How would you invest $50,000?

[bank5]

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

[freebird5825]

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 ?

[LOL!]

I would add it to my already immense existing portfolio following my asset allocation plan. Don't have a plan? Get one.

[W2R]

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.

[bank5]

Quote:

Originally Posted by freebird5825 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.

[FIREd]

I would max out the 401K and put the rest in a taxable account (mix of equity index funds).

[Meadbh]

Quote:

Originally Posted by FIREdreamer 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.

[burch64]

Guaranteed 5.5% interest if you pay it on the mortgage.

Burch

[bank5]

Quote:

Originally Posted by Want2retire 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.

[NW-Bound]

Quote:

Originally Posted by Meadbh 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?

[Meadbh]

Quote:

Originally Posted by NW-Bound 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 Why you are buying gold, I wonder?

As a hedge against hyperinflation and the collapse of the US dollar.

[kumquat]

Quote:

Originally Posted by NW-Bound 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$).

[Rambler]

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

[LOL!]

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: http://www.early-retirement.org/foru...tml#post578722

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.

[NW-Bound]

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.

[Meadbh]

Quote:

Originally Posted by kumquat 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.

[bank5]

Quote:

Originally Posted by NW-Bound 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.

[NW-Bound]

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?

[brewer12345]

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.

[MichaelB]

Quote:

Originally Posted by brewer12345 Venezuelan beaver cheese futures, preferably leveraged.

Where can I find these - Fidelity doesn't list them?