never marked down to zero.

Reds4Life
06-12-2010, 04:34 PM
FTR, I'm not a gold bug but....what are you going to do with mortgage-backed-securities and credit-default swaps?

That's the upside to precious metals, you always have something. It's never marked down to zero.

This.

I have been selling most of my gold, but I had actual physical gold. Sitting in my safe, and it was mine. Not a piece of paper, or a number in a random account on a computer screen.