Ask HN: I have 50k. How do I make it more without a startup? |
Ask HN: I have 50k. How do I make it more without a startup? |
A money market account is safe and leaves your liquid assets in a state where you can get them easily. The downside is a poor rate of return.
Tax-exempt bonds (local, state or federal) are an attractive option provided that the rate of inflation doesn't exceed your rate of return or reduce it to effectively nil.
Another sensible option would be to pay off any debts you have. Your income is your best way to grow wealth, and every dollar you pay in interest is a dollar taken away from your future earnings. Even though this isn't as exciting an option as putting your money in the stock market, this might be your best bet longer-term.
If you have no debt, then the $50k would go a long way towards a down payment on a home - that way you can stop paying rent, which is another source of wasted earnings.
In other markets, home ownership and all its associated costs (including property taxes and maintenance) is more expensive in both the long and short term than renting.
For instance, for what I pay in rent in NYC (PLUS a down payment), I would have to commute at least 3 times as long to afford to buy an equivalent home. And also have to add the responsibility (in time and expense) for maintenance - from upgrading the plumbing to shoveling snow from the sidewalk.) Further, it'd be much more difficult to see friends, whom I'd no longer live near. That's all time that could instead be spent with friends and family, being healthier, or even making money on a side project or freelancing.
And if you get poor terms on your mortgage (think variable rate loans), you're just setting yourself up for pain.
Not true, and it's often opposite where higher risk means a higher overall worse performance. You can also do more homework than others, and/or have more patience than others.
http://webfund6.financialexpress.net/clientsv21/scottishwido...
I went in knowing nothing, and wouldn't have done it if my bank hadn't pushed me in that direction (the department of the bank no longer exists) and I guess I got lucky, as it has worked out well for me.
PLEASE NOTE: investment ISAs/Personal Investment Plans with Scottish Widows can go up and down. Also bear in mind I an openly saying I know next to nothing about this, so please don't jump into anything without researching it carefully.
There's no way for you to reliably make even 20k in the next year off of an investment of 50k unless you are going to be personally involved in it. You will also almost certainly make at least 20k at your job in the next year, and can probably figure out a way to increase your salary by 20k.
Long term assets could be something to be evaluated. solar energy, home refurbishing, ... https://www.forbes.com/sites/laurashin/2016/06/02/4-reasons-...
But no one knows when the time comes for it to pop.
But on the other side. Let's say you invest now. In three years the bubble pops. In five you should be way above on what you have invested. Say around 20% plus in eight years.
There was also a popular article(NYT?), which I can't find the link to at the moment, that showed me that only if you invest in the market for around 30 years or more, can you get a decent return. To me that makes sense if you want to leave your kids a little something after you're gone but not for your own lifetime.
Can someone educate me on this? Does everyone reply "index funds" because it is fashionable to do so or am I missing something here?
Bitcoin as an "investment" is a lot more volatile than most other options. But, as of now, also a lot more profitable.
If you're after no effort at all, then investment is probably the best advise you would get. But that does carry some risk. As always, the risk/reward ratio...
Most people "enter the market" continuously by depositing a percentage of their pay each month of their career and "exit the market" slowly and continuously during retirement 40 years later.
The booms and busts in between become irrelevant and you're left with a nice and high average rate of return.
What about investing for your own retirement? If you start investing when you begin your first job (usually in your 20s), and you expect to retire in your 60s and live into your 80s, that'll certainly give you at least a 30-year investment horizon.
I'm not sure I have a specific point except to say that the math stops working unless you follow the exact path expected.
Index funds are low cost to run, have a low capital requirement, require little to no active management, are highly-diversified, and get a fairly good rate of return. As a default option of 'do nothing and some money comes in', that's hard to compete with.
But overall, I agree with your analysis. It's a great vehicle for people who either lack the time or knowledge required for investing. If you decide that stock investment is the best way forward for you...
on the other side, you've got people who ignore inflation and assume 10% a year returns promising ridiculous growth
I still haven't looked at the numbers to see if it's worth it. In Australia, we're expecting a market correction to happen initiated by the real estate bubble finally busting. Which means that bonds would gain while the market loses. Of course people have been expecting that for many years now and statistically speaking it will have to happen at some time... Knowing this, I am still not sure whether to just invest and deal with the consequences if and when they happen or keep my money in my sock drawer.
I also don't believe this is going to last more than a few more months until the bank has attracted as much cash as it needs. Of course that's also a third world middle eastern country and so lots can go wrong there which I have no control over. Thus my interest in moving it here. Vanguard is looking more interesting by the day. And yes, they do have a similar option.
I am starting to think the best investment possible is in your own business/company. That way there is a direct correlation between what you can control and what you put in to what you earn back out. Obviously you can't predict what the future will hold, but you at least can manage your endeavor prudently so as to better minimise damage in the face of bad circumstances.