$500G cash that you cant afford to risk, where to put it?

amother

Black

Tue, Jan 07 2020, 6:31 pm

amother [ Lime ] wrote:

Correct, we are "privileged" as in "lucky, fortunate, exceedingly grateful to Hashem."
And yes, the relative is wealthy. But we are not.

For better or for worse, people have a skewed view of wealth here.

You invested half a million dollars in a house. Assuming that it hasn't declined precipitously in value, you're sitting on a very valuable asset that you could sell. And yes, having a half million dollars in assets makes you quite well off -- in the top 10% of Americans (assuming you're age 35 to 44).

Good for you. Seriously, that's great.

But people need perspective on what wealth is.

amother

Vermilion

Tue, Jan 07 2020, 7:09 pm

rick1 wrote:

You are correct, this is not a 5 year strategy. You are also correct that a whole life policy wouldn't come close to double double digit returns. He suggested looking into a Premium Financed IUL.

PF IUL is just a leveraged insurance strategy. Like all leveraged strategies, it's dependant on the arbitrage between leverage costs and returns, so if the underlying assets aren't invested to begin with it's just a way to lose money. Also, like all leveraged products, gains are magnified during bull markets and losses during bear markets. It's meant for savvy investors, not necessarily someone with 500k to their name that they can't afford to lose. Like you said, it's a better long term play for a high net worth individual that has capital to work with.

amother

Burgundy

Tue, Jan 07 2020, 7:10 pm

rick1 wrote:

There are many options available to safely invest $500k but it all depends on your age, financial situation, and long term goals with this money. My husband works with Premium Financing which uses the tax free benefits of an indexed universal life insurance policy to enable solid double digit returns. Using an IUL also safeguards the cash value from downward market movements. This is a long term investment strategy. PM if you would like more info.

Huge commissions in this. When the market crashes, it takes indexed funds with it. No need to buy indexed funds and pay big commissions.

amother

Vermilion

Tue, Jan 07 2020, 7:12 pm

amother [ Black ] wrote:

Illiquid assets are paper wealth. Having equity in an expensive home doesn't mean you don't struggle putting food on the table. It just means you have high property taxes.

amother

Black

Tue, Jan 07 2020, 7:18 pm

amother [ Vermilion ] wrote:

Illiquid assets are paper wealth. Having equity in an expensive home doesn't mean you don't struggle putting food on the table. It just means you have high property taxes.

Its not "paper wealth." Its simply a decision that you have made to invest assets in a home while living frugally.

There's nothing wrong with that decision. In the long run, it will probably work out for you as a source of assets in retirement.

Nevertheless, its absurd to say that you have more assets than a full 90% of Americans, but you're not well off.

amother

Denim

Tue, Jan 07 2020, 10:13 pm

amother [ Black ] wrote:

There is a such thing as being "house poor". Google definition - House poor is a term used to describe a person who spends a large proportion of his or her total income on home ownership, including mortgage payments, property taxes, maintenance, and utilities.

amother

Seafoam

Tue, Jan 07 2020, 10:32 pm

amother [ Orchid ] wrote:

I’ll take it!! We’re in debt haven’t paid tuition or rent in months can barely pay for food or basics. There are plenty of people like me desperate for money so ur post is not nice

Really? Did you ever post about your kids? Because I want more kids and it causes me pain when people talk about their babies. Are they being “not nice”? I think this OP is odd for other reasons, but seriously just scroll right on by.

ectomorph

Tue, Jan 07 2020, 10:45 pm

I have a billion dollars I just got as a present from Mackenzie Bezos (she thought my kids were cute). Where should I invest it?

sorry, couldn't help make fun. You need a professional for more than 10k. You may as well outright give the money away as follow our advice.

amother

Tue, Jan 07 2020, 10:48 pm

ectomorph wrote:

Whoever thinks anyone with money would invest solely based on advice here, is drinking funny Kool-Aid.

What I would do is look into some of the ideas that sound appealing, and then research them like no one else has ever researched.

Ive learnt so much from seemingly insane questions that I and others have asked here.

ectomorph

Tue, Jan 07 2020, 11:20 pm

amother [ OP ] wrote:

You are not an investment professional, and your research is at best amateur. 500k needs help to be invested responsibly. Whatever, it's your money. But research online is the way to go after you consult a professional.

amother

Tue, Jan 07 2020, 11:33 pm

ectomorph wrote:

B"H I have never taken any risks without professional guidance. I was just curious what others are doing after professional advice.

amother

Scarlet

Tue, Jan 07 2020, 11:55 pm

amother [ OP ] wrote:

B"H I have never taken any risks without professional guidance. I was just curious what others are doing after professional advice.

I am married to an investment professional. Posters here have no idea of your particular risk factors. Your credit score. Other assets. Expenses. Your income.

If Bill Gates gets 500k its a different investment than you, which is different than a person on programs, which is different than a person who has a gambling addiction. We just don't know, and any advice is more likely to hurt you than help, especially with amateur "research".

amother

Wed, Jan 08 2020, 12:02 am

amother [ Scarlet ] wrote:

Understood.

rick1

Wed, Jan 08 2020, 2:33 am

amother [ Vermilion ] wrote:

Correct, gains are magnified in a bull market though IULs are completely protected from downside market movements so the only losses would be the leverages costs in a down year. There are numerous PF strategies, and not all are exlusively for high net worth individuals. As long as IULs are held for the long term, the fees associated with this type of financial tool are negligible.

amother

Linen

Wed, Jan 08 2020, 2:41 am

I always recommend indexed funds through a low fee investment management company such as Vanguard or Schwab. That's where I keep most of my investments.
But the market is sky high now and I seriously doubt it will stay here. I'm considering switching to a more stable fund for a while. And I hardly do that. The conventional wisdom is to stay the course.
So... I just don't know.

amother

Vermilion

Wed, Jan 08 2020, 3:42 am

rick1 wrote:

If the salesman falls for their own shpiel they're in trouble. You really think there's 100% downside protection from trading losses but complete upside from leveraged market exposure?

amother

Burgundy

Wed, Jan 08 2020, 9:31 am

amother [ Vermilion ] wrote:

If the salesman falls for their own shpiel they're in trouble. You really think there's 100% downside protection from trading losses but complete upside from leveraged market exposure?

There isn't 100% downside protection, double digit gains, and negligible commissions. This product doesn't exist.

Life insurance products have the highest commissions.

amother

Slategray

Wed, Jan 08 2020, 4:00 pm

amother [ Burgundy ] wrote:

There isn't 100% downside protection, double digit gains, and negligible commissions. This product doesn't exist.

Life insurance products have the highest commissions.

You don't seem to understand how IULs work. We signed up for an IUL about 9 years ago and have been very satisfied with the results. Our return has been 10-12% consistently. IULs provide 100% downside protection by utilizing caps and floors. This was one of the main reasons we chose to sign up for the policy as we are somewhat risk averse and couldn't handle direct market exposure.
While I'm not exactly sure how premium finance works, anything leveraged 3 to 1 can easily turn the SP500 7% average return to 12-15%. Yes I'm sure the agent that sold us the IUL made a decent commision, though the performance so far has been great and the policy fees barely make a dent in the cash value.

amother

Vermilion

Wed, Jan 08 2020, 4:17 pm

amother [ Slategray ] wrote:

The S&P is up 180% over the past 9 years. On a 2X leveraged product, you should be averaging 25% a year. Half your money went to fees.

If you had bought a pure 2x leveraged ETF 9 years ago (like SSO or something) you would've had 500% returns by now. I'm guessing that you don't have 6x the money you started with.

A lot of people made a lot of money in the dot com bust. It doesn't mean they were good investments... It means they were in the right place at the right time.

Any leveraged product delivers outsized returns during bull markets and outsized losses during bear markets. Period.