Quick Summary:

Married w/ 4 year old. Joint income is 165K will go up in a few years to 200K
Own home w/ 310K mortgage.....worth 300K
No CC debt, own 3 different cars & toys NO DEBT (wife has a small Student loan 8K?)
Have 30K joint savings and retirement is taken care of w/ PERS + Deferred Comp
I play small stakes live poker part-time (making $20hr) as a hobby that we use to go on vaction to hawaii or mexico in winter.

I have 100K in savings I brought into marriage and want to invest it. I did have a 35K mutual fund from 2003-2012 and ended up breaking even. I know nothing about stocks or bonds ect....Not to comfortable in financial markets cause i'm clueless.

Couple Ideas I had:
1) CD through bank make a small amount
2) Back in stocks
3) Buy rental home( could pick one up for 150K)
4) Enter WSOP and pray
5) Start a small business (my dream really)
6) We would like a bigger newer home closer to work, was thinking of renting ours and buying a new home and use the $$ as down payment. Seems like we would be buried in real estate though with no return.

Any other advice or ideas?

How much time do you want to spend trying to beat the market?

If you were to start a small business what kind of business would you start?

For what its worth I'd keep it in savings until I read books. Real estate is a big hassle and it looks like you are pretty much set up for life if you spend your money right. I'd read Boggleheads to get a good grasp on a lot of different financial options and just plan on indexing my money because #1 you have a decent job and you will likely maximize your money by focusing on that and #2 I'd rather relax than bust my rear for a negligible benefit

Yeah I think this is the key question regarding starting a small business.

Please don't say open a restaurant if you've never washed dishes before.

Really depends how much extra work you want to do. The more work you're willing to do the higher return on your investment. In order of most to least profitable and most to least work you're looking at

5 start a biz > 3/6 Real Estate > 2/1 stocks/CD

4 is just gambling especially if you only play one or two events. Also don't buy a CD. No one should ever buy a CD. Just put it in stocks/an index fund if you don't want to do any work for it.

OP,
I invest with a guy that buys condos in Edmonton,AB. return is around 6% paid monthly and there is an equity growth component as well. Investment is long term so cash wont be very liquid (that is the "downside")

I have another friend building houses in Saskatchewan, Canada. Economy is booming there. Returns are around 15% - 20%/year.

I am not a huge fan of stocks and bonds for several reasons. Main reason is most of the brokers out there are crooks that dont want to help their clients they just want to line their own pockets. You have to be super careful when choosing a broker to go with. These guys make money even when you lose money, such a conflict of interest.

Getting into any situation where you can get your equity working for you and get a steady rental return is a good plan.

PM me if you want to follow up with guys doing business in AB/SASK.

Yes I have been hesitant to buy a cd w/ it just because its locked up and I'm barely making a profit.....so its just sitting in savings..doing nothing.

Book advice would be great about different investing options. I'll check out 'Boggleheads'

Small business ideas are:
-Small sandwich shop (breakfast/lunch only) my wife has great recipes for this and other food ideas.
-Coffee Shop
-Lawn/Landscaping
-Window washing/ property maintenance
-Transportation Business (airport shuttle type or commuter shuttle, Limo?)
-Skate/BMX park , indoor/outdoor, membership type

I have background in all the above ideas......the kicker is that I work 40 hours/week. I am available to be on the phone or internet a few times a day no problem though.

I assumed you would be quiting your job to start a business. Do not start a business if you plan to keep your full-time job.

I have to keep my job because of the retirement package. I will be able to retire at age 55 for ~85K/yr for life. My wife has her own identical retirement package assuming she sticks it out.

Maybe it is best to just keep saving until 55 (I'm 40) then start a business when I have more time to run it, which brings me back full circle to how to make some money on that 100K!

I'm not afraid to work if the money's there. All the businesses I listed could be run part-time.

you are really underestimating the difficulty in running those businesses imo.

I'm not sure I agree with this. What business experience do you have in the industries mentioned above?

You can remove the WSOP thing from your list of investments; with the amount of money you have your risk of ruin would be through the roof unless you stuck to the really small events like Venetians, Rio daily tournaments and 1ks-1.5ks but your expectation would likely only be enough to cover the expenses of staying in Vegas for a couple months.

how long have you owned house? you can refi even though you're underwater if your loan is before march 09 i think. maybe april 09. somewhere in there.
@55 you and your wife are going to need more than 85k/yr/person to maintain the same lifestyle you guys have today. you're already more than that right?
where did the 35k mutual fund go? what mutual fund was it?

in before "target fund", but I'm leaning balanced portfolio for at least 50k (indexed or managed funds, nbd)
i doubt how much value is in CD's or treasuries. but otherwise I think there is a lot of opportunity in both bonds and equities.

and my self-serving reco:
you have 100k doing nothing, could possibly be underestimating retirement situation, scared of markets but want to get back in, want to open a business in 15 years... go find a good advisor.

I was joking about WSOP!! LOL!!

Yes, I know I can refi no problem trying to figure out if its worth it or not (its real close)but thats another subject.

Yes the retirement is underestimating our needs but we are planning on continuing to work in "other" fields ie more interesting/rewarding/yes lower paying. Will also have are deferred comp account as well thats not in 85K yr ~500K.

Cashed out Mutual fund is part of the 100K.

Looks like I should read some books / research and put it back into the market.....
I have no idea what "in before "target fund", but I'm leaning balanced portfolio for at least 50k (indexed or managed funds, nbd)
i doubt how much value is in CD's or treasuries. but otherwise I think there is a lot of opportunity in both bonds and equities." means??

Yes, I agree that running a small business is tons of work and high risk, not underestimating that at all, mostly playing with the idea..looking for partners/opportunities ect...

I appreciate the responses...

I have worked in all the fields mentioned.

I would try to read a few books anyways on what you want to do either way.
also how many hours/week do you work at your normal job?
which state are you from? More opportunities if you live in newyork then if you lived in Iowa or something
Can't imagine starting a business with a full time job. You better be ready to marry that baby if you want to accomplish your goal

Absolutely stay in cash until retirement. That is, unless you do enough reading so that you understand investing theory. Rule number one is to not lose money. And rule number two is to remember rule number one.

It is NEVER a good idea to put money into something where you don't have an edge, or at least an understanding bordering on excellence. Housing was a great investment. Enough people believed it until it became the worst investment possible. Same thing with stocks.

You cannot rely on advice from others. You worked hard for your money, and the worst thing to do would be to lose it because you put it into something you didn't understand.

I find it hard to believe that if you put 25 percent into each of the following right now, and let it ride for 15 years, you would do worse than cash.

Exxon
Kraft
Proctor and Gamble
Berkshire Hathaway


I actually believe that you could choose any of the above and put everything into it and be better off in 15 years. Buffett says that if he had all of his family money in Proctor and Gamble and he disappeared for 20 years and and couldn't check the price of the stock, he would sleep well. There are probably 15-20 stocks that fit the bill.

You could put it into an index fund and very likely be better off in 15 years than if you were in cash. But once again, why put money into something just because somebody says it will work out? If you don't know why something is a good idea, then you have to wait until you know why, so study as much as you can.

Personally, I do things differently, and I look for special situation plays, and asset plays, mainly with small caps. But that is a recipe for total disaster for someone like you who hasn't spent tens of thousands of hours in his life thinking about this stuff.

It sounds like you are heading into a nice retirement in 15 years. There is absolutely nothing wrong with guaranteeing that you enjoy it, and that means staying in cash, even if you get zero percent on your money. There is a reason that rates are so low. There will be little to no growth, and deflation is more likely than inflation, and with deflation, those dollars buy a lot more each year.

There is a certain comfort in having cash, and 90 percent of the time when people chase yield for the sake of getting a higher rate of return, huge losses will follow.

Stay in cash until you have put in a few thousand hours of reading. If you put it into blue chips, or even all into Berkshire Hathaway, you would likely be better off in 15 years than cash, but if you cannot articulate why that is the case and really understand why it is, then you have to stay put.

Thousands of hours of reading to find out he should probably just index?

Wow!! Thanks for that!
To tell you the truth I just felt like an idiot for having that kind of money sitting there. Would like to snowball it, but I certainly would hate to lose any of it after losing a bunch in the housing crash. Which is why I mentioned cd's.
I will do some reading on investments but honestly I read poker books, all the time, I read 2+2, I study & I play as much as possible. I'm probably years away from truely understanding markets.

index funds

I seriously suggest you to learn about put/call selling of high yield dividend sp500 companies that dominate their markets. Sell only a few puts prepared to be exercised ( corresponding to 25% of your cash say) only when stock is oversold badly without real bad fundamental news and usually they expire worthless and you keep the money or you can roll to lower strike next month. If forced to buy stock you do it at least at much smaller price than originally available to you when this started. A bargain usually. You then use that position to start selling covered calls indefinitely until you lose the shares. Rinse and repeat. If the stock keeps dropping without real internal issues you can sell even more puts and build a bigger position. But rarely you will be forced to use all your money. You can always stop buying more shares (via exercised additional short puts) and focus on call selling until you create more cash again.

You can play these games say with up to 50% of your total portfolio in cash at all times. That way no size of horrible bad market or crash can shock you or manipulate you emotionally into panic.

You can easily net 10% per year or more doing this. It requires minimum market monitoring at your spare time and during market hours nothing intense only a couple checks during the day to see if the market is doing anything funny. ( you can control all your moves with limit orders placed whenever you feel like it even during market closed hours). Basically the plan is so straightforward and disciplined that it requires very small monitoring. Just keep reading about the fundamentals of your company though and general economic news.

Stocks like say intel, microsoft, ibm etc issue at least 15-20 good signals each year for put selling or call selling out of the money. This approach can beat the index very easily because you can have income every month selling the derivatives at ideal points. Since most of those items sold are like 2% income on the position blocked its a nice small money flow. Eg the number of shares you force to buy is say 1000 for an exercise price of 25 and the put sold was 0.5 when the stock was 25.5 after being oversold for many days , this requires 25k and you receive 500 that you can keep if at expiration the stock is over 25 which is a quick 30 day 0.5% return on total portfolio of 100k. So basically you used 25k having the other 75k free and either bought the stock at 24.5 cost or kept the 0.5k. If you get the 1000 shares say because stock dropped to 24.3 you can sell next month's strike 25 calls on any rally and pick up another 0.5K. If it goes over 25 you lose the shares and you have made 1k while the stock did nothing and you are 100% cash again waiting for new opportunity. If the stock kept dropping say went to 23.75 you can still sell next month's 25s at 0.3 or 0.25 and then next months 25s or 24s again indefinitely and also pick a 3% dividend while waiting. If the company is good eventually it will go back to your strike and lose the shares with profit. Or you may elevate your exit at 26 or 27 and keep the shares as they go higher. When you finally lose the shares you go back into put selling after selloffs and repeat the above. The market can be doing nothing all year and getting 20 such trades means basically 10% return just like that (0.5% each time) while you were 75% to 100% cash all the time!

The fact is a good solid company will take decades to go under anyway. The worse that can happen to it is to become a dead money stock flat for a decade or drop 50%. During all this of course your 10%+ per year is there...Dividends and out of the money sold calls help recover eventually anyway.


This approach is nice because you force the market to come to you rather than chasing it. You typically find yourself invested only in good prices after selloffs and usually the upside after such events is 5-10% often anyway (so you may adjust your covered calls to be up there and sell them only after rallies or even sell the shares themselves if you are afraid to wait. Plus if you sell shares the moment you do it you can turn around and sell another 10 contracts strike 1-2$ lower than the price you sold the shares and basically force yourself to rebuy it there or keep the change. Lots of ways to make money taking small and smart risks only at oversold or overbought levels. You can change that 25% above to a 12.5% so that you have room to sell even 4 times puts if the market keeps going against you and still have 50% cash left. It is the ideal way to build long term positions as well something you can do if you avoid the call selling or elevate the strikes pretty high to secure that you lose the shares only at a nice profit.

This is the best way to learn the market and derivarives trading that when you become real good can even lead to 20-30% per year doing other riskier (but still correct) things using Kelly betting methods with money you can afford to lose. Can turn 100k to 1 mil easily that way over a few years. Its much better to start as proposed and learn the other things later.

The secret to any investing/trading is to never have positions that can emotionally blackmail you into the wrong actions. You can never go wrong if you have over 50% cash at all times ready to chase real opportunities (eg the 2008-2009 crash was such time).

In a bear market like this probably is and will remain at worse doing nothing for years the above will work nice. If the market turns bullish because the economy is great again you can simply avoid selling your shares and only sell covered calls very far out of the money and only after overbought situations.

This is not great advice. At all. I can think of multiple options that are guaranteed to do better than cash.

+1

I'd hate to admit it, I really do. A lot of people disagree with potleemit, but the more I read his posts, the more I agree with him. At first I thought he was kind of a crack pot who knew a few things, then I've come to realize he's simply giving good advice.

Pot isn't telling you to invest in cash long term, he's telling you to stay in cash if you aren't willing to do the work to learn how to grow your money. I would laugh at someone who stays in cash, but if I knew that person would do zero work towards paying attention to what they invest in and what it's doing, then I'd probably advise the same thing.

We are all not the same people here. Some people wake up, have coffee, watch tv all day and check their investments once or twice a year, make changes (that are usually wrong), and complain about how much they lost. Some people wake up and the first thing they think is "Lets go see how premarket looks" and what happened in the world that day while they slept. Then they start looking around, seeing what went in what direction and for what reason, and keep an eye on things and base their investment decisions on when conditions are favorable.

There is a vast difference between the two, and 50% of those who put in the work STILL do the wrong things.

If you aren't willing to put in the work and learn what is going on with the world (and this is perfectly fine), then invest in the absolute safest things you can find, work hard, live your life, and be happy. If you are willing to learn how to invest and research and dabble and STILL realize you have a ton of work to do, then get to it and start learning when you have down time.

Of all the things I've learned over the last few years, I've learned that everyone doesn't think like me. When it comes to finances I think only 1-5 people I've ever met in person think like me, and I don't know a damn thing. I try to judge people by how much they know and how much time they are willing to put in before I give them advice. If I think they won't do much, I advise them to be as conservative as possible - because I don't want to hear the bitching when it goes bad. If they know what they are doing, I bounce ideas off them and use them as a resource.

For now, I agree with pot. Be as conservative as possible. When you read/learn/research quite a bit, then start dabbling. If the dabbling is unsuccessful multiple times, go back to being conservative and forget it.

Facepalm. What ridiculous advice.