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I would like to invest 100k savings but not sure what are the best options right now. I have no huge debts and have emergency funds. And also, I don't foresee using these funds in near future. Therefore, I am fine with moderate risk (not high risk). Please provide your suggestions.
I would like to invest 100k savings but not sure what are the best options right now. I have no huge debts and have emergency funds. And also, I don't foresee using these funds in near future. Therefore, I am fine with moderate risk (not high risk). Please provide your suggestions.
Not sure of your age and goals. Peak-earning age? $100k sitting in a pile, like that? I've never seen the like. You make me jealous.
I's say to use mutualfunds, particularly since you do sound like a real novice. Later, you might delve into single-stocks. Things were stinky in the markets in Sept-Oct, but in November, we are on a mild upswing. So, you missed that dip. I'd say, for a moderate-risk profile: go with 75% stocks and 25% bonds--- assuming you're not near retirement just yet. You can find a stock-plus-bond recipe like that in "BALANCED" funds. Otherwise called "ASSET ALLOCATION" funds.
Check these out: RPBAX. (I'm putting my grown son into this one.). VLAAX. (Just don't try to deal with Value Line DIRECTLY. I tried getting into that fund a few years ago, before I had an account with my broker/dealer. I waited so long just to receive the prospectus and application in the mail, I gave up on them. I mean, it was 3 or 4 MONTHS! If you buy shares in this fund, do it through an outfit like Schwab or Fidelity or T Rowe Price.
VANGUARD has the history of charging rock-bottom fees, but their customer service sucks sticky corncobs. But you don't have to buy into any Vanguard funds directly through them, either.
Wanna separate the stocks and the bonds?
For stocks, look at TRBCX. (It's very much tech-heavy.). Or FACEX.
For BONDS: is your income high enough for it to be advantageous for you to use tax-free municipal bonds? If you're in the 25% bracket or higher, that's something to think about. If those munis come from the State where you live, they are sheltered from State income tax, too. But for that very reason, they'll pay you less.
Otherwise: Check out PRPIX or FBNDX. Or use two, instead of just one.
You can buy ETFs with no minimums. I did not list any because I just don't like the way they behave. I had some for a short period, then I dumped them.
be careful with prpix , it has a duration of almost 11 years .
if rates rise it will lose quite a bit . it fell 17% last year .
it would take you staying in it 11 years to see todays rate if rates rise 1% from here..
fbndx is just a 6 year duration…big difference between the two as far as what happens if investors bid rates higher.
basic2020, this all needs to be understood by you before randomly taking advice as far as what you should do .
volatility is measured in beta as far as equity funds go .
that is how much more aggressive a fund is then the general market . a beta of 1.20 means the fund is 20% more volatile then the market is .
duration is how bond funds are measured as far as interest rate sensitivity.
the duration value is how long it will take you to recover from the loss if rates rise 1% from here .
so for example if current rates on prpix is hypothetically 6% , it would take you 11 years then to recover at the higher rates to overcome the drop you would see if rates rise on it rise 1% to bring you back to a 6% return.
i am not saying prpix is a bad choice or a good choice but you need to understand the risks before taking anyone’s advice.
which is why at this stage i don’t think anyone should be telling you specifically what to buy until you grasp the basics or choose a portfolio from portfolio charts which explains and shows the various ways to gauge the different models so you can find what fits you .
even then until you see how you will actually react under fire when it’s your money at risk be careful of taking on to much aggressiveness initially and i suggest not loading up heavy on tech heavy funds until you know how you will react to volatility.
if it was me i would stick to broad based diversified index funds initially
Last edited by mathjak107; 11-27-2023 at 03:37 AM..
It all depends on your age, time until you would need your funds, and your risk factor.
I'm 61, I won't need my funds until close to 70 (I'm doing well), and I'm not afraid of risk.
I also do not play with individual stocks. Doing that is like playing the horses, you'll eventually lose unless you're a pro... and even they lose.
I use a good mutual fund company (Vanguard, Fidelity, etc) and look at the portfolios of the funds in the risk factor I'm comfortable with. I usually go with two funds to further diversify. Don't just look at their one year results, look at the 5 and 10 year too. It will give you a more accurate view of it's performance.
One thing you should never do with mutual funds... constantly move them. They are for long term and you must understand that the market fluctuates. If you get nervous and sell when things drop you will lose. You ride storms, or as the pros advise, invest more when it drops, because it will always come back up.
Mutual funds are the reason I'm able to work on my terms now. I educated myself as much as possible (a strong general understanding of mutual funds is all you need) and stayed consistent and never overreacted.
They will surprise you on how quickly they grow.... not immediately but over time. They are the best investment for those with time and less than average knowledge of the market.
one thing beginners can do is subscribe to a top newsletter that caters to either fidelity or vanguard , although i much prefer fidelity .
i have been using fidelity insight since 1987 …
i can put portfolios together in my sleep but i do like the newsletter models .
my investing personality is such that i would always be second guessing my last move and contemplating the next and that hurt me early on.
plus today its all to easy to buy a bunch of various funds and end up overlapping on the magnificent 7 stocks or other holdings .
so the newsletter models make sure you don’t overlap or get to concentrated in one area .
being retired and in my 70’s i run a few different fidelity insight models which use different models for the different time frames one might have .
with money market rates at 5% i keep about 5 years spending in cash instruments that is about 18% of the portfolio .
i have another 8 years of money in the insight income model which is 75% shorter term fixed income and 25% low volatility equity funds , then the lions share is in the insight growth and income model which runs 50-60% equities .
if rates fall i will move some of the money market funds in to the income model ..
finally the money i may never need sits in berkshire and a total market index fund .
so there are so many ways to structure diversified investing based on needs and your investor behavior
Im almost 50 and Ive always kept my money under the mattress so to speak but was finally convinced that its doing nothing for me and that I should invest. I opened up an account with Fidelity recently and I put half in the stock market, 1/4 in cd's, and the rest in the money market for emergencies. In a few weeks time im up about $5k so im satisfied so far. I have no intentions of ever using this money so my goal is to just sit back and see how big it gets. I also rolled over my IRA's to Fidelity for them to manage as well and they have done much better since doing so plus its a one stop shop and makes it very convenient.
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If you are open to something more exotic, I have seen only a handful of no lose scenarios over the years.
Remember when oil went negative not too long ago?
The great recession housing crash?
You could have bought a couple condos in FL, rented them and tripled or better your money.
If you watch and are patient these things do happen and you will know them when they do.
If it were me in your position, today, and you are unwilling to wait I would try to find some real estate in an up and coming area assuming you are already in the market to diversify a bit. These opportunities exist but take more research, an understanding of the local area, etc. and obviously have other costs associated with them.
If you are open to something more exotic, I have seen only a handful of no lose scenarios over the years.
Remember when oil went negative not too long ago?
The great recession housing crash?
You could have bought a couple condos in FL, rented them and tripled or better your money.
If you watch and are patient these things do happen and you will know them when they do.
If it were me in your position, today, and you are unwilling to wait I would try to find some real estate in an up and coming area assuming you are already in the market to diversify a bit. These opportunities exist but take more research, an understanding of the local area, etc. and obviously have other costs associated with them.
Real estate is really what I wanted to invest in but my wife just wont do it. Because of that, I was left with either leaving it under my mattress or investing with Fidelity. I even asked her if we could split the savings and she invest her portion how she wanted to and I would do the same and see who came out further ahead, but she wasnt for that either. This whole thing started when my bank suggested I put my savings in a high yield savings account and when I did, it earned more interest in 1 month than I had for probably 20 years in a traditional savings. Lost out on a lot of free money over the years by not doing that sooner, but that sparked my curiosity and is how I wound up with Fidelity and now I just let them manage it.
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