What to do with $ 20000

[TheOptimist]

Alright guys and girls - I got around $ 20000 cash and I don't really know what to do with it - in what to invest.

- I have a bit of money in stocks and funds but I don't really think it's that interesting for me
- I don't need that money in the next few years and I want to do something with it that gives me an avrage interest rate or even more AND where I can do something good for others (eg jobs for others)

That's why I came here - cause I know you have VERY good ideas on how to invest in something amazing.

So I'm wating for your Ideas - Comments - ...

Thanks very much

cheers tom


PS: I live in EUROPE - If that matters

[escapeplan]

Try metals, although I feel gold prices can't go on rising forever, but other metals are a good bet.

Failing that, it's hard to see how you could go wrong investing in banking shares right now, particuarly certain ones under government ownership.

[Andrew Gubb]

I'm going to start up a raw restaurant and healing centre and I need 50,000-100,000 to start. If you'd like to invest in me we could arrange a good interest rate - however I would be starting within a few years unless I can find other investors.

[Mounds]

My idea of investing into stocks is visiting my banker and asking him what makes money. "Banks" is his usual answer so that's where I put my money.

[Curtis2011]

Originally Posted by TheOptimist

Alright guys and girls - I got around $ 20000 cash and I don't really know what to do with it - in what to invest.

- I have a bit of money in stocks and funds but I don't really think it's that interesting for me
- I don't need that money in the next few years and I want to do something with it that gives me an avrage interest rate or even more AND where I can do something good for others (eg jobs for others)

That's why I came here - cause I know you have VERY good ideas on how to invest in something amazing.

So I'm wating for your Ideas - Comments - ...

Thanks very much

cheers tom


PS: I live in EUROPE - If that matters

My finance teacher is all about the stock market, mutual funds, bonds, etc etc.

She tells us young students that a safe bet is to invest in an S&P 500 mutual fund. Basically one of these funds will diversify your investment so that you gain about the average gain of the stock market, which over the last 20 years or so has been something like 11% per year on average, not every year of course.

So, if you want something more risky but with higher potential payout, go for stocks. If you want something safer, go with mutual funds.

I know you said you don't like the stock market but honestly, that the probably the only place you will find that can get you better returns than a simple ~1-2% interest from a bank savings account.

[cacheborn]

Originally Posted by Curtis2011

So, if you want something more risky but with higher potential payout, go for stocks. If you want something safer, go with mutual funds.

Synchronicity. For the last week or so, I have been thinking about mutual funds and getting constant references to it.

[James81]

I think you should put it into savings until you decide what you want to do with it.

The most common financial advice I've seen about windfalls is to prepare for them before they happen (what you would do if you got a windfall of money), so that the decision isn't an emotional one or one which lacks direction when you *do* get it.

X% goes this
Y% goes to that
Z% goes to ___
Etc.

Since you don't really have an idea of that, I think the best thing you could do is to sit on it for a while until the initial thrust of receiving it wears off and you can focus yourself on deciding what exactly you want to do with it.

[Mounds]

I revoke my previous advice and suggest you send a $20,000 check to me. I'll invest it in the lottery and we'll split the winnings.

[Andrew Brunelle]

I can't say I am a fan of investing money in stocks, because the stock market has created corporations that have more loyalty to the stock holders than the employees, and act as such. And, it is very risky to place your money in any market. And I don't like the idea of making money from your money. It provides no value. Invest your money in providing value, so that you earn more money in return.

[LostMyMap]

Originally Posted by Mounds

I revoke my previous advice and suggest you send a $20,000 check to me. I'll invest it in the lottery and we'll split the winnings.

I was going to send the OP a Paypal link to deposit it in my account

Seriously, I realized that most anything I would say regarding investments would be US oriented, and I really don't know everything you have available.

That would certainly be a nice chunk to invest in starting your own business (or partnering with Andrew).

If it was a year ago, I would have said to buy gold. I don't know how much higher it would go now.

Some people collect art, both for enjoyment and as an investment.

I don't think you can go wrong in the long run with real estate, providing you are astute and find the right things to buy right now.

With the parameters you describe, you are looking for something that has above average return, but probably not huge risk. That ends up being the primary things to look at. Risk vs reward. The higher the reward potential, the higher the risk. You have to decide where on the continuum to jump in. Also, with that much money, you don't have to put it all in one thing.

[escapeplan]

Originally Posted by James81

I think you should put it into savings until you decide what you want to do with it.

The most common financial advice I've seen about windfalls is to prepare for them before they happen (what you would do if you got a windfall of money), so that the decision isn't an emotional one or one which lacks direction when you *do* get it.

X% goes this
Y% goes to that
Z% goes to ___
Etc.

Since you don't really have an idea of that, I think the best thing you could do is to sit on it for a while until the initial thrust of receiving it wears off and you can focus yourself on deciding what exactly you want to do with it.

With all due respect James this is bad advice. Even if savings keep up with inflation (unlikely), all you have done is put your investment potential on the back burner. Right now share prices are still low yet there are signs of economic improvement. Never a better time to invest in shares. Sitting on cash is a fast way to lose spending power in all but a very few circumstances.

If cash savings are a consideration, then put between 25-50% in this and the rest in "real" investments. Metals, shares with good dividends and some bonds are all hot bets at the moment.

If you know your stuff, use this cash to become a business angel- but make sure you really do know your stuff first!

[James81]

Originally Posted by escapeplan

With all due respect James this is bad advice. Even if savings keep up with inflation (unlikely), all you have done is put your investment potential on the back burner. Right now share prices are still low yet there are signs of economic improvement. Never a better time to invest in shares. Sitting on cash is a fast way to lose spending power in all but a very few circumstances.

What's that saying? Bulls make money. Bears make money. But pigs get slaughtered.

The best way I know of to lose a bunch of money in investments is to jump into the fire without knowing your investment fully, simply on the advice of others.

The beautiful thing about the market is that there are *always* opportunities to make money in it. Jumping into it without having a plan of what you are going to do with it, and knowing what you're going to invest in, is, IMO, crappy financial planning. Even if you do so at the best laid advice of another person.

Emotional decisions, decisions that you feel you *have* to jump on RIGHT NOW, decisions that you feel you are losing investment potential if you don't do it, are never sound investment decisions.

And let's get real here. I'm not advising to sit on the money for a year or more. I'm advising sitting it in a safe place for a few weeks to a month perhaps until you get a good idea on the direction you want to go with it.

[escapeplan]

Originally Posted by James81

What's that saying? Bulls make money. Bears make money. But pigs get slaughtered.

The best way I know of to lose a bunch of money in investments is to jump into the fire without knowing your investment fully, simply on the advice of others.

The beautiful thing about the market is that there are *always* opportunities to make money in it. Jumping into it without having a plan of what you are going to do with it, and knowing what you're going to invest in, is, IMO, crappy financial planning. Even if you do so at the best laid advice of another person.

Emotional decisions, decisions that you feel you *have* to jump on RIGHT NOW, decisions that you feel you are losing investment potential if you don't do it, are never sound investment decisions.

And let's get real here. I'm not advising to sit on the money for a year or more. I'm advising sitting it in a safe place for a few weeks to a month perhaps until you get a good idea on the direction you want to go with it.

Fair enough, it's just that with 20k of savings, I figured the cash had sat around long enough!

[James81]

Originally Posted by escapeplan

Fair enough, it's just that with 20k of savings, I figured the cash had sat around long enough!

Hmmm, I got the impression that this was a windfall of money and not savings.

Perhaps I was wrong in assuming that.

[VinceG]

Originally Posted by James81

I think you should put it into savings until you decide what you want to do with it.

The most common financial advice I've seen about windfalls is to prepare for them before they happen (what you would do if you got a windfall of money), so that the decision isn't an emotional one or one which lacks direction when you *do* get it.

X% goes this
Y% goes to that
Z% goes to ___
Etc.

Since you don't really have an idea of that, I think the best thing you could do is to sit on it for a while until the initial thrust of receiving it wears off and you can focus yourself on deciding what exactly you want to do with it.

^^ This.

[Kurtzilla]

TheOptimist, you stated that you would like to do something good for others with the money. Take a look at this site, you can actually loan money to people to help start their own business. The money you loan gets repaid to you as the business grows. It's not a bad way to help someone out, feel good about yourself and help change the world. Check out the link below. Kiva is a Great orginization.

Kiva - Loans that change lives

[spacecadetglow]

Well, I do need a new electric guitar... and drums... and Rhodes electric piano...

If I make it big someday, you can, like, totally get front row tickets to my show. Maybe even some portion of the royalties.

[Mounds]

Originally Posted by spacecadetglow

If I make it big someday, you can, like, totally get front row tickets to my show. Maybe even some portion of the royalties.

Aren't the two front rows reserved for Stevepavlina.com forum members? I mean, $20,000 should at least get you back stage

[ssandra]

If you have the opportunity, there is nothing better to invest in than yourself.

Go traveling for a while. Go backpacking. Go do whatever you wanted to do! Go to a Landmark forum or go do an NLP course (or both ).

Of course you could save that money. Maybe even make more money. But wouldn't it be so much more interesting to actually go and DO something with that money?

[TheOptimist]

Thanks very much for your advice so far!

Alright, my situation is as follows: I'm 19 years old and didn't need much money cause I lived with my parents and still do.

Here in Austria there's a commpulsury service every young man has to do for 9 months - I'm kind of a secretery - so I don't have to do that much - pretty much nothing in the afternoon - so I have plenty of spare time.

I have basic knowlage of business cause I went to a business academy.

Now to your suggestions:

Andrew: I love the idea of a raw-food restaurant and I think I'd invest in you if your business plan is right and so on - but if it's a few years from now - I'll probably invest with the money I made till then - so don't hesitate to contact me when the time has come

The Stock idea: I really thought about it and I think it could be a great idea to get in with a bit of the money - cause it would be a great "hobby" for me during the "boring" hours at work. I think I'd mainly go for commoditys + start ups

I also love the KIVA-idea - but I don't really know what amount of money finally arrives - so I am a bit sceptic

The idea of travelling sounds great but as said - I still have to work for the state for 8 months.
The idea of learning about NLP, psychology and that stuff is in my head for a few years now - so that would be great to - and I could do a lot of it during work. =)


So - thanks again and I'm wating for even more suggestions from you you are great!

Hope this insight helps you a bit in understanding my situation

Thanks everyone

cheers tom

[Andrew Gubb]

Andrew: I love the idea of a raw-food restaurant and I think I'd invest in you if your business plan is right and so on - but if it's a few years from now - I'll probably invest with the money I made till then - so don't hesitate to contact me when the time has come

Awesome, I'll put you on my list of potential collaborators

[SatvikBeri]

Originally Posted by LostMyMap

I was going to send the OP a Paypal link to deposit it in my account

Seriously, I realized that most anything I would say regarding investments would be US oriented, and I really don't know everything you have available.

That would certainly be a nice chunk to invest in starting your own business (or partnering with Andrew).

If it was a year ago, I would have said to buy gold. I don't know how much higher it would go now.

Some people collect art, both for enjoyment and as an investment.

I don't think you can go wrong in the long run with real estate, providing you are astute and find the right things to buy right now.

With the parameters you describe, you are looking for something that has above average return, but probably not huge risk. That ends up being the primary things to look at. Risk vs reward. The higher the reward potential, the higher the risk. You have to decide where on the continuum to jump in. Also, with that much money, you don't have to put it all in one thing.

Real estate as an investment or for owning+renting?

Historically real estate prices have increased at about the same rate as inflation.

[LostMyMap]

Originally Posted by SatvikBeri

Real estate as an investment or for owning+renting?

Historically real estate prices have increased at about the same rate as inflation.

I think we've had this conversation before. My view is somewhat biased because in San Diego we've had some years where prices have shot up like rockets.

To answer the question, I would say either. Prices are depressed in many areas right now and interest rates are low, so this is a huge buyer's market. For income properties, you have to find the right area where rents are good and population is growing. For investments, it's all about knowing where the growth is happening.

There are no lack of people in the world that are rich because of real estate. On investor pointed out that there's always more people in this country, and they will always need a place to live.

[SatvikBeri]

Originally Posted by LostMyMap

I think we've had this conversation before. My view is somewhat biased because in San Diego we've had some years where prices have shot up like rockets.

To answer the question, I would say either. Prices are depressed in many areas right now and interest rates are low, so this is a huge buyer's market. For income properties, you have to find the right area where rents are good and population is growing. For investments, it's all about knowing where the growth is happening.

There are no lack of people in the world that are rich because of real estate. On investor pointed out that there's always more people in this country, and they will always need a place to live.

You're right, we had this conversation before. I'll agree to disagree with you then

TheOptimist, maybe you should do some exploration and try to figure out what your larger goals in life are-then you can decide how to use your money in a way that effectively matches those goals.

[SnerpGoodWord]

Originally Posted by Curtis2011

She tells us young students that a safe bet is to invest in an S&P 500 mutual fund. Basically one of these funds will diversify your investment so that you gain about the average gain of the stock market, which over the last 20 years or so has been something like 11% per year on average, not every year of course.

Uh, you finance teacher is way off. Average compound inflation adjusted annual return for the S&P 500 from 1990 to today is less than 4% per year, and all of the good years were in the 90's. In the 2000's it's negative.

[TheOptimist]

Oh yeah -real estate - I totally LOVE that topic and will definitely step into that business (owning+rent) some day but isn't 20000 not nearly enough for buying houses or appartments?

[Zach M]

Don't forget you can invest in education too. You can buy a lot of business and other books for under $20,000. Since you can't get everything from books, you can also take out some successful people to lunch and find out what they know.

[Curtis2011]

Originally Posted by SnerpGoodWord

Uh, you finance teacher is way off. Average compound inflation adjusted annual return for the S&P 500 from 1990 to today is less than 4% per year, and all of the good years were in the 90's. In the 2000's it's negative.

I think she meant not adjusted for inflation, not sure though. Either way, average stock market return is almost always higher than your average savings account return. Many savings accounts pay less than 1% per year. That definitely won't keep up with inflation.

And right now is a great time to buy stocks, if you are smart about it obviously, because the market just crashed in the last 2 years and many companies are now starting to recover. So buy your stocks/mutual funds now!!!! (or do whatever, I don't really care)

[SnerpGoodWord]

Originally Posted by Curtis2011

I think she meant not adjusted for inflation, not sure though. Either way, average stock market return is almost always higher than your average savings account return. Many savings accounts pay less than 1% per year. That definitely won't keep up with inflation.

Even not adjusted for inflation it's well under 10%.

I will gladly jump on the bandwagon bashing savings accounts (and CDs) though. They're just a gift to your bank.

And right now is a great time to buy stocks, if you are smart about it obviously, because the market just crashed in the last 2 years and many companies are now starting to recover. So buy your stocks/mutual funds now!!!! (or do whatever, I don't really care)

I don't think it's a GREAT time. Early 2009 was a GREAT time. This is more like an acceptable to slightly poor time. If you buy into the Schiller PE theory (and I more or less do) then this market is slightly on the overvalued side.

[Showtime]

Originally Posted by Mounds

I revoke my previous advice and suggest you send a $20,000 check to me. I'll invest it in the lottery and we'll split the winnings.

>invest
>lottery

lol