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The standard answer is that if you need the money soon (less than three or so years), you should not be putting it in risky investments and just park the money in your savings account or similar "safe" holdings. Since you plan to buy in a year, you probably should leave it in your bank account. Sure, you won't gain much interest, but you also sound like you ...
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There are no safe one-year investments that pay a high rate of return. If they existed, then everybody would be putting all their money into them.
If you want to be confident that the money will still be there in a year's time, just put it into the best bank or building society account you can find. The interest over one year will be negligible anyway.
...
12
The three key differences between a Roth IRA and taxable investment account are:
Tax on gains
Access to gains
Eligibility to contribute
With a Roth IRA, you don't pay any income or capital gains tax on the earnings in the account, but you can't touch the gains until you are at least 59 1/2 years old (if you do, you will pay taxes, in addition to a penalty)....
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There are a few common errors you are making in your statement. Before I try to address what I see as problems with your line of thinking, take my overall response to the headline of your question as asked:
Why is it ever a good idea to found a company? To make money, to pursue a hobby, or both.
As to issues with your line of reasoning, consider:
(1) A '...
6
What about that graph today is different from that graph would have been 6 months ago? People 6 months ago bought thinking it would still go up, and it has. That's why people are buying today. That's what you asked. They may be right, they may be wrong, but that's why they are buying.
Further, they may be buying because they have few other options. If ...
5
In as short a time as a year, the best way to invest money is to simply save it. "A penny saved is a penny earned".
Simply not eating out all the time will save you thousands of dollars a year, which is more than most investments will earn, unless you have a large amount in an investment and have some really good stock brokers working for you. For instance, ...
5
Since the S&P 500 ETF will probably have more gains, it would benefit more from being in the tax advantaged account. Personally I prefer to have all of my accounts balanced. But based on the parameters of your question, it would most likely be optimal to have the entire Roth IRA invested in S&P 500 ETF and the entire taxable brokerage account ...
5
In exchange for each share of Celgene, you received 1 share of BMY, $50 and 1 share of BMY.RT. The latter is a security that will be pay out IF (and only if) three Celgene drugs currently in trials are approved by the FDA by certain dates ending 12/31/21. If all three are approved, it pays out $9. Anything less and it's worth will be zero.
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Based on your comment that this will be needed soon for tuition, removing the money from the stock market was a Good Idea.
I'd put the money in a combination of high-yield savings account and high-yield 12 month CD(s) from an online bank. They're just as safe as regular banks, but pay interest rates that almost keep up with inflation.
Two which I would ...
4
While it's true that some companies may cut their dividend if a bad year pushes them over the edge, overall dividend yield will increase in a bad year because of share price decline.
Here's the yield for the SPY for the past 15 years. As you can see, its yield dramatically increased in 2008 when the market dropped ~39%.
Date Yield
Dec 31, ...
4
In addition to what yoozer8 wrote, you can't "put back" contributions (not gains, but contributions) that you withdrew.
For example, if you contribute $6000 to a Roth every year, and need to withdraw $10000 for some purpose or another, the money is gone (from your IRA; you still have the $10000, but can't later1 reinvest it back in the Roth). Whereas if ...
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TSP was created to be a retirement plan for Federal government workers, which is why it only allows participation by Federal government workers (and dependents and survivors). Yes, it is very like a 401k; it was designed to be modelled almost exactly on the already-existing 401k program, except that 401k's can only be sponsored by a private entity which the ...
4
You should be putting it in a cashlike, very low volatility investment, preferably an insured one like a CD or municipal bonds.
It might seem clever to put it in the stock market and get a 10% bump, but you could just as easily take a -20% beating. That is called volatility and it's the thing to avoid.
answered Jan 11 at 7:20
Harper - Reinstate Monica
37.2k7 gold badges60 silver badges122 bronze badges
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I deny your assertion that that market is overbought, and have a graph to lend credence to my assertion.
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The thing you're wanting to avoid, which you called "interest rate risk", has the formal name of duration risk. It's actually calculated as (effective duration * interest rate volatility), but it's named after the duration rather than the interest rate.
That also tells you how to minimize it. Choose a fund with an extremely low effective duration. The ...
3
You say that you're planning on buying a house. You don't seem to have any specific need to buy a house, so you can afford to take some risk. You should focus on bonds, but you can have some of your money in stocks. Even if there is a dip in the stock market, it's likely to be accompanied by a dip in the real estate market, so you'll need less to buy the ...
3
The S&P 500 does not include dividends. You should check the S&P 500 Total Return Index.
From Wikipedia:
The average annual total return of the index, including dividends, since inception in 1926 has been 9.8%
This would give you roughly 5.2% annual real return, looking much better.
However, this is in USD. Apparently, one GPB was worth ...
3
Stock dilution is the decrease in existing shareholders’ ownership percentage of a company as a result of the company issuing new equity. New equity increases the total shares outstanding which have a dilutive effect on the ownership percentage of existing shareholders.
This increase in the number of shares outstanding can result from a primary market ...
3
Stocks were never the best choice for tuition that is needed in a couple of years. Many parents save for their child's education though a 529 plan. In most of these plans the default setting is to become more conservative as the first year of college approaches. By the time high school ends they are in 100% fixed income investments.
The reason they want to ...
3
What's the alternative? Bonds? Interest rates are at historic lows in most developed areas. Commodities? Energy prices are relatively low and have enormous volatility (remember the oil spike a few weeks ago after the US-Iraq dust-up? That's gone now). Mattresses? You actually lose value due to inflation.
I don't know that people are saying that "it's a good ...
2
When this type of question pops up, it's usually this time of the quarter :->)
SPY went x-dividend on 12/20
XSP.TO went ex-dividend for 37+ cents on 12/30
While the correlation appears to have broken down, when you add the dividend back in, the correlation is still there. To see it for yourself, figure out the percentage change in the SPY from 12/27 to ...
2
XSP began trading ex-dividend of $0.37082 per share on December 30, which is expected to cause the per-unit price to drop by that amount.
2
You brought up the often-repeated mantra of,
equity, which is effectively "a lottery ticket"
While that does illustrate the difference between equity and cold, hard, real cash in the form of a salary, equity is arguably only a lottery ticket if you have no direct knowledge of, or connection to, the success of the company. Of course, there's always at ...
2
It's common knowledge that starting a company is risky, but high-risk, high-reward ventures are not inherently bad choices. Do you keep your money in a hole in the ground? It'll always be there when you need it, but you get nothing back. Do you keep it in a bank? It's almost certain to be there when you need it, but you won't get much return. Do you keep it ...
2
I have also thought about putting into gold or silver something like that.
Precious metals are for two things:
preparing for SHTF TEOTWAWKI WROL (Disaster scenarios, for those not wishing to click away), and
speculation (which as you know is risky).
they money may sit until I need a car (3 - 5 years)
CDs at an online bank (current average rate for 12 ...
2
When you state net worth of $1 Million, it sounds like the limit set in the US by the Securities and Exchange Commission for a Accredited Investor which is set at $1M net worth excluding primary residence for Natural Persons.
Assuming the Investment Club qualifies by not being formed just to purchase a specific security, such a club would need assets of at ...
2
The answer to this question depends on many variables, including stock and bond returns, your investment timeline, your tax rate, your future contributions, your withdrawal strategy, etc. So I'm using the following assumptions:
stock return: 2% qualified dividends + 8% appreciation
bond return: 3% non-qualified dividends + 0% appreciation
investment ...
2
If enough shareholders of a fossil fuel company got together they could probably vote to shut the company down entirely thus making their stock worthless.
I'm not convinced that is a practical solution though.
1
Cash ISAs are usually poor investments, their rates are often low and their only benefit is the interest is untaxed. And, for most people, the personal savings allowance 1 makes it moot anyway.
For just a year, an old fashioned savings account would suit. Generally, internet only banks offer better rates than the well known high street names. So, go with ...
1
Open an account at a discount brokerage and invest in an ultra-short term bond fund -- either a mutual fund or an ETF. The better ones have been yielding as much as 3.8% for the past year, and any downside going forward should be very brief.
For example, the bobble in equity markets at the end of 2018, from which some equity funds took a year or more to ...
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