How to invest $900K in 2018

Do your due diligence and determine what is a good property to acquire and rent, preferably small ones in good areas, multiple ones, there is no better passive income. Make a solid relationship with a good and responsible handyman for repairs and maintenance, then off you go, passive income plus capital appreciation over the years.
 
clacy said:
You're arguing for the sake of arguing. Will the portfolio I outlined out perform 100% QQQ? Probably not. But will the OP freak out and sell at the exact wrong time when there is an inevitable 30-40% decline in QQQ? I can't answer that, only he can.

Short term treasuries carry almost zero duration risk and are highly liquid, so essentially a cash substitute with some small interest to contribute to the overall portfolio. And when I say STT and LTT, I mean use ETF's or funds, so you can re-balance easily.

As for LTT you may lose value if rates go up, but you will also likely have Stocks and doing well during that time as an off-set. If QQQ does plunge by 20+%, LTT will increase and offset some of your loss.

Basically what you're saying is buy and hold 100% Nasdaq.

That will very likely outperform a balanced portfolio, but with bigger swings. If you buy at a peak, you can be underwater for years however. Balancing your assets spreads risk.

You can also get an additional 1-2%+ just from re-balancing.

35% TQQQ / 35% EDV / 10% GLD / 20% SHY as outperformed 100% QQQ by 4.5%/yr with the exact same DD and volatility since 2011. That gives you 105% Nasdaq exposure + STT, zero coupon treasuries and gold exposure.

It all depends on what the OP's goals are. He simply hasn't given enough information to say for sure.
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OP better let us know soon before we go too far off track... but OP may not know the goal himself!

35% TQQQ / 35% EDV / 10% GLD / 20% SHY... several issues with this.

- the 4.5% is a moot point... why not go 100% TQQQ you outperform by several miles... this is just data fitting hind sight.

- the TQQQ has issues... not so much in the past few years on a smooth rising market.. sentiment was overwhelmingly bearish among retail in 2016-2017, this fueled the smooth rise, because there was not much dumb money to shake off the tree. in the foreseeable future volatility will be higher (I won't go to the details of the why here)... and in a choppy market TQQQ loses.

- GLD... this is a problem I already stated. exposure is a bad thing.

- the bonds... already explained why they are mis-priced against equities... you could argue that the market is efficient enough to keep bonds vs equities in relative fair valuation... but is it really efficient? endowments, pension funds, private clients... these people seek help from the financial advisors, whose first priority is not to get fired... exactly why bonds are pushed to insane levels.

- diversification basically means the investor/advisor has no clue... which is not a very negative term... most people are clueless most of the time... but when all the puzzle pieces fit so well together and the market is yelling at you to buy stocks... you gotta listen.

but of course all this wont matter... it's just some noise on the internet lol... at the end of the day OP is likely to listen to a financial advisor lol.... the advisor wont' get fired, and OP will be yelled at by the wife.... after all it's a balanced portfolio right?

so after 10 years, this portfolio gets to maybe $1.5m... then what? rental houses? lol

right now at the 3rd inning of the AI revolution, this is the chance to go all in and become a multimillionaire with no more financial worries for good.... but then do you have the conviction, and the risk tolerance, to make it happen.
 
@El OchoCinco thanks for taking the time with that post. I think the two things that scare me most about the rentals: 1) bad tenants and 2) liability. From what I've heard anecdotally, finding a good property manager that you can trust with #1 (or at all) is exceedingly difficult. I get that #2 can largely be addressed with LLCs/insurance, but again, it's the possibility of some disgruntled nut job harassing my family that gives me pause (although I can't say that I've ever heard of this happening...just my paranoia talking). Those hesitations aside, I think adding a few of these is a no-brainer financially.

As far as businesses are concerned, a few HF buddies and I looked at various small businesses a couple years ago and ended up chickening out. Of course, if you go small enough, achieving great returns without much risk is attainable but obviously scaling up isn't feasible. A good example is convenience stores/gas stations. If I recall correctly, in our area, you can recoup your upfront in under two years and the revenue stream is very resilient. But, you really need someone you can trust to manage it and you end up netting about 75k/year if all goes well in a decent location. Putting together a portfolio of these and hiring someone to manage them was an idea that we left on the table.

Another one was AirBnb short term rentals. Great returns, but constant issues. Also, comes with a lot of regulatory risk.
 
jtrader33 said:
@El OchoCinco thanks for taking the time with that post. I think the two things that scare me most about the rentals: 1) bad tenants and 2) liability. From what I've heard anecdotally, finding a good property manager that you can trust with #1 (or at all) is exceedingly difficult. I get that #2 can largely be addressed with LLCs/insurance, but again, it's the possibility of some disgruntled nut job harassing my family that gives me pause (although I can't say that I've ever heard of this happening...just my paranoia talking). Those hesitations aside, I think adding a few of these is a no-brainer financially.

As far as businesses are concerned, a few HF buddies and I looked at various small businesses a couple years ago and ended up chickening out. Of course, if you go small enough, achieving great returns without much risk is attainable but obviously scaling up isn't feasible. A good example is convenience stores/gas stations. If I recall correctly, in our area, you can recoup your upfront in under two years and the revenue stream is very resilient. But, you really need someone you can trust to manage it and you end up netting about 75k/year if all goes well in a decent location. Putting together a portfolio of these and hiring someone to manage them was an idea that we left on the table.

Another one was AirBnb short term rentals. Great returns, but constant issues. Also, comes with a lot of regulatory risk.
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these are jobs, not investments :)
 
jtrader33 said:
@El OchoCinco thanks for taking the time with that post. I think the two things that scare me most about the rentals: 1) bad tenants and 2) liability. From what I've heard anecdotally, finding a good property manager that you can trust with #1 (or at all) is exceedingly difficult. I get that #2 can largely be addressed with LLCs/insurance, but again, it's the possibility of some disgruntled nut job harassing my family that gives me pause (although I can't say that I've ever heard of this happening...just my paranoia talking). Those hesitations aside, I think adding a few of these is a no-brainer financially.

As far as businesses are concerned, a few HF buddies and I looked at various small businesses a couple years ago and ended up chickening out. Of course, if you go small enough, achieving great returns without much risk is attainable but obviously scaling up isn't feasible. A good example is convenience stores/gas stations. If I recall correctly, in our area, you can recoup your upfront in under two years and the revenue stream is very resilient. But, you really need someone you can trust to manage it and you end up netting about 75k/year if all goes well in a decent location. Putting together a portfolio of these and hiring someone to manage them was an idea that we left on the table.

Another one was AirBnb short term rentals. Great returns, but constant issues. Also, comes with a lot of regulatory risk.
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Bad Tenants - this comes down to screening and knowing your area. For me it was employer check and credit checks. If you dont want to do either you don't have to rent my place... Get the deposit (1 months rent) and use a standard form lease for the state/city you are in. Become very good friends with building manager and tip them at Xmas. Mine lets me know when there are issues with my units and I can then follow up with tenant quickly. They have been a lifesaver. Sometimes they damage some shit on the way out but that is why I have the deposit which is not returned in full if I have to do anything beyond wear and tear (i.e. they painted my white walls frickin yellow and purple...without letting me know. I painted them white and took it out of the deposit).

Liability - I own properties through an LLC and I get homeowner's insurance on each property. Separate finances. Find a good lawyer in your town who handles tenant landlord issue and buy an hour of his time and just sit with him and let him go over all the issues you need to be aware of. Best $200 you will spend haha. You want to know eviction laws and all that. I am not sure how someone would harass you and your family. Our tenant has my email and cell phone but that is about it. Rent checks are sent to another address to keep my separate :). Someoone said find a good handy man...great advice.

as for businesses...convenience stores and gas stations are hands on intensive at times and you are not going to be there selling lottery tickets or pumping gas so you either spend all week there or hire someone you trust to oversee...Gas stations depend on location and the franchise. Convenience stores is inventory and security and other issues. But for businesses there is no limit to the ideas, I still say getting in on an extisting business where the owner is looking to cash out means you get in with experience and established name. I still say go in with partners you would die for as money makes friends stupid at times.
 
El OchoCinco said:
Bad Tenants - this comes down to screening and knowing your area. For me it was employer check and credit checks. If you dont want to do either you don't have to rent my place... Get the deposit (1 months rent) and use a standard form lease for the state/city you are in. Become very good friends with building manager and tip them at Xmas. Mine lets me know when there are issues with my units and I can then follow up with tenant quickly. They have been a lifesaver. Sometimes they damage some shit on the way out but that is why I have the deposit which is not returned in full if I have to do anything beyond wear and tear (i.e. they painted my white walls frickin yellow and purple...without letting me know. I painted them white and took it out of the deposit).

Liability - I own properties through an LLC and I get homeowner's insurance on each property. Separate finances. Find a good lawyer in your town who handles tenant landlord issue and buy an hour of his time and just sit with him and let him go over all the issues you need to be aware of. Best $200 you will spend haha. You want to know eviction laws and all that. I am not sure how someone would harass you and your family. Our tenant has my email and cell phone but that is about it. Rent checks are sent to another address to keep my separate :). Someoone said find a good handy man...great advice.

as for businesses...convenience stores and gas stations are hands on intensive at times and you are not going to be there selling lottery tickets or pumping gas so you either spend all week there or hire someone you trust to oversee...Gas stations depend on location and the franchise. Convenience stores is inventory and security and other issues. But for businesses there is no limit to the ideas, I still say getting in on an extisting business where the owner is looking to cash out means you get in with experience and established name. I still say go in with partners you would die for as money makes friends stupid at times.
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Thanks. A lot of good points in there. I guess at some point you need to stop seeing risk everywhere and cut your teeth on a small unit in order to start climbing that learning curve. Wish I would have dabbled in these when I first got out of school.
 
ftrexx1 said:
Hello,
I would love to hear the opinion of you guys about how to invest $900K today.
Let say I'm in my mid 40s, one child on the way, no propriety or homes, 110K in a traditional IRA and an health condition that it might allows to let me work for no more than 10 years.
I have tried briefly with day-trading and swing trading as side of my job, but results were definitely not encouraging and don't want to burn more cash.
I asked a financial advisor but her annual fee would be way more than the annual health insurance premium or the kindergarten annual fee!!
How you guys would employ the cash I have?....Any suggestions would be really appreciated.
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If you don't own your primary residence, that should be in your plans. Put the cash in treasuries for 2 years, and wait for housing prices to correct. Then buy right.
 
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