Jump to content

Sign in to follow this  
fishnfool

How to invest 100k? what would you do?

Recommended Posts

Someone who has no "IRA,CD's,401K" nothing invested. Now has 100K to invest with a little left for him in savings to live on while in school.

 

What would you do to get this amount working for you??? Its all he has and is nervous on what to do with it, but its not getting any bigger in a normal saving account at .75%...LOL sorry.

 

lets hear some ideas to help him out. :angel:

 

Oh also he doesnt have a fulltime job. has some income. Id rather him invest this so he doesnt touch it since he has nothing for his future

Edited by fishnfool

Share this post


Link to post
Share on other sites

invest in hlburi's First Bank. My interest rate is 50% compounded. Oh, but I'm not backed by the FDIC. :-D

 

sorry, don't have any suggestions other than, wish I had $100K to invest.

Share this post


Link to post
Share on other sites
Someone who has no "IRA,CD's,401K" nothing invested. Now has 100K to invest with a little left for him in savings to live on while in school.

 

What would you do to get this amount working for you??? Its all he has and is nervous on what to do with it, but its not getting any bigger in a normal saving account at .75%...LOL  sorry.

 

  lets hear some ideas to help him out. :grin:

 

I'm assuming he probably inherited this money? Just a guess.........but I would have to say probably the best thing at first for him to do is find a decent paying money market account, put it in there, then read read read and research research research on different investment vehicles. That's assuming he has no consumer debt (which of course I'd pay off first).

Decide how he wants the money to work for him in the next 1, 5, 10 years or beyond. Explore ALL your available options before making an educated decision on what would work best in his particular situation. Alot would also depend on the persons' current age, employment and marital status, etc. There are so many variables it's hard to give a "one size fits all" recommendation.

 

Now if it were me, I'd probably go ahead and pay off the mortgages on a couple rentals...............I can dream can't I? :clapping:

Share this post


Link to post
Share on other sites

This is hard to answer, not knowing much about the person.

 

$4,000 in 2005 Roth IRA

$4,000 in 2006 Roth IRA

$14,000 in 2005 401k

$15,000 in 2006 Roth 401k

 

(that takes care of 37k)

 

Married?

$4,000 in spouse's 2005 Roth IRA

$4,000 in spouse's 2006 Roth IRA

$14,000 in spouse's 2005 401k

$15,000 in spouse's 2006 Roth 401k

 

(that takes care of another 37k, 74 total)

 

Kids?

$2,000 in ESA

make too much to contribute to an ESA? then dump $11k in a 529

 

That takes care of 85k. Go blow the leftover 15k.

 

And you should open an ING savings account for whatever is sitting. (LMK if you need a referral to get the $25 bonus.) ING offers 3.15%.

 

Edited to add: Just saw that you're a starting student which means you're probably not married or have kids. Another good idea is to spends some money on a financial advisor, but don't invest in anything you don't understand. The person that is going to do the best with your money is you - it's your money!

Edited by amszyh

Share this post


Link to post
Share on other sites

Ok,

Hes single, Is in his 30's back in school with a partime job. lives with his g/f in a condo I believe he rents.

I think hell be done school in 2 yrs. Hes in one of my classes for a xray tech .

situation is, his money is in a regular saving sitting making no money. I told him atleast put it in a IMG savings at 3.25% to start.

 

Im not experienced enough in money "as I like to spend" so I dont know what a money market would do for him or a IRA or CD...ok Im dumb

Edited by fishnfool

Share this post


Link to post
Share on other sites

Go to Edward Jones and open an account. I love them (and that's saying a lot; I've dealt with my fair share of bozo "financial advisors"). Put it in a mix of high-quality mutual funds- the split between stocks in bonds depends on when they might need the money and how adventurous they are. If he likes the idea of trading stocks, designate $10,000 as "play money", open a disocunt brokerage account for that much, and let him do his own research. At that age you can recover from financial mistakes and you're not putting the whole nest egg at risk.

 

I should mention that EJ deals in funds with front-end loads. Suze Orman says that's a no-no. The funds I have with EJ have low annual fees and the front-end load is less if you have that much invested. I can't argue with the returns- the stock funds area averaging 10%/year since eraly 2003 and one is averaging 23%/year (CWGIX, now closed to new investors). Sorry, Suze. You're not always right.

Edited by Athena53

Share this post


Link to post
Share on other sites

Ok, 100K

 

Put 30K aside as your emergency fund. Stick it in a high yield (for a bank) savings account. WaMu is doing a "Liquid CD" account where you get to do withdrawls once a week on a min. 5K balance. Paying 3.15%. :P

 

Now, max your Roth IRA at 4K. Good. Now take the rest, park it in the same CD and READ, READ, READ about financials, investing, and money management for at least 3 months. At that point, you'll know what you want to do with it.

 

Personally, I'd take it and invest in some smart real estate deals - but that takes, time, patience, and quite a bit of specialized knowledge :)

Share this post


Link to post
Share on other sites

Personally if I were age 30-39 I would do the following: 80k

 

50% S&P Index funds

20% International Stock fund

15% Small Caps

15% Midcap stock funds.

 

With that high of an amount he could use an asset management account and be able to write checks and have debit card access to the stock brokerage account.

 

Although Edward Jones (a full service brokerage) is a company with a great reputation, self management of funds in low expensed account is more my cup of tea. Not only is the amount of time for investment needed to be known but the amount of investment experience. If no experience, then a full service broker might be the way to go...if somewhat experienced than the likes of Fidelity, Vanguard, or TRowePrice might be in order. I hate fully loaded funds in these days of so many no load mutual funds.

 

 

I like the idea of having around 20k of the 100k in an emergency fund with ING or something better.

 

Clark

 

P.S. He won't be able to put it into 401ks since he did not earn the income from his employer. Since the money has been already taxed, other than a Roth contribution, I would not put try to force it into a retirement account of any kind. Brokerage account is the way to go in this case.

Edited by Clarkfan2

Share this post


Link to post
Share on other sites
Although Edward Jones (a full service brokerage) is a company with a great reputation, self management of funds in low expensed account is more my cup of tea. Not only is the amount of time for investment needed to be known but the amount of investment experience. If no experience, then a full service broker might be the way to go...if somewhat experienced than the likes of Fidelity, Vanguard, or TRowePrice might be in order. I hate fully loaded funds in these days of so many no load mutual funds.

 

I agree with Clarkfan 100% on this; IMHO don't use a full service company unless you have millions.

 

Also I recommended his mixture of funds is ok, but I would have more weighting (at least 30%) in an international fund assuming this is money that is going to be invested for 15-25 years.

Edited by hegemony

Share this post


Link to post
Share on other sites

A 100K to invest since he has no immediate need for the $$. :beee:

 

Here's a simple method:

 

1- Short term: Put the cash in a savings. money market, or CD account. He'll be able to earn $300 a month interest that way. B)

 

2- Medium term (up to 3 years): Suggest using some of the $300 a month to educate himself about investing and the 3 asset classes; Paper (Stocks, bonds, mutual funds, and etc...), Real Estate, and Businesses. Each of the Asset classes have plus's and minus's. None of them are "perfect"! :P

 

3- Long term: Depending on his risk tolerance, family situation, and inclinations there are thousands of ways to invest 100K. Some in "Paper" asets, some in real estate, and owning a small business keeps the nestegg growing and pretty well diversified. B)

 

There is no one "Financial Advisor" that covers all 3 asset classes. Self Education and getting specialized advisors is crucial for successful investing. B)

 

Take care,

Skipper

Share this post


Link to post
Share on other sites

I'm sorry, but this guy needs professional help.

 

This advice of avoiding a company, such as Edward Jones, just because there are fees incurred for the advice, is nothing more than the old saying of being penny wise, pound foolish.

 

Yes, there are unscrupulous Financial Advisors out there that will just take advantage of him, but they are easily avoidable. Get a referral. Based upon this scenario, I'm assuming this is inherited money. Ask the lawyer who handled the estate for a referral. If not, ask your doctor, dentist, accountant, etc.

 

Telling a guy who is an unsophisticated investor to "read" and then invest his $100k, is terrible advice.

Share this post


Link to post
Share on other sites
I'm sorry, but this guy needs professional help. 

 

This advice of avoiding a company, such as Edward Jones, just because there are fees incurred for the advice, is nothing more than the old saying of being penny wise, pound foolish.

 

Yes, there are unscrupulous Financial Advisors out there that will just take advantage of him, but they are easily avoidable.  Get a referral.  Based upon this scenario, I'm assuming this is inherited money.  Ask the lawyer who handled the estate for a referral.  If not, ask your doctor, dentist, accountant, etc.

 

Telling a guy who is an unsophisticated investor to "read" and then invest his $100k, is terrible advice.

a FEE BASED FP may be in order; but not one that makes commissions.

Share this post


Link to post
Share on other sites

Wow great read guys!!!!

 

This money can from an award he recieved. Its been in a regular old bank account for a year and now hes ready to do something with it. I cant help him as I have zero knowledge, thats why I posted while Im fixing my credit on the other Forum...LOL

 

Trust would be a issue for me having a investor,Its all he has his life savings..Im not sure hes ready to get deep into school(for investment) as hes in the same classes Im in at 6 days a week now and a part time job. It would be nice to say put it here and youll be rich but I know it doesnt work that way...

 

I liked the IRA 2004 then 2005 idea but dam now that I see how much would be left over what to do with it all and still make money. I also liked him investing 10k in stocks that would get his feet wet but not loose his shirt also but now thats only say 20k, 80k left...

 

another 30k in a IMG??? for emergency money?? In total he recieved over 100k so he was talking about the additional money over the 100k be oput in a IMG for bills and so forth, since hell be in school for another 2 yrs I believe. The 100k is sitting and needs to be put somewhere.

 

again thanks. anyone else so I can print this out tommorrow night for him to see?

 

By the way he single and lives in a rented condo..and Im sure of this hes not handy enough to buy homes and rehab them , as I was called over to screw in a light bulb last week...lol

Edited by fishnfool

Share this post


Link to post
Share on other sites
I'm sorry, but this guy needs professional help. 

 

This advice of avoiding a company, such as Edward Jones, just because there are fees incurred for the advice, is nothing more than the old saying of being penny wise, pound foolish.

 

Yes, there are unscrupulous Financial Advisors out there that will just take advantage of him, but they are easily avoidable.  Get a referral.  Based upon this scenario, I'm assuming this is inherited money.  Ask the lawyer who handled the estate for a referral.  If not, ask your doctor, dentist, accountant, etc.

 

Telling a guy who is an unsophisticated investor to "read" and then invest his $100k, is terrible advice.

 

NotaBadrisk,

 

Who's opinions are you referring to Hegemony's, mine, or both?

 

Thnks,

Skipper

Share this post


Link to post
Share on other sites
I'm sorry, but this guy needs professional help. 

 

This advice of avoiding a company, such as Edward Jones, just because there are fees incurred for the advice, is nothing more than the old saying of being penny wise, pound foolish.

 

Yes, there are unscrupulous Financial Advisors out there that will just take advantage of him, but they are easily avoidable.  Get a referral.  Based upon this scenario, I'm assuming this is inherited money.  Ask the lawyer who handled the estate for a referral.  If not, ask your doctor, dentist, accountant, etc.

 

Telling a guy who is an unsophisticated investor to "read" and then invest his $100k, is terrible advice.

 

Really??? That's funny, because about 8 or 9 years ago, dh and I considered ourselves "unsophisticated" investors, and spent about 2 years doing alot of reading and research. We had a pile of debt, did own our own home, but with little equity. We now have net assets of over $1M.........WITHOUT the assistance of a "professional" financial advisor.

 

I've never discounted the notion of consulting with a financial professional, but unless you know SOMETHING about what they are advising you on, how do you know if the advice is legit? No one in the world has your best interests at heart more than you, so it's ultimately up to oneself to become "educated" on things that are near and dear.

 

We did have an "advisor" come to our house years ago, someone that was recommended by my husband's then boss (who BTW is now bankrupt). He tried to sell us a bunch of mutual funds with loads, whole-life insurance policies, and a bunch of other investments that were mediocre at best. I had a counter for everything he was pushing, and when I had described our financial "plan" and goals and rattled off MY numbers to him, he offered me a job. :blink:

 

Knowledge is power, and power is a good thing. :)

 

And about asking your doctor or dentist for financial advice...........it's great to get input from lots of people, no doubt.........but just because someone has a high-earning career does not mean they are good WITH money, it often means they are good at MAKING money. Read the book "The Millionaire Next Door", you'll see exactly what I mean.

Share this post


Link to post
Share on other sites

Some more on full-service vs. "financial planners" vs. independent investing:

 

I agree with pinkflamingo- education is key. The scenario she described with the financial planner is exactly the type of thing I would be concerned about with your student. Before he knows it, a good chunk of his money could disappear in first-year commissions on whole life insurance, additional commissions from trading too frequently in investments (not to mention the taxes he'll have to pay if there are gains), and possibly losses on whatever stocks or mutual funds they're trying to get rid of this week. EJ doesn't sell anything wild and woolly so they won't push things that are inappropriate for him.

 

I checked my info on EJ- my biggest holding is CWGIX. Annual fees on Class A funds are .77%. Front-end fees are 5.75% if you invest under $25K. $100K or over, that drops to 3.5%. That applies to your total accumulation of all funds in the family (American Funds). No additional charges if you move between funds. If your investments are less than $100K but then appreciate to more than $100K, your fees go down to 3.5%- retroactively. Right now I'm paying 2%. If you're planning to get out of the funds soon, front-end loads are a bad idea. Over the long run, they're a good deal because of the smaller annual fees.

 

Before EJ, I tried "independent" advice from a discount broker (paid as a % of the assets). I was not happy. When the first picks did badly, the next time I told him I'd like to just hear his recommendations and track how they did. Response: "well, if you're not going to buy them there's no use my telling you my recommendations, is there?" OK, he was toast. I keep $$ in that account (without the financial advice) so I can get the research when my planner at EJ recommends funds, but the big bucks are at EJ. BTW, I also trade stocks in the discount brokerage account- even my EJ rep says their commissions are too high.

 

Your friend needs to make his own decisions, but I wanted to add some more inputs from 30 years of investing, many mistakes, and a "millionaire next door" ending (so far).

Share this post


Link to post
Share on other sites
a FEE BASED FP may be in order; but not one that makes commissions.

What are you basing that on?

I am basing it on my experience of shopping around for a FP this past spring. We "interviewed" 5 different ones. The worse was AMEX which wanted $700 for a plan and they also admitted they make a commission on all of the products they wanted to sell us.

Share this post


Link to post
Share on other sites

First of all, let me apologize for my posts sounding so harsh and rude on this subject.

 

That being said, if a guy is so lost and confused that he is asking a classmate of his to help him, simply saying "do it yourself" is probably not helpful advice. This is a guy who just had $100k fall in his lap. We're talking about real money.

 

I understand why many people choose not to use an investment professional. There are plenty of used car salemen types in the financial services industry who are unqualified and just looking to make a buck at your expense. However, those folks are easy to avoid. Ask people you know for referrals, and go meet/interview a few of them. Go to www.nasdr.com, enter your perspective advisor's info, and you can find his complete diciplinary, legal, and work history. Screen the person to make sure they have the credentials, background, experience, and clean diciplinary history that you want.

 

As far as how they get paid is concerned....That is not nearly as important as how MUCH they get paid, and you get for it.

 

The attitude of "avoid financial advisors and do it on your own" works great for some people, but the people who are able to do that well are in the minority. Like other professionals such as CPAs and attorneys, a good financial advisor is worth every penny you pay.

Share this post


Link to post
Share on other sites

My two cents:

 

All mutual funds should be no load and have a good five track record

 

20% International small cap fund

 

20% domestic small cap fund

 

20% domestic value growth

 

10% bond fund

 

10% discount brokerage

 

12% 1 year laddered CD's

 

8% ING Direct

 

Before every one get upset here is my logic: The top two funds are high risk Because in my opinion there is nothing worse than reaching retirement age and finding out that for 40 or 50 years you where to cautious and didn't even keep up with inflation. At 65 or 70 it is to late, you have lost 40 years. Take the risk now before you are to old. Since your friend has nothing for retirement and he is young he should go for higher yields. He should also get in the habit of putting something away from every paycheck. Just my opinion.

Edited by s1100

Share this post


Link to post
Share on other sites

I agree with a mix that includes aggressive investments, as long as he understands it will sometimes go down and can live with that. Even at age 52, I've got 60% stock funds although most are blue-chip and dividend-paying funds. Only a small % os really "aggressive".

 

I'd look at track records longer than 5 years if available. It's good to see how the fund performed before, during and after the tech boom. I look for ones that maybe didn't rise as much during the tech boom because they didn't go hog-wild on dot-coms, but also didn't sink like a stone when the others crashed.

Share this post


Link to post
Share on other sites

maybe put it in a secured mutual fund of some sort... or buy a few secured bonds of 10k each and earn some interest $$

Share this post


Link to post
Share on other sites
:rolleyes::dntknw: I would take $100k and put $90k in IngDirect with a 3.15% return isn't bad. I would do some research in the local area and try to purchase a 2-4 unit apartment for under $80k for little to no money down. Collect the rent and watch your $4k investment turn into $110k in 2yrs. But hey maybe I watch too many infocommericals at night. :rofl: that's just what I would do with that type of money. They don't teach us this type of money mgt in prep school or college!

Share this post


Link to post
Share on other sites
I would do some research in the local area and try to purchase a 2-4 unit apartment for under $80k for little to no money down.  Collect the rent and watch your $4k investment turn into $110k in 2yrs. 

I think you really have to understand what goes into being a landlord and be willing to do it. That includes maintenance, upkeep and having the cash flow to pay the mortgage if you can't rent the place or the tenant stops paying. If this guy stuck $100K into a savings account, he has either no time or no inclination to do anything that involved.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Sign in to follow this  




About Us

Since 2003, creditboards.com has helped thousands of people repair their credit, force abusive collection agents to follow the law, ensure proper reporting by credit reporting agencies, and provided financial education to help avoid the pitfalls that can lead to negative tradelines.
×
×
  • Create New...

Important Information

Guidelines