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earlyretirement.
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September 7, 2011 at 5:00 PM #19112September 7, 2011 at 6:25 PM #728606
sdrealtor
ParticipantBuy a house
September 7, 2011 at 6:56 PM #728607earlyretirement
Participant[quote=kev374]So I have $250,000 in savings parked in cash right now earning 1.9% in a CD that’s due to expire soon. I’m just so confused what to do. I don’t want to invest in stocks as I’m not sure the market is in a bubble condition and about to retract soon. I don’t want to invest in gold as it has risen to maniacal levels and i’m not sure if that is a bubble as well.
Given inflation exceeding interest rates (due to our government’s fiscal policies) my nest egg is losing value and i’m not quite sure what exactly to do.
I don’t want to consult a finacial adviser because I personally think most of them are ignorant and don’t know much more than anyone else on this form. I also know many people who have been given extremely bad advice by financial advisers and have lost of lot of their net worth due to them.
I would like to know what you guys in a similar situation as myself are doing to protect the value of your savings.[/quote]
Hey Kev374,
I know lots of people in your situation that don’t want to be in the stock market or already cashed out of gold already and don’t want to get in at these prices.
I’ve mentioned this before on another post but I’d recommend probably sticking it in an account where you will earn Frequent flyer miles. Look at one like this:
http://bankdirect.com/products/checkingmileage.aspx
You will earn plenty of miles. CD’s are paying almost nothing these days anyway. You can rack up plenty of miles per year. Even if you don’t fly much, odds are you probably know family/friends that do. It’s against the rules to “sell” your miles but you can easily barter with your friends or family for them and earn MUCH more than the puny rates you are going to earn in a savings account or CD.
Not only that but the best bang for the buck is using the miles to upgrade to business or first class on international flights. I’ve used upgrades many times on international flights that were worth as much as $7,000 or more.
Also, check out the One World Awards using American Airlines miles. GREAT use of miles if you plan an around the world trip or even a trip with many stops. You can read up on it here:
I’ve done a few of those before and flown around in business or first class on miles I’ve earned in these accounts and a GREAT use of miles, IMHO.
Plus the best part is the miles aren’t taxable…. so it’s tax free “income” vs. the puny rates that you will earn in a CD that will also be taxed.
The banks like Bank Direct have devalued big amounts and made the program more limited compared to before. Before, you could stick in a million or more and earn massive amounts of miles each month. Same at BBVA Compass (old Guaranty Bank). Many of us are fortunate enough to have been grandfathered in at BBVA where we still get miles in our savings accounts. But they devalued them there as well. $100,000 used to earn 10,000 miles per month but now it’s 5,555 miles per month.
These accounts are FDIC insured so no worries there. Plus you can add on your wife and kids as POD beneficiaries so you can easily get the protection levels up. But you’re guaranteed anyway to $250,000 so you’re good.
This is something that is kind of idiot proof. You don’t have to do anything and you get the miles. Plus you can pull the money out whenever you want. No long-term commitments. The low interest rate environment will stick around for the next few years so it won’t make sense to roll it over in a new CD.
I fly pretty much non-stop so these miles are really valuable to me. Maybe not so much for you. But I still know friends and clients that I’ve recommended these programs to and they absolutely LOVE it. It’s typically not difficult to find people that can use these miles.
This would be the easy thing to do vs. any other major investment that has risks like buying a house, etc.
Good luck!
September 7, 2011 at 6:58 PM #728608ParticipantNo buy a house from me
September 7, 2011 at 7:17 PM #728609PCinSD
GuestFind a conservative hard money lender to invest with. You should average 12%.
September 7, 2011 at 7:26 PM #728611EconProf
ParticipantI’d agree with the hard money loan idea. Just make sure you invest conservatively, i.e., good loan-to-value ratio of 70% or less, ALL the paperwork done right, and into a property you wouldn’t mind owning. Because there’s a good chance you will. But if your LTV ratio is low enough, you are getting it at a good discount.
Also, only 1st trust deeds; avoid 2d TDs.September 7, 2011 at 8:09 PM #728614ParticipantI just saw your income on the other thread and you should definitely buy a house from me. I promise to spend all the money stimulating the economy. Think of all the good things I could do like
Take TG out for a night of debauchery
Buy scaredy a new bike
Get BG a 300K mile tune up on her Lexus
Take Allen elk hunting in Montana
Buy CAR enough stamps to send every congressman/woman and senator a letter.
Send Brian to SF so he can let his freak flag fly
Buy Desmond enough fire wood to survive a nother frigid Winter on the mountain top
Pay for UCGal’s RealtyTrac subscription so she can stay up to date on all the lastest foreclosure data
Unlimited Happy Meals for the Jacarandoso/Rusctico kids
Dinan chips for FLU’s cars
A 1 year subscription to Money magazine for Econ Prof
Buy JP seeds and fertilizer for the garden she has dreamed of for years
And not to forget me, buy myself a case of Dalla Valle
Really kev, dont be so selfish. We are all depending upon you (snark off)
September 7, 2011 at 8:24 PM #728616scaredyclassic
Participanthey, a new bike! yay! things are looking up for ol’ Gil.
September 7, 2011 at 8:38 PM #728617Participantspread it out 4% in every asset class you can think of.
it always feels painful to take money from cash and put it anywhere.
vde for energy
gdx for gold miners
short the market, go long the market, sell either on when it gets to 7% keep the other.
gold coins
emerging makets
cash
i don’t know.
forget it.
September 7, 2011 at 8:52 PM #728619Guest[quote=EconProf]I’d agree with the hard money loan idea. Just make sure you invest conservatively, i.e., good loan-to-value ratio of 70% or less, ALL the paperwork done right, and into a property you wouldn’t mind owning. Because there’s a good chance you will. But if your LTV ratio is low enough, you are getting it at a good discount.
Also, only 1st trust deeds; avoid 2d TDs.[/quote]Yep. However, if it’s done right, there’s NOT a good chance you will own it. That could be a nice gift if it happens, but it usually doesn’t. And 1st TD’s are the only way to go. Good luck.
September 7, 2011 at 10:44 PM #728628CA renter
Participant[quote=sdrealtor]I just saw your income on the other thread and you should definitely buy a house from me. I promise to spend all the money stimulating the economy. Think of all the good things I could do like
Take TG out for a night of debauchery
Buy scaredy a new bike
Get BG a 300K mile tune up on her Lexus
Take Allen elk hunting in Montana
Buy CAR enough stamps to send every congressman/woman and senator a letter.
Send Brian to SF so he can let his freak flag fly
Buy Desmond enough fire wood to survive a nother frigid Winter on the mountain top
Pay for UCGal’s RealtyTrac subscription so she can stay up to date on all the lastest foreclosure data
Unlimited Happy Meals for the Jacarandoso/Rusctico kids
Dinan chips for FLU’s cars
A 1 year subscription to Money magazine for Econ Prof
Buy JP seeds and fertilizer for the garden she has dreamed of for years
And not to forget me, buy myself a case of Dalla Valle
Really kev, dont be so selfish. We are all depending upon you (snark off)[/quote]
LOL!!! 🙂
That was pretty good, sdr.
September 7, 2011 at 10:49 PM #728629ParticipantKev,
Sorry to hear about your situation. Wish I had the answer, but we’ve been sitting in ~1% cash accounts for too long, ourselves. What REALLY sucks is when you have good CDs or bonds that get called. Just happened to me **AGAIN** last week. The only good news is that the rest of our fixed income stuff all has call protection.
This has got to be one of the worst investing environments in decades.
Just remember, return OF capital vs. return on capital. Good luck with whatever you do.
September 7, 2011 at 11:12 PM #728630temeculaguy
Participantbuy a house from sdrealtor, I like his stimulus plan. Due to some recent recon, I have his next night of debauchery all planned out.
I can’t give advice about what to do with all that money other than to be thankful for your situation, what a wonderful problem to have. This is one of those problems that isn’t really a problem. Like the woman who has a problem finding a bra because her breasts are ginourmous, or the guy who has decide which woman to go home with, or you, who has to decide what to do with all that money. Step one, thank the universe, Step two, I don’t know because I’m still at step one.
September 7, 2011 at 11:35 PM #728631afx114
ParticipantTravel the world for multiple years, because the return on investment in memories is astronomical.
September 8, 2011 at 6:45 AM #728636ParticipantMaybe having too much stuff or cash is a curse. Actually that amount of money is irritating. It’s just enough to give some illusion of security that could promptly evaporate. Cursed quarter million. Too small to matter too big to ignore. I hate that sum!
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