Login required to started new threads

Login required to post replies

Financial question/opinion needed
Quote | Reply
Hi,

If you had large piece of money come into your life, what investment options would you choose and why?
Do you have concerns with putting a large portion in the at one point with where the market/economy is at?
Do you think it's a better choice to pay down low interest mortgage debt and then put the money in on a monthly
basis instead? when I say "in the market", I'm referring to mutual funds/long term investments as opposed to stocks.
But I'm open to any suggestions.

Thanks!
Quote Reply
Re: Financial question/opinion needed [checkcheck1212] [ In reply to ]
Quote | Reply
This sounds like a bogleheads question. You are going to have to provide more information to get a good answer.

Personally, I would invest it but everyone’s financial position is different.
Quote Reply
Re: Financial question/opinion needed [checkcheck1212] [ In reply to ]
Quote | Reply
Here is one way I'd suggest you look at it: do I think I can earn a higher rate of return than what my mortgage interest rate is? Ideally look at both on after-tax basis so it's consistent. For me, I think I can beat my 3.5% mortgage by being invested, so I keep my money invested vs paying down the house. This lets me cover my interest and then some, keep the liquidity/flexibility of having the money vs as home equity. If my mortgage was 7% I'd feel differently.
Quote Reply
Re: Financial question/opinion needed [checkcheck1212] [ In reply to ]
Quote | Reply
A lot of this answer depends on what you plan to do with the money, how comfortably you are covering your mortgage payment now, and how secure you think your future income is over the remainder of your mortgage. There's also an emotional benefit some people get to having that mortgage paid off, regardless of what the numbers say.
Quote Reply
Re: Financial question/opinion needed [checkcheck1212] [ In reply to ]
Quote | Reply
Quote:
when I say "in the market", I'm referring to mutual funds/long term investments as opposed to stocks

That's like saying "when I say 'sex' I'm not referring to anything involving penises or vaginas."
Quote Reply
Re: Financial question/opinion needed [SH] [ In reply to ]
Quote | Reply
SH wrote:
Quote:
when I say "in the market", I'm referring to mutual funds/long term investments as opposed to stocks

That's like saying "when I say 'sex' I'm not referring to anything involving penises or vaginas."

Sex toy anal?
Quote Reply
Re: Financial question/opinion needed [ilikepizza] [ In reply to ]
Quote | Reply
So much depends on your current financial state.

I’m a diversifier by nature. I like to think about breaking up things into making my life better short term, mid term and long term and start from where I am to where I want to get.

So, I would definitely invest the long term chunk. I would look into paying down mortagage to free up resources for mid term if there wasn’t something like kid’s college that needed mid term focus- although I started with a goal of paying off mortgage by the time my kid started college so I would have that extra cash flow during that expensive period.

Then near term- what would make your life better now. First would be a 6 month emergency fund if you don’t have it. After that I think it’s okay to splurge on home renovation or even a vacation.

That said my intent in investment is not to maximize returns but to maximize well being across all time frames. I sleep better with a paid off mortgage- which to me is worth a few points of return- some people would sleep worse knowing they were not maximizing returns. Only you know what will give you the best life return.

I usually split 20/40/40 short/mid/long but depending on my needs/ desires that can change to where I have neglected the most.

Having done my parents finances for the last 4 years while caring for them was eye opening. You definitely need to save for the future- but at the same time investing in your health and well being is critical. My mom loves looking at pictures of all of her travel even though she can barely speak- it brings her a ton of joy.
Quote Reply
Re: Financial question/opinion needed [checkcheck1212] [ In reply to ]
Quote | Reply
Diversify. Choosing the asset classes and percentages depends on your risk tolerance, age, and overall financial condition.

Mortgage interest is a tax shelter (for now), and an especially good one if you earn wage income.

Unless you received life changing money, I'd invest and keep the mortgage.
Quote Reply
Re: Financial question/opinion needed [checkcheck1212] [ In reply to ]
Quote | Reply
Meet with your lawyer before posting anything further. Just bc the NDA was not signed, it may still be enforceable.
It would be a real shame if you disclosed too much in the LR and had to give the $130k back.
Quote Reply
Re: Financial question/opinion needed [checkcheck1212] [ In reply to ]
Quote | Reply
Hookers and blow.

===============
TDS is real: https://en.m.wikipedia.org/wiki/TDS
Quote Reply
Re: Financial question/opinion needed [checkcheck1212] [ In reply to ]
Quote | Reply
Your post is vague and this being the Lavendar room Captain Canadas hookers and blow suggestion is appropriate.

1: what are you wanting to achaive with your money, ie. short or long term goals? Diversify, cash flow, debt free, pay less taxes.
2: what is your current financial situation.

If you are in the US your financial institution offers financial and investing seminaries for free. Their goal is to educate you on your goals and comfort level.
A 20 yr old will have different strategy than a 55 yr old home owner.
Quote Reply
Re: Financial question/opinion needed [checkcheck1212] [ In reply to ]
Quote | Reply
I would pay off the mortgage, (as I have done) nothing like piece of mind and not having that monthly bill, market crashes, you still paid off your mortgage. Then invest over time. I would buy into the fidelity S&P500 index fund.

end of story.

Just Triing

Triathlete since 9:56:39 AM EST Aug 20, 2006.
GM employee, The views and comments posted are my own and in no way reflect those of GM. - Required legalize from employer.
Quote Reply
Re: Financial question/opinion needed [checkcheck1212] [ In reply to ]
Quote | Reply
As most people have said .... IT DEPENDS. Anyone who is counseling you on what they would do without knowing your circumstance at all should be taken with a mountain of salt.
Quote Reply
Re: Financial question/opinion needed [DavHamm] [ In reply to ]
Quote | Reply
DavHamm wrote:
I would pay off the mortgage, (as I have done) nothing like piece of mind and not having that monthly bill, market crashes, you still paid off your mortgage. Then invest over time. I would buy into the fidelity S&P500 index fund.

end of story.

If I had to give one answer and only pick one fund this would be it. Pay off your mortgage and but S&P 500.
Quote Reply
Re: Financial question/opinion needed [checkcheck1212] [ In reply to ]
Quote | Reply
I'm referring to mutual funds/long term investments as opposed to stocks. //

Mutual funds are stocks, and thus will react to the ups and downs of the stock market, in a general sense. If it crashes you mutual fund will also crash. It just spreads the risk over a lot more individual stocks as to buying a few on your own. And you can buy individual stocks that track most the big funds, S&P, QQQ, small, medium cap, different sectors, etc.


But without knowing the ballpark of money you got it is hard to say what to do with it. How big is your mortgage, do you need the write off on it, have any higher interest car loans or things like that? Did you get enough to think about investing in real estate/rental properties? Usually it is good to diversify, pay off interest loans(unless you are getting some write offs that make them really cheap money) and build a nest egg. I have so many friends that have set themselves up by buying distressed properties, putting a few bucks and elbow grease, then renting them out at even to positive cash flows. If you have a nice long timeline you will most probably get some appreciation, build equity in your payments, and skim off a little positive cash flow. Get 3 or 4 of these and it can make for a very comfortable retirement, even if you just had SSI.


But nowadays you want to max out your own personal retirement accounts, so do that first, especially if you have any matching from employers. Get all the free money first, then worry about what to do next with any left over..
Quote Reply
Re: Financial question/opinion needed [checkcheck1212] [ In reply to ]
Quote | Reply
100k, 1m or 10m?

For the former i would, if I did not already have it, have a cash stash

Can you cover your living costs for 6-12 months when things go really badly wrong?

I had a apartment burn down, lost a job and burnt through cash at an astonishing rate.

I'd keep 6-12 months of cash on hand to cover living and mortgage.

The balance, if any from 100 i would pay of mortgage capital

For 1m. I would have cash. Clear mortgage and put balance in a tracker, or a number of trackers; S&P and smaller amounts in other market trackers; ftse, emerging markets etc (vanguard does a global thing that does this.......sort of)

For 10m. All the above plus Hookers and blow.......for somewhere between 1 and 10m I'd actually do the above plus real estate, commercial and residential.
Quote Reply
Re: Financial question/opinion needed [monty] [ In reply to ]
Quote | Reply
Quote:
Mutual funds are stocks

Mutual funds are also bonds , combination of both or other assets. As well as domestic , international , global excetra. They can combine different sectors , style boxes , maturities and any number of factors.
Some are very restrictive by nature and some allow the manager more flexibility.

There are also inverse funds that act the opposite of the market along with market neutral funds. Mutual funds are a lot of different things depending on the specific funds goals by perspective.

"I think I've cracked the code. double letters are cheaters except for perfect squares (a, d, i, p and y). So Leddy isn't a cheater... "

JasoninHalifax
Dec 1, 17 9:57
Quote Reply
Re: Financial question/opinion needed [Leddy] [ In reply to ]
Quote | Reply
Go to Disney.
Quote Reply
Re: Financial question/opinion needed [checkcheck1212] [ In reply to ]
Quote | Reply
When I had a mortgage I concentrated paying it off. I don't like debt. Could I have made more in the market? Perhaps. But I have been debt free for the second time, this time around for about 10 years. Cash flow is insane, and I have no money worries. In fact, just yesterday I was checking my bank account and noticed the balance dropped significantly. I inadvertently paid 10x more than was due. It is a mere inconvenience that Chase is holding a ton of cash for the next 4 to 6 months (called Chase and don't want a big check sent though the mail) as credit for future credit card bills (spread across 3 cards for my wife and I). In the days when I had a mortgage, even without paying it down, I likely would not have had the cash on hand for a mistake like that. Plus, over the yearsthings like new flooring, appliances, doors for the house, etc, are easily paid out of pocket.

So my preference is debt first. If you do invest and are hesitant due to "high" equity prices, pick a fun that is a mix of stocks and bonds. Last year I started a new house fund, which I use VSMGX for stability.
Last edited by: tigermilk: Mar 10, 18 18:47
Quote Reply
Re: Financial question/opinion needed [tigermilk] [ In reply to ]
Quote | Reply
tigermilk wrote:
In the days when I had a mortgage, even without paying it down, I likely would not have had the cash on hand for a mistake like that. Plus, over the yearsthings like new flooring, appliances, doors for the house, etc, are easily paid out of pocket.

But that's also an argument for keeping the lump sum around in a liquid investment. Most investments are more liquid than a house. So in an emergency situation having more liquid investments available is nice. Including for being able to make debt payments in the event of catastrophic double-income loss / medical situations, etc. Without having to sell or reverse-mortgage a house.

Of course you're correct that you can have a higher savings rate with less debt, but likely takes much longer for that increased savings rate to reach the same level as the immediate lump sum.





Quote Reply
Re: Financial question/opinion needed [trail] [ In reply to ]
Quote | Reply
Personally I think it depends a lot on your job, how much you enjoy it, how secure it is, etc.

I have a job that at times is highly stressful, and is also in an industry where people get laid off fairly regularly. It's never happened to me, and if it did I'd get a decent pay off and likely could find other work fairly easily even if it meant taking a pay cut, but it's a factor.

For me, reducing our monthly outgoings really helps change my mindset. Means I'm working on my terms, and not because I can't afford to quit, and just knowing that makes it much easier to deal with the stressful times. I've never bought things on debt, so mortgage was our only debt, paying that off has got our cash flow to the state where we could comfortably live off just my wife's salary (very secure job which she enjoys) and/or I could take a big pay cut. For me, not having any debt really lifted a weight off my shoulders. I realise that on paper it's really no different to still having that mortgage debt while having enough investments to pay it off and/or generate enough income to cover the repayments, but somehow it feels different.

To the OP, I'm in a similar position of having a lump sum come my way last year as a result of selling off a business. In my case it was a pretty big lump (8-10 times what I'd save/invest in a typical "good" saving year, though it's not hookers and blow kind of money) and also likely a one-off - I have no plans to start another business. No way I wanted to put all that into the market at the same time, or even over a period of a few months. If you're investing X/month then you don't need to worry about trying to time the market. Even if you happen to invest X on a market high that isn't reached again for another 5-6 years, you'll have put enough Xs in before and after that high to average your buy price down and make good returns. If you put 100X into the market in one go and happen to be close to that market high, you've just said goodbye to a load of money.
Quote Reply
Re: Financial question/opinion needed [cartsman] [ In reply to ]
Quote | Reply
You can't time the market

Even if you put it in and the next day lost 40% I think historically the s and p has returned an average of 7-8% or more since inception so unless you were close to retirement or buying an annuity you should get it back in for course
Quote Reply
Re: Financial question/opinion needed [Andrewmc] [ In reply to ]
Quote | Reply
I know you can't time the market, which is why I'm suggesting spreading the risk by buying in over a longer period. If the market rises you've missed out on a bit of growth, if it drops you've reduced your losses. Depends on the size and nature of the lump sum as to how much you're bothered. If it's the equivalent of a few months or even a year or 2 of normal saving/investing, then it's probably not worth worrying too much and just get it in there. If it's significantly bigger than that, then it may be worth spreading the risk.

I think investing a one-off lump sum does require a different approach to the more common situation of investing every month (or even investing an annual bonus every year), where over time you'll automatically smooth out any peaks and troughs.
Quote Reply
Re: Financial question/opinion needed [cartsman] [ In reply to ]
Quote | Reply
I think the only argument for not investing all at once would be having cash on hand, needing it for something else or being very close to retirement

You - I think - and I are about the same age. In the event that at 30-40-ish We came in to a sum between 100k and 1m. Its not enough to retire on, though it would certainly clear a London mortgage, if it had appeared in 2008-10 and investing it had been spread over 2-4 years the accrued losses would have been significant, and you don't ever get it back.

I'd however you'd gone in in 2007 and just left it, whilst you'd have taken a hit, in the end you'd have been better off than spreading it out.

It's worth reading A Random Walk which in a circular way covers some of this.

It's interesting that even buffet has said in an annual letter to shareholders he'd tell his relatives to stick their inheritance in a low cost index fund and leave it at that......
Quote Reply
Re: Financial question/opinion needed [Andrewmc] [ In reply to ]
Quote | Reply
Without more info, it is impossible to advise. Paying down mortgage, expanding cash holdings and investing in the market all can work but they may not be desirable (or possible) all at the same time.
Quote Reply