what to do with $20,000?

[mostsmooth]

i wish i knew about all the things some of you guys talk about in here, but i dont, which leads me to the topic of this thread. what would be the smartest thing to do with $20,000 right now? sitting in the bank has got to be the worst thing. all input appreciated.

[Ray Zee]

use it for a down on a house. then fix it up in spare time and that will be the best investment you ever made bar none.

[Waterproof]

Housing market- looks positioned to crash (I hope anyway!)
Buy beer, invite me

[Mark Heide]

mostsmooth,

I don't agree with Ray unless you need a house or you expect values to go up where you buy one. This takes some research to assess, just like picking stocks.

If you are looking to invest rather than gamble, you may want to start investing by buying an index fund like the S&P 500 from someone like Vanguard. Futhermore, learn as much as you can about investing. I suggest trying the Motley Fool website www.motleyfool.com. (http://www.motleyfool.com.) Just like when you first start playing poker you should play tight and conservative until you understand the game better and discover other things you can do.

Good Luck

Mark

[GeorgeF]

"sitting in the bank has got to be the worst thing"

Not necessarily. For example if the real estate market were to collapse having a solid down payment would allow you to take advantage of the situation. Note the real estate market will not likely collapse any time soon, but it will eventually (as it always does).

You also need a cash reserve in case of emergencies.

As to things you could do with the money.
1) If you are young investing in yourself might be the smartest thing. The right education, spouse, clothes, psychiatrist, ect. might do wonders for your future earnings power.

2) If you don't know what to do, diversify. Put some money in each of the following: Cash (US dollars), Foreign currencies (www.everbank.com), US bonds (www.vanguard.com, http://www.treasurydirect.gov/), foreign bonds (Pimco), stock index funds (www.vanguard.com).

3) As to real estate. I do not suggest you borrow money to invest in anything you do not understand. Only you know if you are ready to put up $20k to borrow $100+k. You might read some of www.JohnTReed.com (http://www.JohnTReed.com) books first.

[AceHigh]

Buy 500 shares of Shufflemaster (SHFL).

[Carl_William]

"What to do with $20,000?"

If that is all you got -- then keep some as an emergency fund.
Get a job and add to it. $20,000 is a nice sum of money but not much in this day & age – most cars cost more then $20,000.

From my feeling for your question "what to do with $20,000?" -- I take it you are a young guy without much experience for the financial world.

Myself -- I'm an older man -- but if I was 21 or 22 today and knew what I know at my present age and had $20,000 then I would consider some of the following:

Investing: Start a mutual fund at the Vanguard Group:
Buy $2000 worth of "Vanguard Target Retirement 2045 Fund," and read the book "The Intelligent Asset Allocator" by William Bernstein, McGraw-Hill. Dollar average every year in this mutual fund and let it ride – don’t be concerned too much with the ups and downs of the market – in the long run the odds are in your favor. (Hint: intelligent asset allocation is the easiest way to maximize your returns with minimum risk, and you don’t have to waste a lot of time trying to actively beat the market – use your time to learn things, study, and enjoy your youth.) Even at my present age “69,” I just wish I knew about these techniques 10 years ago – it would have enabled me to make much more in the market in the past 10 years.

Emergency: Keep part of the $20,000 as emergency cash – keep enough to live (survive for six months).

Plan your life.


Good Luck -- Carl

[Rooster71]

One of the most important things to remember when investing is to only invest what you won't be needing any time soon. Every time I have invested and THEN had to pull money out, the investment lost value. They really didn't "lose value", I just sold at a loss. Good investments almost never lose value in the long run (sometimes the really, really long run), but most will certainly have flunctuations. It is important to invest in things that you can actually stomach. For instance, if you invest $20,000 in small cap growth stocks or foreign stocks (just an example), how would a 20% drop in value make you feel?

If you are interested in stocks, I would recommend making a small investment of $10-12/month to become a morningstar.com subscriber. They give indepth and un-biased analysis on many stocks and funds. Beware of recommendations from brokerage houses, they are the ones trying to sell you stock.

Hope this helps. Good luck!

[ZeeJustin]

You could buy 900,000 shares of enron.

[Ulysses]

[ QUOTE ]
Buy 500 shares of Shufflemaster (SHFL).

[/ QUOTE ]

I relatively recently sold (and made an incredible return) a large block of SHFL that I bought a while back based largely on recommendations from this forum. However, I don't believe it is a great buy anymore and a couple of gaming industry analysts I've spoken with agree. Just my opinion, FWIW.

[BradleyT]

Or how about WYNN and the Macau(sp?) deal. Those chinese like to gamb00l.

[eastbay]

[ QUOTE ]
use it for a down on a house. then fix it up in spare time and that will be the best investment you ever made bar none.

[/ QUOTE ]

You're watching the mortgage market? This doesn't seem so certain right now.

eastbay

[DpR]

If you want to make it a long term investment (i.e. you are certain you wont need it for several years) and you think stocks are right for you (i.e. you can handle some volatility in the value in exchange for better return) then you should put all of it in SPY. This is a closed end fund - you will effectivley be purchasing some of each stock in the S&P500 (500 different companies many of which you know, and pretty close to the 500 biggest companies).

Do NOT buy 1 stock, in fact do not buy individual stocks at all. Stock symbol: SPY

If stocks are right for you no one can give you better advice than this....

[Ray Zee]

yes the mortgage market is going to get real scary in two months or so. but i stand by my assertion of owning a house as the best investment a person can make. it wont always be the thing that gives the best % return. but overall considerering leverage, and personal satisfaction, nothing is close.

[mostsmooth]

hey all
thanks for the replies
i will go over them and learn some things
answers to some questions:
the 20g is not all i have, its just the amount i feel i can invest and not need it
i own a house (mortgage)
im 33, but never learned anything about investing /images/graemlins/frown.gif

[BigBiceps]

pay off your mortgage early ... yes I am aware of the tax deductions for interest and the current interest rates. I still believe this will be the safest and easiest and close to the most profitable investment you can make. The only other recommendation I would have would be if your income is large (>100k/year) then buy 4 AAA insured LONG TERM(>25 years) (of your state's) municipal bonds and funnel the interest from those bonds into paying off your mortgage early.

[Waterproof]

I love this idea... It's just 25 year bonds? Don't you think interest rates are a little low right now?

The idea is great, but my approach would be to hold this money as cash for a while in a 2% MM account. Then as interest rates increase (the word on the street and in the journal), I would invest in bonds... or maybe a 10 year ladder would work in this situation...

If you're still looking for ideas, do a search on bond laddering. Ya might like it. GL /images/graemlins/smirk.gif

[Waterproof]

I love this tread too... I just keep coming back to it.

Okay, I agree that for long-term investments, stock index funds are the way to go. My entire retirement account is in stock index funds... I personally like the Vanguard Total Stock Market Index (Roth IRA). No matter what index you want to invest in, I would have to advise you and everyone else to use Vanguard. They have the lowest fees in the industry... I only wish that my 401K was with them /images/graemlins/frown.gif

If you want to invest in bonds in order to diversify, I would recommend laddering. There are many bonds index funds out there, but because bonds mature at different times, there is no true "bond index". I believe you can do better laddering... no fees, no unexpected maturities.

Currently, I don't deal in currency... but it could be interesting...

Stay away from single stocks, options, and futures... they are only ment for experts like me /images/graemlins/smirk.gif ... or at least until you gain some more experience...

Of course I still think that 500 kegs would make a great party. GL to ya. /images/graemlins/smirk.gif

[SomethingClever]

[ QUOTE ]
[ QUOTE ]
use it for a down on a house. then fix it up in spare time and that will be the best investment you ever made bar none.

[/ QUOTE ]

You're watching the mortgage market? This doesn't seem so certain right now.

eastbay

[/ QUOTE ]

What makes you say this? The upcoming FED meeting? A likely raise in interest rates?

[RollaJ]

It may not be the safest play, but I think lumber is a great short here /images/graemlins/wink.gif

[DpR]

"The only other recommendation I would have would be if your income is large (>100k/year) then buy 4 AAA insured LONG TERM(>25 years) (of your state's) municipal bonds and funnel the interest from those bonds into paying off your mortgage early. "

Please make sure you are in 35% tax bracket before doing this: >100k is not good enough

[DpR]

Be careful buying individual bonds as well. If you are considering corporates the spreads at the brokerages are KILLER. It is an embedded fee that a lot of peeople do not consider.

[Senor Choppy]

[ QUOTE ]
use it for a down on a house. then fix it up in spare time and that will be the best investment you ever made bar none.

[/ QUOTE ]

Anyone with a decently hourly rate is better off playing more poker and paying someone else to do it for you.

[MMMMMM]

"Anyone with a decently hourly rate is better off playing more poker and paying someone else to do it for you."

Yes to a point, but how many hours of poker can you play per week--long term--without getting burned out?

A little fixing-up could be like a hobby and a little exercise combined--if you like that sort of thing. Some like gardening or doing a bit of yard work. I don't like either but I do like chopping and splitting wood.

[bbooze]

I'm in almost the exact situation as the original poster, so was tickled pink to find this thread.

I was planning on getting a house/condo with the $20K I currently have... but why has it been suggested by some that in two months time I could be burned (in the market sense) by doing this. (I was hoping to buy in exactly two months)

Also, what are the tax implications of doing this if the $20K I plan to use was never reported. I've worked a square PT job for about $7K reported each of the past two years... so it might look odd if I suddenly drop twenty on a house. I'm not worried about getting the actual mortgage, my brother-in-law is going to arrage it, and has said that no matter my lack of work history he'll be able to get it done with no problem. Has anyone ever gotten investigated after doing something like this, that would be the last thing in the world I need to go through next year.
On the same topic, another poster mentioned that paying for Neteller Fedexed checks was a better long term plan than the bank transfers. since this would bypass the tax man. I currently just do $2K bank dumps from Neteller every 8 weeks or so.... and I'm starting to think this might have been foolish on my part. Can anyone elaborate what the poster was talking about?

Sorry if this stuff has been discussed to the point of exhaustion. I've recently jumped ship here from UPF, and they don't talk about money very much over there. If someone has a link to a longer old thread I'll just read that and answer my own questions.
Thanks.

[Nemesis]

yes they'll be suspicious of it. You will prolly have to pay taxes from what i can tell =(