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I'm talking over $5million. You don't want "financial advisors" sticking their noses and hands into your money since you already know what you're going to do with it. Big problem is, FDIC only covers $250K. TOTAL... so even if you have 10 accounts at one bank with $250K in each one, you'll only be covered for $250K in the event something happens. So, what do you do? Do you spread this money out over several banks?
This is why poor people who win the lottery go broke. They always think they know how to manage millions of dollars (even though they never have) and make enemies in their minds of the very people whose jobs it is to help you manage and make even more money.
It is bad when you made $50K at 1% interest over the course of that year, but also lost $150K at 3% inflation.
Well the net is 2% and is that better or worse over the course of a year than say a 30% loss? It's all about risk mitigation for some folks and they will take the erosion of purchasing power
Take you yourself and your very limited income need. If you ran into 5mm tomorrow there would be no need for you to invest in equities given your limited need. Of course you could invest in equities but it wouldn't be necessary
Well the net is 2% and is that better or worse over the course of a year than say a 30% loss? It's all about risk mitigation for some folks and they will take the erosion of purchasing power
Take you yourself and your very limited income need. If you ran into 5mm tomorrow there would be no need for you to invest in equities given your limited need. Of course you could invest in equities but it wouldn't be necessary
No I completely understand that there's incredibly risk-adverse people out there. I just don't see how it's logical. If the US economy collapses and never comes back, and the US dollar becomes worthless, $5M sitting in banks is not going to save you. And since that's most likely not going to happen, why not invest your money? I can understand a hyper-conservative 1% withdrawal rate with equity (or even just bond) exposure, but cash is just horrible.
And while I only need very little to live on, that doesn't mean I wouldn't give any of my extra income to charity.
No I completely understand that there's incredibly risk-adverse people out there. I just don't see how it's logical. If the US economy collapses and never comes back, and the US dollar becomes worthless, $5M sitting in banks is not going to save you. And since that's most likely not going to happen, why not invest your money? I can understand a hyper-conservative 1% withdrawal rate with equity (or even just bond) exposure, but cash is just horrible.
And while I only need very little to live on, that doesn't mean I wouldn't give any of my extra income to charity.
You don't need to post returns for me or explain anything. I fully understand the situation, the concepts and why it's possible for people to stay out of the market. It's complete logical that if my need is X and I have let's say 250 times that I will be okay not taking any market risk. It's completely logical and I'm not sure how you couldn't see that even if you don't agree with the strategy. 100% cash isn't horrible if it fully meets your needs, you can't comprehend it because there is no way 100% cash could meet your needs
It's completely logical and I'm not sure how you couldn't see that even if you don't agree with the strategy. 100% cash isn't horrible if it fully meets your needs, you can't comprehend it because there is no way 100% cash could meet your needs
Like I said, I completely comprehend the strategy. I just think it's stupidly risk-adverse. If someone is so risk-adverse that they will accept nothing other than saving in pure cash, they need help, of a different kind.
I would park $5M in gold & silver (which I do not consider investments) before cash.
Like I said, I completely comprehend the strategy. I just think it's stupidly risk-adverse. If someone is so risk-adverse that they will accept nothing other than saving in pure cash, they need help, of a different kind.
I would park $5M in gold & silver (which I do not consider investments) before cash.
Parking 5mm in gold and silver is not a smart idea if that's all the funds you have.
Why on earth would you call a strategy stupid and suggest someone implementing said strategy needed some kind of help if met all their needs and objectives? Really mind boggling
Why on earth would you call a strategy stupid and suggest someone implementing said strategy needed some kind of help if met all their needs and objectives? Really mind boggling
I already was very clear: because there's absolutely no reason to be so conservative. It shows a fundamental lack of understanding about how the economy works.
Why would anyone want to live with subpar returns for zero additional benefit? If one needs 50K a year, it would be safer to buy stocks and bonds (specifically index funds) with the $5M and draw the 50K/year rather than putting it in the bank. If the entire stock and bond market become worthless, the US dollar most likely also be worthless, as the value of the dollar is directly based on the value of the US economy. Hence why I hypothetically suggested buying raw metals, as that's at least something of a hedge if the dollar somehow loses it's value (the greatest risk of an investment in pure cash, even if a very small risk). Buying foreign currencies would be a similar hedge, though if the US dollar collapses foreign currencies would also be at risk.
So yes, I would not advise an all-cash portfolio in any case. Even with all-cash the risk of losing your investment is not zero. There is risk of higher than expected inflation making your all-cash investment insufficient.
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