Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
How would you invest $50,000?
Old 05-29-2009, 06:01 PM   #1
Recycles dryer sheets
 
Join Date: Mar 2009
Posts: 357
How would you invest $50,000?

Say you're single, made $200,000 this year, and want to put $50,000 for retirement. How would you invest the money?
__________________

__________________
bank5 is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-29-2009, 06:07 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
freebird5825's Avatar
 
Join Date: Feb 2008
Location: East Nowhere, 43N Latitude, NY
Posts: 9,017
Right in the Bank of Freebird. Free toasters today.

Without knowing your existing AA or your time horizon until you need to draw on the investments, it's a tough question to answer.
How about a few more parameters ?
__________________

__________________
"All our dreams can come true, if we have the courage to pursue them." - Walt Disney
freebird5825 is offline   Reply With Quote
Old 05-29-2009, 06:11 PM   #3
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,626
I would add it to my already immense existing portfolio following my asset allocation plan. Don't have a plan? Get one.
__________________
LOL! is offline   Reply With Quote
Old 05-29-2009, 06:28 PM   #4
Administrator
W2R's Avatar
 
Join Date: Jan 2007
Location: New Orleans
Posts: 38,934
I agree with "LOL!" - - it is hard to know what to recommend, since investing isn't a one-size-fits-all sort of process.

Personally I would probably contribute the maximum plus over-50 catch-up to my TSP (=401K). Or, at least enough for the match. Of course, in my case I am already doing that. So, I would invest it in my taxable account according to my investment plan.

If it fits with your investment plan, many people seem to be happy with the Vanguard Target Retirement funds. I don't have anything in those funds, myself.

To develop your own investment plan, I always recommend reading books from this book list and reading the Bogleheads message board. Then after you have developed your plan, if you want you can bounce it off the experts on that message board. They very politely gave me a terrific critique of mine, and helped me to refine and improve it.
__________________
Already we are boldly launched upon the deep; but soon we shall be lost in its unshored, harbourless immensities.

- - H. Melville, 1851
W2R is offline   Reply With Quote
Old 05-29-2009, 06:30 PM   #5
Recycles dryer sheets
 
Join Date: Mar 2009
Posts: 357
Quote:
Originally Posted by freebird5825 View Post
Right in the Bank of Freebird. Free toasters today.

Without knowing your existing AA or your time horizon until you need to draw on the investments, it's a tough question to answer.
How about a few more parameters ?
I purposely left it open ended to get a variety of answers but now that I reread it I realize it's too vague. How about this for parameters (feel free to add more if needed)

Age: 30
Target Retirement: 50
Portfolio: $0
Mortgage: $200k with 5.5% interest rate

I was curious about what sort of tax advantages you could take advantage of. You would be making too much to open an IRA. Assuming your employer offers a 401k you could put $16,500 into that. I guess t-bills could be another option to save on taxes but if your retirement is 20 years down the road that might not be the best option.

I don't make that much, but if I did I'd be very tempted to invest it in a BMW convertible.
__________________
bank5 is offline   Reply With Quote
Old 05-29-2009, 06:36 PM   #6
Moderator Emeritus
 
Join Date: May 2007
Posts: 11,044
I would max out the 401K and put the rest in a taxable account (mix of equity index funds).
__________________
FIREd is offline   Reply With Quote
Old 05-29-2009, 06:39 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2006
Posts: 11,019
Quote:
Originally Posted by FIREdreamer View Post
I would max out the 401K and put the rest in a taxable account (mix of equity index funds).
That's what I would do too, if I were you. But being myself, if I suddenly had a $50K windfall, I would put it into gold and silver.
__________________
Meadbh is offline   Reply With Quote
Old 05-29-2009, 06:43 PM   #8
Recycles dryer sheets
 
Join Date: Sep 2005
Posts: 101
Guaranteed 5.5% interest if you pay it on the mortgage.

Burch
__________________
burch64 is offline   Reply With Quote
Old 05-29-2009, 06:45 PM   #9
Recycles dryer sheets
 
Join Date: Mar 2009
Posts: 357
Quote:
Originally Posted by Want2retire View Post
I agree with "LOL!" - - it is hard to know what to recommend, since investing isn't a one-size-fits-all sort of process.

Personally I would probably contribute the maximum plus over-50 catch-up to my TSP (=401K). Or, at least enough for the match. Of course, in my case I am already doing that. So, I would invest it in my taxable account according to my investment plan.

If it fits with your investment plan, many people seem to be happy with the Vanguard Target Retirement funds. I don't have anything in those funds, myself.

To develop your own investment plan, I always recommend reading books from this book list and reading the Bogleheads message board. Then after you have developed your plan, if you want you can bounce it off the experts on that message board. They very politely gave me a terrific critique of mine, and helped me to refine and improve it.
Seems like that's the best option -- max out the 401k and putting the rest in a taxable account. I haven't been to the bogleheads.org site but I'll be interested to check it out. I have most of my portfolio in a Vanguard target retirement fund and have been satisfied with them so far.
__________________
bank5 is offline   Reply With Quote
Old 05-29-2009, 06:52 PM   #10
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,438
Quote:
Originally Posted by Meadbh View Post
That's what I would do too, if I were you. But being myself, if I suddenly had a $50K windfall, I would put it into gold and silver.
Ah, a confirmed gold bug.

Just teasing. I have a couple of American Eagle coins bought back when they were $400/each, to be given to my children some day, and 10-oz worth in an ETF bought as a lark. Percentage-wise of the portfolio, it is not much. It is also much less than your would-be $50K worth.

I have some Canadian stocks worth a lot more than my gold, and they have been doing OK. Why you are buying gold, I wonder?
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 05-29-2009, 06:57 PM   #11
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2006
Posts: 11,019
Quote:
Originally Posted by NW-Bound View Post
Percentage-wise of the portfolio, it is not much. It is also much less than your would-be $50K worth.
How do you know that?

Quote:
Originally Posted by NW-Bound View Post
Why you are buying gold, I wonder?
As a hedge against hyperinflation and the collapse of the US dollar.
__________________
Meadbh is offline   Reply With Quote
Old 05-29-2009, 06:57 PM   #12
Thinks s/he gets paid by the post
 
Join Date: Nov 2005
Location: North of Montana
Posts: 2,753
Quote:
Originally Posted by NW-Bound View Post

I have some Canadian stocks worth a lot more than my gold, and they have been doing OK. Why you are buying gold, I wonder?
Your Canadian stocks are up nicely, measured in US$. Meadbh is Canadian and her portfolio is measured in C$. While Canadian stocks are doing OK (in Canada), US stocks are not (when measured in C$).
__________________
There are two kinds of people in the world: those who can extrapolate conclusions from insufficient data and ..
kumquat is offline   Reply With Quote
Old 05-29-2009, 07:00 PM   #13
Thinks s/he gets paid by the post
Rambler's Avatar
 
Join Date: Jul 2007
Posts: 2,250
Port = 0?

How about emergency fund? If that is also zero, and you do in fact have a 200k income, that means your expenses are somewhere in the order of 100-120k. 50k would be somewhere around 6 months of emergency funding. Emergency fund should be in short term CDs, savings accounts, very safe mm funds etc, i.e., in cash.

If you already have the emergency fund, then 401k. With that kind of income the roth is not available to you and IRA has little value. I'd put it in a taxable account with an AA of 70/30 equity to bonds, given your youth.

FWIW

R
__________________
Find Joy in the Journey...
Rambler is offline   Reply With Quote
Old 05-29-2009, 07:01 PM   #14
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,626
OK, here is an asset allocation plan for you:
75% equities, 25% bonds
50% US stocks, 25% foreign stocks with a tilt to small cap and value.
Here are your investments: 25% VTI, 25% VBR, 15% VEU, 10% VSS, 15% VFIIX, 10% VIPSX

Put the VFIIX, VIPSX, VBR into tax-advantaged. If you have a taxable account, put VEU there. The rest can be located wherever you have space.

Max out your 401(k); max out your Roth IRA. Use the above asset allocation plan.

See also: Asset allocation tutorial?

Take some of the $50K and buy a couple of books to read: The Four Pillars of Investing and The Boglheads' Guide to Investing. Then read them.
__________________
LOL! is offline   Reply With Quote
Old 05-29-2009, 07:02 PM   #15
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,438
Not an economist, I wonder how the future $US inflation would spread to other country currencies?

And by the way, I have been buying international stocks for future inflation protection as well as for participation in this global recovery. So far so good. Yes, the dollar has been falling.

Sorry to bank5 for the diversion, but the "greedy" mind needs to know.
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 05-29-2009, 07:04 PM   #16
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jul 2006
Posts: 11,019
Quote:
Originally Posted by kumquat View Post
Your Canadian stocks are up nicely, measured in US$. Meadbh is Canadian and her portfolio is measured in C$. While Canadian stocks are doing OK (in Canada), US stocks are not (when measured in C$).
Thanks kumquat. Since the loonie is rising rapidly (because the US dollar is going down), Canadian stocks would look much better to a US investor than they do from up here. Currently only 10% of my PF is in US equities. I guess I could take the fall of the US dollar as an opportunity to buy more, if I'm sufficiently confident in the US economy. Which, to be honest, right now, I'm not.
__________________
Meadbh is offline   Reply With Quote
Old 05-29-2009, 09:04 PM   #17
Recycles dryer sheets
 
Join Date: Mar 2009
Posts: 357
Quote:
Originally Posted by NW-Bound View Post
Sorry to bank5 for the diversion, but the "greedy" mind needs to know.
No problem at all. Most of my posts are kind of random so I don't really care which direction they go My OP was a complete hypothetical. I just posted to learn some things and thanks to everyone's response I definitely learned a few things.

I found your tag line interesting. Although it's 22 years down the road, I could see myself in a very similar place when I reach my early 50's.
__________________
bank5 is offline   Reply With Quote
Old 05-29-2009, 09:28 PM   #18
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
NW-Bound's Avatar
 
Join Date: Jul 2008
Posts: 19,438
Thanks. We are not really broke that I need to work for food. However, having an income makes one bolder in spending more of the cash reserve to buy these cheap stocks. Plus if the work is not too tiring, reasonably paid, and part-time, then why not?
__________________
"Old age is the most unexpected of all things that can happen to a man" -- Leon Trotsky
NW-Bound is offline   Reply With Quote
Old 05-29-2009, 09:37 PM   #19
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Venezuelan beaver cheese futures, preferably leveraged.



Seriously, an e-fund would be the way to go for such a person. Maybe after they made the next 50k they could actually afford to invest.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 05-30-2009, 09:36 AM   #20
Moderator
MichaelB's Avatar
 
Join Date: Jan 2008
Location: Rocky Inlets
Posts: 24,487
Quote:
Originally Posted by brewer12345 View Post
Venezuelan beaver cheese futures, preferably leveraged.
Where can I find these - Fidelity doesn't list them?
__________________

__________________
MichaelB is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
How would you invest a lottery winning of $10,000,000? rec7 FIRE and Money 51 11-12-2008 11:21 PM
And I thought that 750,000,000,000 was a big # !!! mickeyd Other topics 0 09-27-2008 02:44 PM
Don't forget to claim your part of the $10,000,000,000 refund mickeyd FIRE and Money 1 12-26-2006 01:58 PM
$2,000,000,000,000- Happy 55th mickeyd Other topics 12 12-28-2004 09:19 AM

 

 
All times are GMT -6. The time now is 12:47 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.