Money, and lots of it.

Lets assume a good friend of yours has asked where to invest about 40k within a week for a period of maybe a decade or two. It's not for retirement, so risk is not a huge deal, but it's important that it remain somewhat stable. Nothing that requires too much work (no real estate deals that you need to be a lawyer to understand).

I think I like YACKX fund, and I have a tiny bit of my kids college money there. I don't like any single stocks for a chunk, but I would consider a smattering to accompany a chunk in a fund or three.

If it were mine I'd buy the nicest rarest earliest 911 I could get my hands on and insure it to the dickens and keep it perfect. It's not, though.

Ideas?

Various Vanguard funds, BRK, hookers, and blow.

Risk not important but stability is? Those two are at odds with each other. You either take on risk at the expense of stability or you go for stability with lower risk.
Historically a stock fund is the way to go over a decade or multi decade time scale and that's probably the end of the discussion. Unfortunately $40k isn't enough to get admiral share status at Vanguard, the low load there makes it my top recommendation.
$40k is a lot, but when you're old and retiring, it should only be a very small part of what you have. What other investments does he have? Diversity is important.

http://www.cnn.com/2013/12/02/business/how-to-get-rich-quick-buy-a-classic-car/

And "get rich quick" is a real thing when you're starting with lots of money.

The 911 is a decent idea, maybe throw in a clean Hachiroku if there's any money left over.

Jensen Interceptors are going up like crazy, buy a nice one (~25k) and invest the rest in a few solid stocks with good dividends and low P/E ratios and low debt. Something boring- like a company that makes cardboard boxes or something.

I'd pick a stock index fund. Boring but likely to do pretty well, and is pretty much a buy it and forget it deal.

S & P 500 … steady growth … very little risk … not much need to monitor … even if the market takes a dump, the index fund will probably come back quicker than any individual stock

i'd be waiting for the next big "almost" scandal like the toyota gas pedal or BP spill, then hop on one of those on their way back up. both of those dipped during the peak of their crises and has recovered. i'd look to large companies that aren't likely to die off at the first sign of adversity.

if i had a time machine i'd go back and put my whole egg on F in march 2009. its gone from 1.49 to over $15... thats a 1000% gain over the dark days of bailout talk.

edit: low close looks like 1.58 Feb 20, 2009, with a high of 18.65 jan 14, 2011

Edit-edit: I have a bit of money in ANEFX, back when i was like 12, my grandfather cleaned out his change holder and a bank bag he had been keeping and we took it to the bank to count it, then we went to his investment guy and i picked out a mutual fund to put the change money into. when i graduated from college they gave it to me. mine started with just under 400 bucks and is now worth around 2 grand. it's been kicking butt lately too.

The nicest clean, STOCK, versions of the following:

1. 87-93 Ford Mustang LX 5.0/MT5 Notchback
2. 92-95 Mazda RX-7 FD
3. 87-89 Porsche 911 Carrera 3.2/G50 Coupe

That should take up the $40K and give you one car from each continent that's going to be worth a fortune in 10 years when the people that grew up with them are retiring with money to burn.

Strizzo wrote: i'd be waiting for the next big "almost" scandal like the toyota gas pedal or BP spill, then hop on one of those on their way back up. both of those dipped during the peak of their crises and has recovered. i'd look to large companies that aren't likely to die off at the first sign of adversity. if i had a time machine i'd go back and put my whole egg on F in march 2009. its gone from 1.49 to over $15... thats a 1000% gain over the dark days of bailout talk. edit: low close looks like 1.58 Feb 20, 2009, with a high of 18.65 jan 14, 2011

I rode Ford from 1 something to teen something. I love timing things properly. Unfortunately I also bought GM because I misunderstood how stocks work in bankruptcy and it was nearly a wash.

First, if you don't want to make investing a hobby, I'd stay away from individual stocks. Their volatility is much greater than the overall market's unless you buy blue chips only, and even in that case you have higher volatility and higher risk.

I also wouldn't invest the money within a week (why the rush?), but parcel it out and invest it over at least a few months to get at least some semblance of dollar cost averaging. If it absolutely has to be within a week, I'd put a large part of it into inflation protected securities and then move it into index funds on a monthly basis as that smooths out market movements to a certain extend.

As to where to invest, I'd stay away from the full fare brokers and go with Fidelity, Schwab, Vanguard or possibly T Rowe Price. With either one of them you'll want a low cost index mutual fund or ETF - personally I prefer ETFs as they currently tend to be lower cost than mutual funds. Either way you'll want to keep an eye on the fees as they take a surprisingly large bite out of your investment returns over time.

Personally for my wife's Roth IRA, we have a Schwab account and put the money into Schwab ETFs. The latter cover pretty much everything I'd want to invest in right now (US broad market, large international, a little emerging markets and the aforementioned inflation protected securities), are extremely low cost - lower than the corresponding Schwab mutual funds - and at least for now I don't have to pay trading costs for the ETFs either. Also, if you can make sure your broker automatically reinvests the dividends - over time, that's another strategy that has a massive impact on your investment returns.

I'm not an investment advisor and this advice is worth less than you paid for it. After all I'm just an amateur who's been working in finance for a while. With the sort of money you're talking about I'd be tempted to sit down with a fee-only advisor for an hour or so, that's most likely money well spent. The problem I find with investment is that if you want to be half decent at it, you've just found yourself another hobby.

Re the investing in cars suggestions - obviously you can make money doing that and it's probably closer to all our hearts, but the carry cost is much higher than with stocks and a lot of people forget to factor that in.

Mutual funds don't tend to need regular oil changes, insurance and garage space and that all costs money that does bad things to your overall investment return.

mazdeuce wrote: Unfortunately $40k isn't enough...

Just for the record, aside from retirement, 40k is a crazy high, ludicrously large, we've-gone-plaid, amount of money. To me.

I love the Vanguard total market index admiral fund. VTSAX. Mazdeuce, the minimum investment is only $10k, I think they lowered it some time back. 10-20 years will net a nice return at moderate risk. The fund's costs are so low as to be nonexistent.

Cars as investments has to be a serious job or else you will lose your shirt. Jensen Interceptors? Fox body Mustangs? Surely you jest! You'd have to successfully flip 50 of them to get the same return as just leaving it be in VTSAX.

I looked at buying rental houses and you still only get 5% - 10% after paying maintenance, taxes, etc. You're better off with an index fund; same return, lower risk, and WAY less work.

mazdeuce wrote: Unfortunately $40k isn't enough...

Tuna55 said: Just for the record, aside from retirement, 40k is a crazy high, ludicrously large, we've-gone-plaid, amount of money. To me.

^ me too.

I'm looking for investors in an existing business. I can promise lucrative returns. Have his people call my people.

I can't imagine putting money into an "investment" that happens to be something like a car. Unless it's small enough to put in a safe in a bank, so basically gold bricks, it seems crazy when you could have disaster wipe out a car. Like a building fire, flood, etc etc.

I'd probably put half into Pimco Total Returns (assuming a small time investor can? I do in my 401(k) at work but not sure if it's easily available otherwise) and the other half into an S&P 500 tracking ETF.

If you get a good answer to this question, please share it!

Stocks are at an historically lofty level, but I won't suggest a correction is imminent simply because people are desperate to put their money in something that earns more than the 0.00000025% that banks are offering on CD's. Demand for stocks is likely to remain high, and that will continue to drive valuations higher. Until it doesn't.

I would suggest a balanced allocation, with exposure to more than just stocks (i.e. bonds). Also non-perishable foodstuffs, and ammo.

Gearheadotaku wrote: mazdeuce wrote: Unfortunately $40k isn't enough... Tuna55 said: Just for the record, aside from retirement, 40k is a crazy high, ludicrously large, we've-gone-plaid, amount of money. To me. ^ me too.

It's a lot of money to have, but not a lot of money to invest. The world is weird. The bank will freak out if I have over $10K in my checking account and try to get me to "invest" it instead of leaving it laying around. However, if I'm really trying to buy into something significant (and most of what I know is in the oil industry because of who I know) then we're not talking any real money until you're over $10 million or so. As I've gotten to know the private equity side of oil over the past five years I've come to understand that the opportunities that are out there for the very wealthy are much much different than those that are available to those that are aware of what their electric bill is each month.
$40k is a lot, but it's well within the realm of 'regular' investments. Stocks, bonds, some real estate and investing in small businesses if you know a guy. There's really not too much innovation at this price point.

Wealth begets wealth, who knew.

Not to sound like a prick, but if you've been working for 10 years, you ought to have 40k stashed away in your retirement fund. Minimum. Once you start seeing numbers like that in your quarterly statement, even if it's technically "non-touchable" money (since you really can't or at least shouldn't, do anything with it until you hit 65), it starts making you feel like maybe you might actually be able to quit working, someday. Or at least, work on something you'd rather be doing. ;-)

Once I hit the million mark I'm selling all but one of my dress shirts, buying 7 pairs of coveralls, a used toterhome, a couple of vintage race cars (which at that point will be like 2010 models) and traveling the country from track to track.

volvoclearinghouse wrote: Not to sound like a prick, but if you've been working for 10 years, you ought to have 40k stashed away in your retirement fund. Minimum. Once you start seeing numbers like that in your quarterly statement, even if it's technically "non-touchable" money (since you really can't or at least shouldn't, do anything with it until you hit 65), it starts making you feel like maybe you might actually be able to quit working, someday. Or at least, work on something you'd rather be doing. ;-) Once I hit the million mark I'm selling all but one of my dress shirts, buying 7 pairs of coveralls, a used toterhome, a couple of vintage race cars (which at that point will be like 2010 models) and traveling the country from track to track.

tuna55 wrote: It's not for retirement...

wbjones wrote: S & P 500 … steady growth … very little risk … not much need to monitor … even if the market takes a dump, the index fund will probably come back quicker than any individual stock

MadScientistMatt wrote: I'd pick a stock index fund. Boring but likely to do pretty well, and is pretty much a buy it and forget it deal.

mtn wrote: Various Vanguard funds

All of these. Index funds, total market index being the best bet.

dculberson wrote: I looked at buying rental houses and you still only get 5% - 10% after paying maintenance, taxes, etc. You're better off with an index fund; same return, lower risk, and WAY less work.

The deal with real estate is that a) you can get a loan to finance what would otherwise be something you couldn't buy with cash, and b) it can be a major tax advantage.

Let's say you have 40k in cash. That would let you buy a $200,000 property, assuming 10% down and some closing costs, etc. Mortgage, taxes, insurance, etc might be $1500 per month, and rent would also probably be $1500/ month, so it's essentially a wash. But over 30 years, someone else is making mortgage payments for you. Plus, that mortgage interest is tax deductible, as is the depreciation on the property, as is every single cent you spend on maintenance, travel, etc related to it.

After 30 years, assuming a VERY conservative real estate appreciation, you've got a $400,000 property you can sell, retire into and sell your other home, etc. My guess is that the house would actually be worth more like 500-600k after 30 years, but of course it's subject to a lot of variables.

Even 40k into 400k in 30 years isn't a terrible return (7 to 8%, about what you mentioned above), even ignoring the tax savings- which are not insignificant. But yeah, it takes a bit more effort than simply watching the stock market ticker every day. Though I am skeptical of anyone getting that kind of return on "normal" investments. The stock market is, at best, like betting on horses. At least with real estate, like my grandfather always said, "They aren't making any more of it."

I'm in the Vanguard Wellesley fund, the regular shares are .025% load and the Admiral shares are .018% load which is a great deal either way. It also has a pretty steady return. Regardless of the ultimate intent of the fund if it's going to be a long term investment I'd recommend they seriously consider it.

EDIT: Rental property can be a great investment, that's how my dad made his living for 60 some years. It does have its pitfalls. First is that $40k might be a little short for what you'd really need, a $200k rental property is like the average suburban house in most areas. That means all the financial eggs are in one basket; if a tenant welches on you there's nothing else to fall back on. That's why my dad did ONLY multi unit stuff like small apartment complexes, triplexes etc. That way if one unit is vacant at least there's still something coming in.

But $200k won't buy a whole lot of apartment complex. I think I'd seriously consider using the $ to build a small mobile home park. That can be VERY lucrative over the long term, I know a guy whose mom bought one, she lived there as the resident manager. Over the years tenants would have to move quickly, she'd buy their MH's and then rent them out. She wound up with something like 25 of them and of course the complex itself.