Originally Posted by sailingfarmer
The problem with stocks is the market is close to an all time high... the reason the stock market is so high is because of a lack of options. Bonds pay diddly and CD's worse. Stocks are very risky if the FED ever raises interest rates and takes the dollar and economy off life support. Say you buy a stock today and stocks sell off 50%.... suppose because of the week economy as a result of a crash generates less dividends or none... if you try to sell your stock you not only get less or no income but you can lose 50% of the value of your investment. That is why stocks are considered historically riskier than bonds or fixed income.
Yes. If you're a lucky dog and have a big pile of investment money in the stock market, now might be the time to get some out. ATHs are the best time to sell. It might continue to go up, most likely will over time. But the odds of it dropping are ever increasing.
For what it's worth, I would if I were lucky enough to be in your shoes, take some of that money and buy a solid property ideally in somewhere where property values are not at ATHs, and space is limited, and the trends that drive growth are likely to continue. That lesson comes from here, the properties that are in shortest supply have gone up the most in value. Flat land in the middle of nowhere with nothing around it has not. Water/Near waterfront on the other hand... at least if it's not right at sea level
I would then find a reputable AirBNB management company and hand it over to them well insured for the purpose. This reduces a lot of risks over long term tenants, as the tenants have a limited time to cause damage, the company has a vested interest in protecting your property and will have someone on scene often for changeovers.
This has 5 benefits to my mind and I WISH I could do this.
1. You have a backup plan. Cruising doesn't work
out? You get too old? You get tired of it? You get hurt or sick? You have somewhere to go on land, and you know what it costs already. Property going up or down doesn't really affect this. Many people including me are now priced out of the market. I wish I'd done this at the first opportunity when I was young. I could have but got steered away by family
. Live and learn.
2. Some net profit, potentially a lot of it.
3. The property isn't vacant.
4. There are many benefits to owning property, whether it is for borrowing money, insuring a boat
, or as simple as the many marinas
that do not want people who's home address is their boat
to come and stay.
5. You yourself can use it as a respite from cruising, simply by blocking out the time in the schedule as not for rental. This can save BIG dollars when not if you need to refit/repair the boat, or want a break from life at sea.
Side note: I got in bitcoin early. Like .75c/coin early. Invested a thousand bucks because I had it into building mining rigs. Handed them over to a friend to run because he was better at software
than I. We accumulated around 100 coins. I was clear that I wanted to hold onto them, anything that gets progressively harder, is unlikely to go down in value much. He then without asking spent them on something stupid, and decided the mining rigs were too much hassle...
Hindsight is 20/20. If I end up wealthy, which is bloody unlikely in this life, I will put a small % into the top 3 coins, a third each. Mostly as a hedge, crypto often does things opposite to the market, it gives me a small reserve of money in times of need if everything else goes to hell as has happened twice in my life now. Would I invest in it to make money? At an ATH? No. I think the same thoughts I had at the start still apply, if it carries on as I think it will, I will probably be looking back in anger at me now the same way I look back in anger at my friend then. But it might also do the opposite.
I would likely go:
A property I can buy outright, that I don't buy outright but finance at a locked in rate that is so cheap
these days and let the AirBNB pay for it, whatever doesn't go to financing
payments/a small kitty for repairs
goes into the investment/cruising accounts at a 50/50 split. Leaving sufficient cash out of the market at the bank to pay for 10 years of payments no matter what the market does. I have been broken and lost
everything before. Sometimes it takes many years to climb back to level ground again.
50% of the remaining balance in high yield dividend stocks with good long term reputations and consistent performance, or ETFs or managed by someone else. 10% into crypto, 10% into actual cash money, mix of prepaid credit cards, bills, precious metals. 10% into cash money stored in a safety
deposit box at a different bank from my other money, in the middle of nowhere that doesn't have a high disaster rate(earthquakes/fires/weather etc). 10% into a bank in another major world power(EU/Aus/NZ). 10% to invest in higher risk/high return stocks.
I thought of that often when I was homeless after losing everything recently.
I have often believed that this was a relatively good starting point to thinking about staying secure in an insecure time in the world.