If you had 500K just to invest, WWYD? (Vanguard, stocks, buy)

[mysticaltyger]

Originally Posted by MountainBiking

I agree with you on the apartment building. My uncle, who lives in So Cal, bought an apartment building in Arizona and has lost his ARSE BIGTIME. Terribletenantsand every time they leave they leave the unit trashed. His 6 hour drives to AZ must be like hell.

I have a friend who lives in FL with similar stories to tell about his rental properties in New Orleans. I will say that my friend really doesn't have a good head on his shoulders when it comes to this stuff (smart, but no common sense...usually underestimates the down side of just about everything, etc.), so that is part of the problem...but really, anyone who thinks owning an apartment building is "passive" has another thing coming. Even if you hire a management company, often the management company is no good. I have another friend who seems to be doing better with his rental properties...but he had to fire a management company because they didn't evict a tenant who was clearly a problem.

Originally Posted by MountainBiking

Wellington has been good to me . Very well managed balanced fund. The fund allows me to sleep at night. I have a chunk of it in my IRA and taxable account.

Wellington is a great fund . I wish I had invested in it or a similar balanced fund from the beginning. As long as the expenses for Wellington stay low, the fund has a very good chance of outperforming most balanced funds and matching/beating the performance of the S&P 500 index (with less volatility).

[mathjak107]

wellington has been around since im a kid and thats a very long time ago.

[okaythen01]

Originally Posted by mysticaltyger

I would never in a million years buy an apartment building and have to deal with tenants, maintenance, etc. What a nightmare! Isn't the point of having 500K to reduce or eliminate one's need to work for a living?

I'd invest it in a boring balanced mutual fund that invests in a mix of stocks and bonds such as:

Vanguard Wellesley Income (VWIAX)
Vanguard Wellington (VWENX)
T. Rowe Price Capital Appreciation (PRWCX)

or if I really wanted a high income payout from my fund, I'd go for:

Loomis Sayles Bond (LSBDX)

I got Vanguard Wellington Fund Investor Shares and Vanguard Wellesley Income Fund Investor Shares, and also vanguard total stock and total international and vanguard growth index fund investor shares. For wellesley it havn't been done good for the last 2,3 years.....wondering if I shoudl get rid of it or keep on holding it.

also for mutual funds do you guys check on the fund manger once a while? cause once awhile they will change them. Or just check the fund ratings if they are 4 or 5 stars then it should be ok? before I just leave them there and didn't look at them at all...I know they are decent fund at the beginning but how often and what should I do to check up on the funds....the ratings and the managers I guess? I probably will leave the fund there like 5, 10 maybe longer years. thanks guys

[okaythen01]

Originally Posted by midlifeman

The problem is that you think Europe is some short term noise. This is going to have a long lasting effect on the world economy. The market has evolved for the worse in my opinion. Too many hands in the pot, too much manipulation by traders, to interconnected to world markets, and more irrational behavior than ever before in the history of the market. Remember the good old days when the price of a stock went up and down based on it's earnings....This is not your fathers stock market anymore. The times are a changing and that's why you are seeing an increase of private equity, and I encourage everyone to at least diversify into private equity. It could be real estate, ownership in a business etc. but don't put all your eggs in the stock market basket.

Can you go into more details about:

Too many hands in the pot, too much manipulation by traders, to interconnected to world markets, and more irrational behavior than ever before in the history of the market.


thanks !

[midlifeman]

With out a doubt the world is more interconnected because of technology. While this can be a good thing to make the world a better place, it makes me uneasy when it comes to my investments. Our 24 x 7 media and social networking can bring down a country (egypt), a university (penn state) or a major corporation (take your pick). It can also create a lot of hype. Think Facebook, Linked Inn, etc. While the market has always been irrational it is even more so today because of the exposure. How does it make you feel when Greece wakes up with a hangover and it effects your portfolio negatively. Now some people just call this stuff noise, but I call it irrational behavior. The more hands that are stewing the pot, the more irrational it becomes. When it comes to my money I take the rational approach, so that is why the market is not for me.

So what does an investor do in an irrational market? Everyone is taught the same thing: Diversify!!

Definition: Diversification is taking a bunch of money and spreading it around (I.E. I don't know what I am doing!!!!) now I ask you is that rational? No. and that's why I advocate for alternative private equity investments.

[mathjak107]

diversification is very rational. but you need true diversification.

many asset classes folks think are diversified are not. 2008 saw foreign stocks ,domestic stocks ,reits and corporate bonds all fall together. gold and treasuries soared as they were true diversification .

just equal amounts of equities,gold,long term treasuries and cash rebalanced once a year returned an annual average return of over 9% for almost 40 years .

im not saying the future will do that but your argument about diversification has no merit.

it works because when your truely diversified most things fall by half in worst case scenerios. the same events that caused the market to plumge usually doubles or triples other asset classes.

you dont rule out uncertainty and bear markets, you plan for them.

100 years of history has shown us given enough time markets always recover. your long term average return will be somewhere between your peaks and valleys.

if you got the stomach and the time you could always wait things out which could present violent swings and at least 15 years of waiting.

or you could run with diversification which will still get you to the same average return but in a shorter more direct route.

whether you had 100% in the s&p 500 for the last 25 years or only 25% and used the other asset classes i mentioned above your return would be almost identical . the diversified portfolio did beat the 100% equity mix by a nose.

[irish_bob]

Originally Posted by MountainBiking

I agree with you on the apartment building. My uncle, who lives in So Cal, bought an apartment building in Arizona and has lost his ARSE BIGTIME. Terrible tenants and every time they leave they leave the unit trashed. His 6 hour drives to AZ must be like hell.

Wellington has been good to me . Very well managed balanced fund. The fund allows me to sleep at night. I have a chunk of it in my IRA and taxable account.

wellington does appear to be a top quality fund , if you dont mind me asking , what are the anual fees like ?

ive invested in a few funds this past ten years and the fees really put me off , etf,s are much more attractive and i cant really see the difference , they both operate in the same market at the end of the day , im sceptial about the idea that so called professionals are more likely to be carefull with my money , hasnt worked out that way in the past , granted their are dud funds out there you need to avoid

[Pivot Point]

200K - invest in high-dividend, blue chip, diversified stocks that are leaders in their industry like AAPL, XOM, JNJ, ALL, CAT, KO, MCD. I would set a target and sell when I reached it. I would not hold indefinitely.

100K - invest in ETFs like SPY, QQQ, TLT, USO, IWM, EFA, GLD. You have broad diversity in the best stocks, large caps, small caps, bonds, international stocks, and gold.

30K - buy options on SPY. All the volatility in the market provides some great opportunities for options trading.

125K - buy a foreclosed condo in Boca Raton. This area got hit really hard by the real estate crisis. Therefore, prices are still very low, and there's a lot of inventory on the market. I go there all the time to visit family and friends, go there for winter vacations, and plan would like to have it when I retire. In the next 20-25 years, the prices will go up and I can sell it for a nice profit.

45K - maximum contributions to my and hubby's Roth IRAs and 401Ks that get 75-100% employer matching (free money).

[MountainBiking]

Originally Posted by irish_bob

wellington does appear to be a top quality fund , if you dont mind me asking , what are the anual fees like ?

ive invested in a few funds this past ten years and the fees really put me off , etf,s are much more attractive and i cant really see the difference , they both operate in the same market at the end of the day , im sceptial about the idea that so called professionals are more likely to be carefull with my money , hasnt worked out that way in the past , granted their are dud funds out there you need to avoid

Here's some information regarding Vanguard Wellington:

VWELX Vanguard Wellington Inv Fund VWELX Quote Price News

https://personal.vanguard.com/us/fun...FundIntExt=INT

-Cheers.

[cpg35223]

Originally Posted by Marie1249

200K - invest in high-dividend, blue chip, diversified stocks that are leaders in their industry like AAPL, XOM, JNJ, ALL, CAT, KO, MCD. I would set a target and sell when I reached it. I would not hold indefinitely.

100K - invest in ETFs like SPY, QQQ, TLT, USO, IWM, EFA, GLD. You have broad diversity in the best stocks, large caps, small caps, bonds, international stocks, and gold.

30K - buy options on SPY. All the volatility in the market provides some great opportunities for options trading.

125K - buy a foreclosed condo in Boca Raton. This area got hit really hard by the real estate crisis. Therefore, prices are still very low, and there's a lot of inventory on the market. I go there all the time to visit family and friends, go there for winter vacations, and plan would like to have it when I retire. In the next 20-25 years, the prices will go up and I can sell it for a nice profit.

45K - maximum contributions to my and hubby's Roth IRAs and 401Ks that get 75-100% employer matching (free money).

This is the winner in my opinion. The only thing I'd throw into the mix is industrial commercial property in the Southeast U.S., Texas, and the Great Plains. That's where the large majority of the county's economic growth takes place over the next 20 years.