Results 1 to 15 of 15

Thread: So You Have $500K: Now What??

  1. #1
    Featured Member minnow's Avatar
    Joined
    Sep 2007
    Location
    USA
    Posts
    1,003
    Thanks
    242
    Thanked 519 Times in 315 Posts
    Blog Entries
    10
    My Mood
    Twisted

    Question So You Have $500K: Now What??

    "Every single DD visitor is able to post new threads"........ (Thank you Mr. Hyde for steering discussion in another direction)

    OK, Mel, I'll give it a whirl. A recent 500K thread gave me a thought: What will(should) individual who actually accumulates said ammount do with it? How would you invest $500K?

    To those wishing to answer question, I'll provide 2 hypothetical people to gear your advice to:

    A: Thirtysomething dancer who wants to get out of dancing. (OK, Zinaida, few dancers are hotter than you). She has some "civilian" job background, and is capable,(lets say she has some jr college courses, maybe a 2 yr degree) but in no big rush to grab first job that comes around. How should she invest $500K exchequer that she's accumulated?

    B: Fiftysomething working in corporate world. There's some changes coming down the pike, one of which involves freezing your pension. This may eventually lead to cashing out and terminating the plan. In the take annuity vs lump sum option, you pick Curtain #2 ( lump sum). You don't plan to tap into this until "retirement" ~ 5 years down the pike. How should $500K be spread out in this case?

    I just threw out $500K as an arbitrary figure, feel free to comment on any other ammount, be it $100K, or 7 figure ammount. (Everyone has different minimum levels for financial security).
    Last edited by minnow; 08-07-2010 at 05:09 PM. Reason: 1st addendum
    I'm right 96% of the time. I don't sweat the other 5% .......................

  2. The Following User Says Thank You to minnow For This Useful Post:


  3. #2
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: So You Have $500K: Now What??

    How would you invest $500K
    Disclaimer : this is not to be considered as investment advice ... simply as a statement of my own recent investment decisions. And I'll reference amounts scaled to your US$ 500k figure ...

    - US$50k in physical 1oz gold bullion

    - US$100k in Swiss Franc denominated bonds

    - US$100k in various commodity futures / ETF's

    - US$100k in stock shares of emerging market primary producer companies ( energy, mining, chemical etc.)

    - US$100k in 'recession proof' high dividend US stock shares i.e. AT&T, RJ Reynolds, Duke Energy, Bristol Myers, DuPont

    - US $50k in 'dice roll' puts and calls

    ... I would also add that none of these are to be considered as 'long term' positions.


    In the take annuity vs lump sum option, you pick Curtain #2 ( lump sum). You don't plan to tap into this until "retirement" ~ 5 years down the pike. How should $500K be spread out in this case?
    hmmm ... $250k in Panama and the other $250k in Lichtenstein ?

    The above is a reference to the high probability that future Social Security and medicare benefits will be 'means tested'. Thus the best available 'return on investment' for future retirees is likely to be 'hiding' their own assets outside the USA so their Social Security checks are not reduced !

    ~
    Last edited by Melonie; 08-08-2010 at 07:37 AM.

  4. #3
    Veteran Member
    Joined
    Mar 2010
    Posts
    519
    Thanks
    441
    Thanked 296 Times in 155 Posts
    My Mood
    Relaxed

    Default Re: So You Have $500K: Now What??

    500 thousand lotto tickets! :p

  5. #4
    God/dess Mr Hyde's Avatar
    Joined
    Oct 2004
    Location
    Tampa
    Posts
    4,035
    Thanks
    278
    Thanked 586 Times in 346 Posts

    Default Re: So You Have $500K: Now What??

    Spend it on Zinaida at the SC

  6. The Following User Says Thank You to Mr Hyde For This Useful Post:


  7. #5
    Featured Member silk55's Avatar
    Joined
    Feb 2009
    Location
    MIAMI,WPB
    Posts
    1,283
    Thanks
    889
    Thanked 729 Times in 445 Posts
    My Mood
    Cool

    Default Re: So You Have $500K: Now What??

    first things you should do is start a business! then invest in P2P (person to person) lending. like lendingclub.com

    there are risks with everything in life. lets face it $500k isn't what it used to be
    "The point is, ladies and gentlemen, that greed, for lack of a better word, is good. Greed is right. Greed works" -GORDON GECCO

  8. #6
    God/dess anouk.oui's Avatar
    Joined
    Nov 2009
    Location
    Australia
    Posts
    2,961
    Thanks
    3,002
    Thanked 1,485 Times in 738 Posts
    My Mood
    Blah

    Default Re: So You Have $500K: Now What??

    i personally would love the idea of my own apartment with no mortgage to pay off...

    and start up my own business. even if it fails i do better at forgiving myself for trying than for some other douchebags mistake

  9. #7
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: So You Have $500K: Now What??

    I'm a bit surprised that, so far, there have been absolutely no questions in regard to my choice of investment allocations !?!?

  10. #8
    Featured Member minnow's Avatar
    Joined
    Sep 2007
    Location
    USA
    Posts
    1,003
    Thanks
    242
    Thanked 519 Times in 315 Posts
    Blog Entries
    10
    My Mood
    Twisted

    Default Re: So You Have $500K: Now What??

    Quote Originally Posted by Melonie View Post
    I'm a bit surprised that, so far, there have been absolutely no questions in regard to my choice of investment allocations !?!?
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^

    OK, I'll nibble: In your 100K categories, what number of individual stocks, or positions would you hold? Sweet spot number of not putting too many eggs in 1 basket, or juggling too many chainsaws. Also, in the stocks category, would you consider mutual funds with general stated objectives, or is it all individual stock picks?
    I'm right 96% of the time. I don't sweat the other 5% .......................

  11. #9
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: So You Have $500K: Now What??

    ^^^ well, where the dividend stocks are concerned, it has to be individual stocks in order to take best advantage of the dividend payout.

    Where the foreign shares in 'primary producer' industries is concerned, at the moment there is also no real choice but to go with individual stocks. I would have no qualms about purchasing shares of a targeted ETF if one existed. However at the moment, ETF's based on foreign country stocks aren't 'selective' enough.

    In regard to mutual funds, I won't buy them for 2 reasons. The first is the inability to trade intra-day ... which represents a risk since it makes 'stop-loss' sell orders impossible. Second reason is that, one way or another, mutual funds route some portions of your theoretical gains towards 'expenses'. Some funds are above board and do this via fees. Other funds are more 'stealthy' and accomplish it via 'value creep'

  12. #10
    God/dess threlayer's Avatar
    Joined
    Aug 2003
    Location
    Syracuse
    Posts
    5,921
    Thanks
    369
    Thanked 419 Times in 290 Posts
    My Mood
    Fine

    Default Re: So You Have $500K: Now What??

    Sounds like there is no buy-and-hold for a time strategy anymore.
    I loved going to strip clubs; I actually made some friends there. Now things are different for the clubs and for me. As a result I am not as happy.

    Customers are not entitled to grope, disrespect, or rob strippers. This is their job, not their hobby, and they all need income. Clubs are not just some erotic show for guys to view while drinking.

    NOTE: anything I post here, outside of a direct quote, is my opinion only, which I am entitled to. Take it for what you estimate it is worth.

  13. #11
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: So You Have $500K: Now What??

    ^^^ that strategy still works for gold, but not for stocks, bonds or US dollars !!!

  14. #12
    Featured Member minnow's Avatar
    Joined
    Sep 2007
    Location
    USA
    Posts
    1,003
    Thanks
    242
    Thanked 519 Times in 315 Posts
    Blog Entries
    10
    My Mood
    Twisted

    Default Re: So You Have $500K: Now What??

    Getting back to $100K allocation ?/ How many different stocks/ bonds would you allocate to $100K portions?

    Myself, I wouldn't want to have more than 10 different, and probably more like 6. I just don't feel like juggling too many chainsaws, or incurring too many broker fees.

    For someone starting off with more like $10K, I wouldn't want more than 4. Others thoughts???
    I'm right 96% of the time. I don't sweat the other 5% .......................

  15. #13
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: So You Have $500K: Now What??

    ^^^ well depending on pricing of individual stocks, I would absolutely try to work with a minimum of 100 share blocks since there are usually higher fees associated with smaller quantities. Of course this doesn't work with companies like Berkshire Hathaway where the single share price is something like $40,000 !

    Agreed that 'jugglng too many chain saws' can be a problem. However, there is also the possibility of purchasing ETF or ETN shares ... which have the same intra-day trading advantage of stock shares ( vs mutual funds which only trade at the end of the day ) but bring some 'diversity' without the associated research requirements.

    As to any absolute number of stocks, all I will say is that every stock one owns needs to be thoroughly researched before buying in, with continuing research to justify holding versus selling. Some people can handle hundreds, other people can't handle a few.

  16. #14
    God/dess
    Joined
    Sep 2006
    Posts
    7,964
    Thanks
    6,155
    Thanked 10,183 Times in 4,602 Posts

    Default Re: So You Have $500K: Now What??

    I'd probably go with high dividend stocks. I'd also look into purchasing some rental properties. There's probably a lot of good buys out there right now.

  17. #15
    Banned Melonie's Avatar
    Joined
    Jul 2002
    Location
    way south of the border
    Posts
    25,932
    Thanks
    612
    Thanked 10,563 Times in 4,646 Posts
    Blog Entries
    3
    My Mood
    Cynical

    Default Re: So You Have $500K: Now What??

    ^^^ arguably, the trick to successfully purchasing rental properties is two-fold. First, you must hold off until the commercial real estate market bottoms out or you stand to quickly find your mortgage underwater if real estate prices decline further. Second, you must match the characteristics of the rental units to the tastes and budgets of would-be renters who actually have the ability to pay ! Increasingly this means million dollar houses or multi-unit slums ( with rent payments guaranteed by Section 8 gov't money ).

    For the latter, I would recommend buying something in Atlanta ... as there are at least 30,000 future tenants willing to start a near-riot just to get on the Section 8 waiting list. Of course, with tenants like that, the insurance costs for your property may turn out to be higher than the mortgage payment ! Now for the former a beach house in Malibu might be just the ticket. However, since the price of such a house exceeds Fannie/Freddie limits, you'll have to come up with some 'real money' to make such a purchase.

    As to high dividend stocks, they make sense right now given stock share valuations plus a 15% tax rate on qualified dividends. If dividend tax rates take a jump to 28-33-36% after the GWB tax cuts expire on January 1st, as is currently in the pipeline, continuing to hold high dividend stocks may turn into a losing proposition. Unless something appears in the way of Washington enacting some exceptions to the GWB tax cut expirations, I would be seriously considering dumping the high dividend stock shares quickly before other investors figure out the same imminent tax problem on their high dividends and beat you to the 'sell' desk.

Similar Threads

  1. 500K
    By Zinaida in forum Dollar Den
    Replies: 106
    Last Post: 07-27-2013, 08:58 PM
  2. bringing david hicks home cost us $500K
    By jaizaine in forum The Lounge
    Replies: 10
    Last Post: 05-22-2007, 02:31 AM

Bookmarks

Posting Permissions

  • You may not post new threads
  • You may not post replies
  • You may not post attachments
  • You may not edit your posts
  •