How to invest $35,000 if the investment period was 10 years

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garcia2012
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Re: How to invest $35,000 if the investment period was 10 ye

Postby garcia2012 » Thu Sep 27, 2012 6:14 am

Please see my responses in blue



dpixel wrote:And keep some cash on hand is case the market tanks so you can get in on some discounted prices.


I could be wrong but I took the question to be soliciting suggestions for a "handsoff" portfolio. If the OP wants to actively trade then there is nothing wrong with your suggestion but for a buy-and-forget investments that advice is anathema.

Yes I do want a handsoff portfolio and I do not want to be actively trading


Can you provide more information?
- What will you use the money for?
- Do you intend to actively trade or do you want to buy something now and forget about it for 10 years?
I do not want to be actively trading so a handsoff approach.

- What do you mean by 15% risk tolerance? Do you mean you don't mind losing 15% in one day? One investment? Would losing 15% of your money over the 10 years be acceptable?
We could handle a 15% average lost of the whole investment after the end of the 10 years.

- What is your tax situation? If this investment produces income, what rate will it be taxed at?[/quote]
I stated this in my post but here it is again If you started this investment before the end of 2012 then in 2013 onward you would have about $1,600 of tax free space left empty in a Roth IRA. You have a 7 month emergency fund, 0 debt, Taxes-married filing jointly, 15% Federal Tax, no state tax.

I would also like to add that I am new at all of this and what our goal would be if it is even possible is to try to take the 35,000 plus 400/month*10years=$83,000 and with the possibility of losing 15% of that then trying to get the $83,000 into around $113,000 to $120,000 range.

garcia2012
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Re: How to invest $35,000 if the investment period was 10 ye

Postby garcia2012 » Thu Sep 27, 2012 6:18 am

DoingHomework wrote:
Bichon Frise wrote:My question is, how does everyone know what is best without more details?

Why the ten years? What will it be used for?
Do they have an emergency fund?
What does 15% risk really mean? fluctuation? % of reduced sleep?
Where else are they invested?

It was a vague question which merits a vague response. Detailed responses above are merely what the posters would do, which may or may not be a "good" suggestion for the OP.


You are absolutely right.

Even my attempt at a helpful response was based on an assumption that I had in the back of my mind that this is for a child's education. If so, I think there are some things that can be done that are separate from anything the OP even thought about. For example, zero coupon bonds can be tax free if used for education (I think) but I think they would be a terrible idea for other uses.

But really, we need more information.


Please see my additional post for more info and basically I am new at all of this and what our goal would be if it is even possible is to try to take the 35,000 plus 400/month*10years=$83,000 and with the possibility of losing 15% of that then trying to get the $83,000 into around $113,000 to $120,000 range.

Bichon Frise
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Re: How to invest $35,000 if the investment period was 10 ye

Postby Bichon Frise » Thu Sep 27, 2012 7:09 am

garcia2012 wrote:
DoingHomework wrote:
Bichon Frise wrote:My question is, how does everyone know what is best without more details?

Why the ten years? What will it be used for?
Do they have an emergency fund?
What does 15% risk really mean? fluctuation? % of reduced sleep?
Where else are they invested?

It was a vague question which merits a vague response. Detailed responses above are merely what the posters would do, which may or may not be a "good" suggestion for the OP.


You are absolutely right.

Even my attempt at a helpful response was based on an assumption that I had in the back of my mind that this is for a child's education. If so, I think there are some things that can be done that are separate from anything the OP even thought about. For example, zero coupon bonds can be tax free if used for education (I think) but I think they would be a terrible idea for other uses.

But really, we need more information.


Please see my additional post for more info and basically I am new at all of this and what our goal would be if it is even possible is to try to take the 35,000 plus 400/month*10years=$83,000 and with the possibility of losing 15% of that then trying to get the $83,000 into around $113,000 to $120,000 range.


Good luck. That is a pretty high return.

Just because you want something, doesn't mean you get it. There is a general relationship between risk and return, and you want to violate that relationship. You want to basically triple your money in a 10 year timeframe. Swing for the fences buddy.
Bichon Frise

"If you only have 1 year to live, move to Penn...as it will seem like an eternity."

avocado wrote:Good to see you back, I was starting to miss your incisive commentary!

stannius
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Re: How to invest $35,000 if the investment period was 10 ye

Postby stannius » Thu Sep 27, 2012 11:59 am

Bichon Frise wrote:
garcia2012 wrote:Please see my additional post for more info and basically I am new at all of this and what our goal would be if it is even possible is to try to take the 35,000 plus 400/month*10years=$83,000 and with the possibility of losing 15% of that then trying to get the $83,000 into around $113,000 to $120,000 range.


Good luck. That is a pretty high return.

Just because you want something, doesn't mean you get it. There is a general relationship between risk and return, and you want to violate that relationship. You want to basically triple your money in a 10 year timeframe. Swing for the fences buddy.


What? No it's not. Maybe the risk isn't accurate (it's not usually expressed quite like that) but over 10 years that's only a 4% to 5% return. That isn't anywhere near "swing for the fences" high.

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Re: How to invest $35,000 if the investment period was 10 ye

Postby Bichon Frise » Thu Sep 27, 2012 12:51 pm

stannius wrote:
Bichon Frise wrote:
garcia2012 wrote:Please see my additional post for more info and basically I am new at all of this and what our goal would be if it is even possible is to try to take the 35,000 plus 400/month*10years=$83,000 and with the possibility of losing 15% of that then trying to get the $83,000 into around $113,000 to $120,000 range.


Good luck. That is a pretty high return.

Just because you want something, doesn't mean you get it. There is a general relationship between risk and return, and you want to violate that relationship. You want to basically triple your money in a 10 year timeframe. Swing for the fences buddy.


What? No it's not. Maybe the risk isn't accurate (it's not usually expressed quite like that) but over 10 years that's only a 4% to 5% return. That isn't anywhere near "swing for the fences" high.


I think your math may be off a little Stannius.

Just using the law of 72, if you had 7.2% annual return your money would double in 10 years. Or, if you had 10% annual return, your money would double in 7.2 years. AREYAWITHME?

But, since we want to actually calculate these number, let's do so. Say you had....$35k to invest for...let's say 10 years. With a 4% return, the amount you had at the end of 10 years would be...35k*(1+.04)^10 or $51808.55. 5% => $57011.31. But, not what the OP "wants."

Since the OP wants $83k or $113k to $120k after the 10 years, we can calculate what that would look like. $113k after 10 years would need an AVERAGE 12.4% annual return. $120k after 10 years would need an AVERAGE 13.1%. If they want $83k, that is an average annual return of 9.02%. That is more reasonable, but isn't risk adjusted and absent in the last 10-15 years or so. Capping one's risk exposure will also limit their ability to invest to get the max.

Where are you getting your numbers?
Bichon Frise

"If you only have 1 year to live, move to Penn...as it will seem like an eternity."

avocado wrote:Good to see you back, I was starting to miss your incisive commentary!

catchingup
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Re: How to invest $35,000 if the investment period was 10 ye

Postby catchingup » Thu Sep 27, 2012 1:41 pm

The OP is investing $36,000 AND $400/month * 10years = an additional $48,000, or $84,000 total.

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Re: How to invest $35,000 if the investment period was 10 ye

Postby Bichon Frise » Thu Sep 27, 2012 2:10 pm

catchingup wrote:The OP is investing $36,000 AND $400/month * 10years = an additional $48,000, or $84,000 total.


Got it, my mistake. I took the $400 a month to be the derived income. 4 or 5% is then a more reasonable number. I stand corrected if this is the case, and Stannius could very well have a better estimate than I.
Bichon Frise

"If you only have 1 year to live, move to Penn...as it will seem like an eternity."

avocado wrote:Good to see you back, I was starting to miss your incisive commentary!

stannius
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Re: How to invest $35,000 if the investment period was 10 ye

Postby stannius » Thu Sep 27, 2012 3:17 pm

Bichon Frise wrote:
catchingup wrote:The OP is investing $36,000 AND $400/month * 10years = an additional $48,000, or $84,000 total.


Got it, my mistake. I took the $400 a month to be the derived income. 4 or 5% is then a more reasonable number. I stand corrected if this is the case, and Stannius could very well have a better estimate than I.


Yes I think that was the confusion.

$35k giving spendable income of $400 per month AND growing to $120k would take a 21% growth rate. I Love the Nineties!

$120k giving spendable income of $400 per month is right about 4%, which is exactly the rule of thumb "safe withdrawal rate". Of course that's assuming OP gets to the target number.

I am not sure if $35k growing to $115k +/- 5k is "swing for the fences" crazy or not. Everybody talks about how we should expect lower stock market returns for the forseeable future... but long term average is 12%, which would be just enough. It's up for debate anyways, not a foregone conclusion either way.

Without knowing what the OP plans to do with the money, and how flexible those plans are, it's a bit hard to advise...

But $35k + $400 every month, turning into $120k in 10 years, seems really quite achievable.


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