Hi Ritual, and welcome.
Firstly, right off the top, my advice to you would be "sell the silver
IMMEDIATELY." It's had a great run. You're right - you got lucky. Now do the smart thing and lock in those gains. Precious metals are an entirely speculative investment. They pay no interest or dividends. Their value relies entirely on market sentiment. There are no fundamentals to support its value, at any price. You say you're terrified of losing money, and PM's are among the riskiest assets you can invest in. So sell it all
YESTERDAY.
Beyond that, I have 3 points to make.
Number one, in order to provide meaningful advice, we need to know more about your financial situation and goals. What do you do for a living? Is your job secure? What assets/debts do you have? What do you have for retirement savings? Company-matching 401(k)? IRA or Roth IRA? Do you have an emergency fund? What goals do you have? Do you want to retire early? Do you expect to provide financial support to any parents in the future? Do you want to travel? Do you collect antique cars? The more details you can provide, the better advice we can give you.
Secondly, I'd give you the generic advice, which is probably the best approach in your case, given how little we know about your specifics. I tend to recommend Dave Ramsey's "Baby Steps." Step one is gather up $1,000 as a starter emergency fund. It sounds like you're already well past that. Step two is pay off all non-mortgage debt (student loans, credit cards, vehicles, lines of credit, etc.). I'm guessing you've also already achieved this one. Step 3 is build up that emergency fund until it is enough to cover 3-6 months of expenses. Again, based on your silver windfall, you probably already meet this. Keep this cash completely liquid, in a bank account somewhere. Don't try to get fancy with it and invest it in anything except maybe some CD's or something. The next step is to be saving 15% of your income for retirement. This is where I'd take whatever money you have left after the first 3 steps and use it to fill up any room you have in your 401(k) and IRA.
As for what, specifically, to invest it in, well you'll need to learn a little bit about asset allocations. In general, you should have some invested in the market (probably around 60-70% for someone of your age), and the rest in fixed income like bonds, CDs, high-interest savings accounts, treasury bills, and whatever else. Don't invest in real estate because you already have a ton invested in your home and rentals.
So what do you invest that 60-70% "equity" money into? Again, the general advice is a mix of low-fee passively-managed index mutual funds. I'd split it up 25% domestic small-cap, 25% domestic large-cap, 25% foreign market, and 25% emerging markets. That's a pretty standard allocation. However, there's one thing you said that may require adjusting this traditional approach.
Ritual wrote:
I have over $100,000 just chilling because I really dont know what to do with it. I cant lose it ever.
This is the third thing. You say you absolutely cannot lose any money. That says "low risk" to me. Unfortunately, it also says "inexperienced." Let me explain.
The only way to guarantee not losing any money at all is to stick it in an FDIC-insured savings account. You're guaranteed to get the interest the bank pays, and if the bank ever folds, then the government steps in and makes you whole (up to a $100,000 limit, although I think this was raised to $200,000 during the crisis in '08). The problem is that the bank pays piddly interest (less than 1%). That interest is typically less than inflation, so while your money is growing in an absolute sense ($101 > $100), it's actually shrinking in a real sense, as inflation erodes its value.
The only way to earn a higher return is to take more risk. That's an absolute, fundamental law in economics. If it were any other way, then the world would be flipped upside down as a torrent of cash flowed into low-risk, high-return investments, and equity markets were starved for cash because they offered less return and higher risk than a bank account. Why would anyone ever invest in companies in that scenario? The economy would completely collapse. In order to attract investment capital, equity markets
must offer higher returns than risk-free vehicles like bank accounts, CDs, and treasury bills. But there are no guarantees, so there is more risk involved. It's rule #1 in economics, and there's no getting around it. If anyone ever tells you they can give you a "risk-free" return of anything higher than what a CD or treasury bill is currently paying, they're a filthy lying scammer.
You mention the advice to "invest in what you understand," and that's good advice. You admit that you currently have a soft understanding, which limits your investment options. So you can either stick to what you know and give up the possibility of better returns, or you can expand your understanding (and thus, your investment options). There are plenty of great books to introduce you to how markets work. Here are some I'd recommend, in the order I think you should read them:
- Your Money or Your Life (Robin and Domingues)
- The Little Book of Common Sense Investing (Jack Bogle)
- The Richest Man in Babylon (George Samuel Clason)
- The Total Money Makeover (Dave Ramsey)
- Still The Only Investment Guide You'll Ever Need (Andrew Tobias)
- The Millionaire Next Door (Stanley and Danko)
- Four Pillars of Investing (William Bernstein)
- Where are the Customers' Yachts? (Fred Schwed)
If you're a numbers nerd, you could add "A Random Walk Down Wall Street" to the list, but it's a pretty long and dry read.
Whatever you do, don't read "Rich Dad, Poor Dad." It's utter garbage and terrible advice. It's a bunch of fluff with little to no substance, and what little substance is there is extremely high-risk, tunnel vision real-estate nonsense that might have seemed like a good idea in 2006, but is utterly laughable in today's market.
If you read all of those books, you'll be so far ahead of where you are right now you won't even recognize yourself. You won't need any of our advice, and you'll realize you don't need an opportunistic, conflict-of-interest "Financial Advisor" to "help" you.
Hope this helps, feel free to answer my questions at the beginning of this post, but most importantly, get to the library and start reading!
I know it was pretty paranoid but looking back on it now I feel like the smartest idiot ever. This has given me the most incredible sum I've ever had. I know its probly low for most but the amount has really blown my mind. (Yes I've sold alot, more on this in a sec)