54
First congratulations and well done in both your salary and investment. Hopefully there will be more of this in the future.
First I applaud your initial approach. Give some, spend some, save some. The disagreement with your wife is standard. One member of a partnership tends to be more conservative than the other; the disagreements help bring balance into ...
43
One benefit of cash ETFs over a bank deposit is if you're interested in diversifying your currency holdings, they are a cheaper method than going to traditional currency exchanges. For instance, if you're in the US, and you want some of your cash holdings to be in EUR to hedge against the possibility of the dollar falling, you could exchange your dollars to ...
35
What you do with your income, and with your windfall, should be based on your retirement goals, which you have not mentioned.
For many people, a paid-off residence and $1M in the bank would mean retirement could already start. But it seems your lifestyle (young children, Porche 911, etc.), won't quite allow for that. So you acknowledge that you will be ...
26
I would call that strategy "waste of time":
Your individual purchase decisions are not meaningful for the bottom line of the company.
A single individual (you) simply isn't representative enough of the market as a whole.
As the Canon example shows, how a company behaves depends of a lot more than consumer products, and many of those factors are difficult to ...
17
I'm going to be a bit practical here. Good for you for wanting to give to charity, but I'm going to ask you to hold off for a bit.
Warning, Will Robinson, Warning! As happens occasionally on this site, people are scammed into thinking they are getting a bunch of money and aren't actually going to get that money. Don't spend Any money until you get paid ...
17
Your investments are an attempt at hedging your consumer price risks. You are trying to choose stocks that will help fund your planned consumption, such that if the prices of your favorite products spike, your investment returns will roughly compensate. If you plan to consume N widgets per year, you are buying up-front your own "little factory" (small share ...
13
The term "unsettled funds" is a legal term, defined by legislation and judicial decisions and enforced/monitored by the SEC. The intuition is the idea that while a financial transaction on a security may be processed at one point in time, the "settlement" of the cash takes time and could end up reversed or delayed (such as for rule violations, investigation, ...
10
No, it is not even close to index investing. From Investopedia, with my emphasis:
Index investing is a passive strategy that attempts to generate
similar returns as a broad market index. Investors use index investing
to replicate the performance of a specific index – generally an equity
or fixed-income index – by purchasing exchange-traded funds (...
10
If we exclude speculation about future value, there's one rather simple reason to buy such a bond:
If you're looking for a safe way to store a lot of money, this is in fact the cheapest option.
Let's assume you're a bank with a lot of money that your customers gave you. This money must be stored somewhere. Of course you can lend it to other customers ...
9
It can be part of an investment portfolio.
If somebody has several investments at a broker, they may have ETFs/mutual funds that invest in various sectors or indexes, they can own various individual stocks, but at this moment in time are accumulating cash because they think that is the best choice for new money. Or maybe they recently sold some or part of ...
9
But it does seem that, say you had a crystal ball and you knew when a
recession was going to occur, then switching to a conservative
strategy for that period is the smart move to make.
But you don't have a crystal ball.
To be clear - I'm not talking about timing individual stock picks.
...
switch one's managed fund from an aggressive to a ...
7
If your investment property is worth $900K now and you foresee it going down in value, why not sell it now and buy another one (or two) when the market bottoms out?
Your wife wants to reduce the risk in your life. If it were me, which of the 3 halves of your brain would I listen to? Not #3; saying "to hell with it" and just buying an expensive house where ...
7
Someone who would invest part of their assets in a term deposit might hold a cash ETF instead because it presents a similar risk/return profile, but superior liquidity.
A term deposit requires your invested capital to remain locked up until the term expires. A cash ETF can be sold at any time, assuming sufficient liquidity. This is less important for a ...
7
My best guess would be:
Liability.
If someone sues "you" for something that happens at a certain property, they're really suing the company which owns that property.
In the event that the company loses the lawsuit, you liquidate that property to pay off the judgement while retaining all of your other property.
6
Essentially, if your are an institutional investor you may want to keep a certain percentage of your holdings in cash to reach a balanced asset allocation, in the same way as an individual investor (you & I) would to.
But as your asset holdings are in the millions and billions, you naturally will have a need for broader diversification among different ...
6
At your age there are a number of things you can do to build wealth, but not all are traditional investing.
One thing you should think about is investing in yourself - by which I mean doing things to increase your long term earning power. Maybe you should start saving for college, if that's something you might do and if you don't live in a country with free ...
6
The limitations of 529 accounts have been mentioned in comments, so think about an UGMA (Uniform Gifts to Minors Act) account.
https://www.investopedia.com/terms/u/ugma.asp
https://www.troweprice.com/personal-investing/products-and-services/non-retirement-accounts/ugmas-utmas.html
Up to $1,050 in earnings tax-free.
The next $1,050 is taxable at the ...
6
What would make investing into my 401k the better option other than NW?
Company match. Eliminating all 401(k) contribs means no company match, and that's a pay cut, which naturally is Unwise.
More important is the foolishly binary thinking embedded in your statement:
If I choose to invest $19k into my 401k
Who mandates that you must fully contribute ...
5
You're correct that paying your interest-bearing debts is the frst move before you put anything in an investment. Makes no sense to maybe get 7% return on an investment while you're accruing interest at a higher rate than that.
The next step would be to establish a liquid savings. Having a buffer to be able to pay unexpected expenses or to support yourself ...
5
Change the property.
In the US there are ways to roll an investment property ownership to another more expensive property without paying capital gains on the first one (deferring until the sale of the next property/properties).
If that is an option in Australia, I would use between $1,000 and $50,000 to buy a new rental property in an area that you ...
5
If you are a retail investor with a bank account, and the bank goes bust, you lose your money unless your country has some guaranteed government-operated protection scheme. Even if such a scheme exists, it only protects a limited amount - e.g. the UK guarantee scheme protects a maximum of £85,000 for all your accounts with one bank.
And since 2008, the ...
5
Unless your child has earned income an IRA or Roth IRA is not available.
You can use a 529 plan to save money. It has several advantages in that the money grows tax deferred. Some states give you a state tax break on contributions. You have to check for your state.
It can be used for post-secondary education, which means that it can be used for vocational ...
5
The Securities Exchange Act of 1934 formed the SEC and granted it the power to oversee all securities as well as the markets, the conduct of brokers, dealers, and investment advisers as well as the financial reports required of publicly traded companies.
More specific to your question, its anti-fraud provisions prohibit misstatements or omissions in an ...
4
You may have stumbled upon a particularly unattractive ETF because as you say, the yields don't seem to be better than what you could get at your local bank. I'm not sure if is due to the nature of the Australian cash markets at the moment but I do know that there are attractive examples of this in the US.
In the US we have "Money Market Funds" which ...
4
You sold your ETF shares so the transaction is complete. Poof! Your shares are gone.
Equities have a T+2 settlement date. Since it's a Cash Account, that means that the proceeds from your sale will be available for trading in two days.
In a margin account, your broker would allow you to buy other securities immediately.
4
I saw a nice sound-bitey phrase today that I think helps address this question. "It's not how you time the market, but time in the market."
That reminded me of an article I read (and I looked for a while, but couldn't source it, so please accept my apologies that I cannot properly credit the original author). He took 3 hypothetical people.
Each had $12k to ...
3
Tax considerations are top of the stack
You seem content to collect the money, pay the tax, and then decide what to do with the money. That is offbeat enough I'd even use the word "wrong".
You need to talk to a tax lawyer or CPA who does not sell or recommend investments. (investments sold by advisors pay sales commissions, and they are inculcated to ...
3
In #1, you ask if there's any truth to the possibility of a gap preventing a fill.
Yesterday, IRBT closed at $89.63 and reported earnings shortly thereafter.
At 4:01:04, price was huge at $85.00 x $89.62 (always reminding me of Black Monday in 1987). The first problem is that the wide spread effectively runs all stops from $89.62 down to $85. OUCH. ...
3
Debt funds are exposed to fixed income risks, which overlap with but are not the same as equity risks. Equity, for example, falls during every recession. Debt may or may not.
The main risks you face in fixed income assets are:
Inflation risk. If inflation ends up being higher than expected, the price of your fixed-income assets will likely fall because the ...
3
In order to have a "market" price and ticker symbol or ISIN (which is what I think you mean by "no one is mentioning the stock name") the stock must be listed on a market. Remember that the stock price is the last price someone paid for it on a stock market.
A symbol will be allocated by each stock market it trades on at or just before IPO; there is no ...
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