Best investment while we travel

[sailingfarmer]

If not real estate... just buy an S&P500 fund, Spider, etc. Most managers and advisors can't match the results of the S&P500... in fact a study was done not long ago and @80% plus of all prime money mangers did not best the returns of the S&P500 for a rolling 10 years.

[Crazcarl]

I will be doing this in the next 3.5 years and will plan on having about the same amount. I cannot tell you what to do, but tell you what I am planning on doing and let you make the choice if it sounds good to you as well.

Estimate out one year of expenses and keep that in a Money Market account or online savings (should generate 1% ish)

Then take about 12-18 months and place it into the highest % CD you can get.

Take the rest and park it in a mixture of Funds, preferably Vanguard. Try something like 50% Total US, 20% International, 10% REIT, 20% Bonds.

You have the cash to last you a year. The CD is there in case there happens to be another recession and you wont have to remove your money from the market when it is down low. Almost all recessions in the past have not lasted more than 12-18 months. The funds you can choose at Vanguard should have fees below .5% down to .05%.

Good luck and Enjoy!

[barnakiel]

Read most recent news on UK inflation forecast for 2017 (to quadruple) to understand how easily any plan based on financial instruments (esp. bonds and bond related instruments).

I mentioned this somewhere up the thread. US inflation indexed bonds at negative yields already (you are losing money). Non-indexed at mickey mouse positive yields (to be wiped out as soon as inflation picks up).

So plan accordingly. See the consequences of artificially low interest rates induced by money printing in the US and the EU. Act (invest, save, keep) accordingly.

Love,
b.

[Training Wheels]

Originally Posted by Crazcarl

I will be doing this in the next 3.5 years and will plan on having about the same amount. I cannot tell you what to do, but tell you what I am planning on doing and let you make the choice if it sounds good to you as well.



Estimate out one year of expenses and keep that in a Money Market account or online savings (should generate 1% ish)



Then take about 12-18 months and place it into the highest % CD you can get.



Take the rest and park it in a mixture of Funds, preferably Vanguard. Try something like 50% Total US, 20% International, 10% REIT, 20% Bonds.



You have the cash to last you a year. The CD is there in case there happens to be another recession and you wont have to remove your money from the market when it is down low. Almost all recessions in the past have not lasted more than 12-18 months. The funds you can choose at Vanguard should have fees below .5% down to .05%.



Good luck and Enjoy!

Great advice. Love my Vanguard!

[denverd0n]

Originally Posted by Crazcarl

The CD is there in case there happens to be another recession and you wont have to remove your money from the market when it is down low. Almost all recessions in the past have not lasted more than 12-18 months.

The recession itself may only last 12-18 months, but the market can take a lot longer to rebound.

The recession of 2008 is a perfect example. Yes, the recession itself lasted less than 2 years. Look at the S&P 500 index, though, and you will see that after the precipitous drop in March of 2008, it took four years for it to get back up to that same level again.

Hence, even if you had two years worth of expenses in a CD, you would still have had to remove money from your other investments when the market was "down low."

What you have to do is find an appropriate mix of different types of investments that fit your tolerance for risk. This is called "asset allocation," and the subject of asset allocation is way too involved for a forum posting. Nonetheless, if you want to live off of your investments, asset allocation is something that you absolutely must understand.

[Sam8989]

With bitcoin / cryptocurrencies becoming so popular and massively adopted, it would be considered wise to go ahead and allocate .3% of ones portfolio to crypto since they are not represented in the total market index.

[valhalla360]

Originally Posted by denverd0n

The recession itself may only last 12-18 months, but the market can take a lot longer to rebound.

The recession of 2008 is a perfect example. Yes, the recession itself lasted less than 2 years. Look at the S&P 500 index, though, and you will see that after the precipitous drop in March of 2008, it took four years for it to get back up to that same level again.

Hence, even if you had two years worth of expenses in a CD, you would still have had to remove money from your other investments when the market was "down low."

2008 was an extreme event to start with but even so.

While I lean toward 3-5yr cash equivalent....2yr of cash equivalent is still useful.
- March 2008 around 1400
- February 2009 around 700
- March 2010 around 1200

So even though not fully recovered, I would much rather have to start pulling money out at 1200 vs 700.

[fcftampa]

I'm increasingly worried about the prevalence of index fund investing and dividend seeking strategies.
In case there's a downturn, index funds dumping will punish the good and the bad. Think of dumping Enron, MSFT and Berkshire all at the same time. Similarly with masses blindly seeking >4% dividend stock, suddenly realizing how much they've overpaid.
I think is time to place tight stops on index funds and divest calmly off of them into companies you trust.
and (quietly whispering) "buy some bitcoin"

[Shrew]

Originally Posted by Sam8989

With bitcoin / cryptocurrencies becoming so popular and massively adopted, it would be considered wise to go ahead and allocate .3% of ones portfolio to crypto since they are not represented in the total market index.

This is a three year old post, and the last 3 pages were arguing over the merits of crypto currency.

Please consider reading the entire thread before commenting.

[denverd0n]

Originally Posted by fcftampa

In case there's a downturn, index funds dumping will punish the good and the bad.

No, in case there's a downturn, those of us who have our assets properly allocated for our level of risk tolerance, will experience yet another glorious buying opportunity. Only those who are dumb enough to have all of their money in stocks, when they do not have the stomach for stock market fluctuations, will be punished.

[fcftampa]

Originally Posted by denverd0n

No, in case there's a downturn, those of us who have our assets properly allocated for our level of risk tolerance, will experience yet another glorious buying opportunity. Only those who are dumb enough to have all of their money in stocks, when they do not have the stomach for stock market fluctuations, will be punished.

No?

You're just confirming what I'm fearing by saying

those of us who have assets properly allocated.

IOW, either you'll have cash or will cashout out of an investment -that won't get hit as hard or a have a properly hedged asset- in order to buy an oversold asset. How do assets get oversold if not by ppl capitulating en masse? Which is exactly what I'm arguing by being leary of index funds at this point.
maybe for allocation you're referring to risk management.

[fcftampa]

the first mention of btc in the thread was
6 oct 2016 BTCUSD 610
17 oct 2019 BTCUSD 8055

The suggested investment was 1% and the gain up to date 13X.
I'd say an apology is in order to the fellow cruiser @pickpaul.

[denverd0n]

Originally Posted by fcftampa

...you'll have cash or will cashout out of an investment...

No. You do not understand what I mean by asset allocation. Do a google search for "asset allocation" and you will find all the information that you need.


If you understand asset allocation, and have the right distribution for your level of risk tolerance, then a downturn does not scare you.


The biggest problem for most people is that when the market is going up they convince themselves that they have a high tolerance for risk. But when the market starts to drop, all that tolerance suddenly disappears and they panic. The result is that they buy high and sell low, instead of the opposite, which is the objective.

[SmoothGhoster]

Put it in five different fdic insured interest paying savings accounts. Wait for the 20% pullback heading into elections and go all in S&P 500.

[belizesailor]

Its ultimately up to your comfort level and objectives. If you like annuties then obviously you prefer low risk, income production, and low hassle. Some other options to consider that tick most of these boxes, maybe as part of a mix:

Fed Tax Exempt Muni Bonds. High grade only (in the "A" categories of the rating agencies). Some carry P&I insurance. They are more scarce these days and yeilds are down around 4%, but that is Fed tax exempt (maybe State exempt too depending on State and your residency).

REITs. You potentially get growth & income in the Real Estate sector without owning real estate directly.

Private Equity Real Estate. Similar to REITs. There are some with great track records.

What kind of investments are you selling? There may be better options than just cashing them out.