5 million dollar windfall

[Fearsome Forehand]

Regarding real estate, it really depends on what and where you buy and for how much.

I think if one is very selective, you can find some good deals.

Or, he could just live in a deluxe trailer or in a van down by the river.

[LuckyR]

Originally Posted by acura9927

I got burned in the 2000 Nasdaq crash and have not recovered. So thats why if I have a windfall I would say screw it to the stock market and not tempt fate a 2nd time. I have modest taste- a nice motorcycle, good health and travel once a year to a far away place is all I require if I hit it rich.

The 2000-2001 NASDAQ crash was a perfect example of a spike. In this case the spike was so narrow (brief in time) that only those who tried to "time" the market are likely negative at this point. Perfect evidence for dollar cost averaging over timing strategies. Or to put it another way, if you erase the 24 months or so of the spike, the NASDAQ has a steady climb in value, since 1978, a perfect place to put money.

[jmnk]

Originally Posted by diredesire

Sure, the market is largely arbitrary, but historical returns are ~8% over time following only index funds. I'm only saying that it is going to give you bigger returns in the long run as compared to a traditional savings/money market account. I acknowledged it's higher risk (due to above). "It is what it is," and there's nothing you or I can do about it. Doesn't mean you shouldn't invest. If you're risk adverse there's still better options than holding money (strictly) liquid or put it in a bank. With current interest rates, you're losing (real) money on an YOY basis. IMHO it'd actually be pretty unwise to toss the money into a savings account and call it good.

yes indeed, it is what it is. But I seriously wonder if we are not nearing the time when people do realize what the stock market is and just stop buying - which will be just the end of stock investing as we know it. It already appears that there's fewer new investors coming (just like in ponzi schema when you run out of new gullible folks).

In fact when you see index return from like 1999 till now (~13 years) you will see that there's virtually no return over this 13 year period whatsoever. Not 8% yearly, not 5% yearly , nothing. (i mean assuming you invested in Jul 1999 and just hold till now).

When you say "there's still better options than holding money" - what are those? I'm seriously asking since I do agree that putting it in the bank is indeed a losing proposition due to inflation.

[diredesire]

Originally Posted by jmnk

yes indeed, it is what it is. But I seriously wonder if we are not nearing the time when people do realize what the stock market is and just stop buying - which will be just the end of stock investing as we know it. It already appears that there's fewer new investors coming (just like in ponzi schema when you run out of new gullible folks).

In fact when you see index return from like 1999 till now (~13 years) you will see that there's virtually no return over this 13 year period whatsoever. Not 8% yearly, not 5% yearly , nothing. (i mean assuming you invested in Jul 1999 and just hold till now).

When you say "there's still better options than holding money" - what are those? I'm seriously asking since I do agree that putting it in the bank is indeed a losing proposition due to inflation.

It really depends on how old you are, and how risk adverse you are. Holding cash and/or savings is ~1% now, almost any investing scheme is better! If we're avoiding discrete stock trading, most funds or bonds will be better. Not to mention tax advantaged accounts, but that still falls under the same large umbrella. If you're avoiding trading/attempting to game the system, then your options are relatively limited (real estate, microloans, angel investing, possibly fine art...?)

[ten11]

Buy and manage a tennis club. Play tennis, do some stringing, teach the kids for free so they will start play tennis. Later on they will join club, so can make more money.
make money while having fun.

[GRANITECHIEF]

^^ What he said. Also buy Gold (physical), McD's, Coke, Pfizer, a few REIT's, and some tech mutual funds.

Also MNST and AAPL have pulled back a bit lately. Might be good entry points.

[mikeler]

What do you guys think of buying index funds versus trying to pick individual winners in the stock market? I know there are fees with index funs but it seems like a much less risky way to invest.

[ATP100]

Put most of it in a Spyder/Spider Cd, that way all funds are FDIC insured.
Don't make any other decisions for at least 1 year.

[diredesire]

Originally Posted by mikeler

What do you guys think of buying index funds versus trying to pick individual winners in the stock market? I know there are fees with index funs but it seems like a much less risky way to invest.

Index funds can be extremely low fee as compared to many managed funds. Individual winners (at least in my eyes) is more of a short term investment. Making any long term (significant) investment goes directly against diversifying your portfolio (putting all your eggs in a basket).

Realistically, if you're making bets on individual stocks, you're going to be buying/selling on a short term basis. There's going to be taxes on this income vs. being able to hold a stock for >1 year (http://taxes.about.com/od/capitalgai...GainsTax_2.htm). You're going to get penalized, just in a different way.

Index funds IMHO are completely fine if you're looking to hold long term, but if I were going very long term, I'd just buy into a target/retirement date fund. The fees (depending on which/where you invest) can be low, and the fund is managed for you. You don't have to worry about diversification/reallocation as you get older, and the fund starts out more aggressive, and gradually moves towards more stable investments nearer the end/goal date. For anyone overwhelmed with the sheer amounts of options, this is an easy one to just dump money into and forget until it's time to take it out. Kind of out of the scope of the initial question, though.

[Maui19]

I would put the money into a managed DSIP. Wells Fargo has an excellent one.