
Ask HN: I've saved up $80k USD. What should I do with it? - neilgodwin
It&#x27;s been on my account for at least 3 years. Nothing ever seemed worthy of investing it. How does one find the confidence to invest large sums? Do you start small? How to get rid of the pressure knowing that money is just collecting dust?
======
parenthesis
The world of investing is filled with a lot of bs, conflicts of interest,
snake oil, fraud, and plain old incompetence.

Therefore, you need to pretty much learn enough that you could do it all
yourself. At that point, you might not do it all yourself, but you'll have a
decent chance of judging whether or not someone (advisor, robo-advisor,
investment fund, index fund provider etc.) you delegate to knows what they are
doing.

And by the way, I'm starting up a hedge fund right now. I can guarantee you an
annual 20% return.

~~~
mrbonner
Good job! I was nodding along and almost choke to dead from laughing at your
last sentence.

------
alltakendamned
Well, it depends on your situation, but in general you could consider:

\- Do you have high interest debts? Paying off debt is a guaranteed return.

\- Can the money be invested, or is it earmarked for e.g. downpayment for a
house, new car, education, or other short to mid-term purchases ? Consider
your investment horizon. If it's less than 3-5 years, consider leaving it
where it is.

\- Can you spend it on yourself, e.g. improve your earning potential or start
a business ?

\- If you want to invest it in the stock market, I would not try and pick
stocks, but spread it across a number of well diversified funds. I also would
not spend all the money at once but e.g. aim to invest a chunk of it every
month over 6-8 months

Think within the context of broader personal finance considerations, there's
already a few good links in the answers.

------
WJW
First off: Well done saving up! If you are paralysed about (getting started
with) investing, I can recommend the books "A random walk down Wall Street"
and the (very thick but well worth it) "The intelligent investor".

Especially the last one opened my eyes a lot about how to approach investing.
I have the revised edition from 2006, though the original publication was in
1949. The 2006 edition has a section after each chapter discussing how the
original chapter fared in the decades after publication. Without exception,
the lessons discussed in the book from the 1929 recession and earlier turned
out to have been very applicable in the dotcom crash of 2000, the "black
monday" crash of 1987, etc. It really shows how most things are nothing new
and gives a lot of perspective on the markets.

Reading up and understanding how the stock markets work can take away some of
the pressure. Finally, there is no rule about having to start big or small. If
it makes you feel better, start with $500 and see how it goes. The sister
comment by "ForHackernews" about starting with a diversified index fund is
good advice (and probably what you'd conclude anyway after reading the books).

~~~
slantaclaus
One Up On Wall Street, Peter Lynch

~~~
tohmasch
I am currently reading this and I can't help but think every single page is a
puff piece on how many stocks he owns and which opportunities he did and
didn't see.

It doesn't feel like learning about investing for a beginner but rather an
autobiography on his portfolio. What did you like about it?

~~~
slantaclaus
The idea that one can go about his own world, think for himself, and get into
positions based off his own information advantages before wall street catches
on. As a type 1 diabetic, this idea has paid off handsomely with my returns on
$TNDM and $DXCM

------
mback00
I take it you are a young person... First max out your company 401K with as
much contribution to the ROTH option as you can afford... invest it in the
lowest fee broad market matching index fund (Hint: S&P500) you can find. OK...
now hopefully you are down with this and you still aren't eating into that
80K... If you don't need this money for a house, Well... over the long haul
investment in the broader stock market "historically" doubles investments
every 7 years. So, I'd suggest you open a cheap online brokerage account and
first invest as much as you can into a ROTH and drop both ROTH and excess into
an (again S&P500?) index mutual fund with the lowest expense ratio that you
can find... and... try not to look at it again for the next 30 years except to
convert as much each year into ROTH as possible. After 30 years you will
hopefully look back into your account and have about $1.5M in that account
with... being able to pull some significant amount of that investment out _tax
free_. If you do need some of it for a house try to avoid 30 year loans and
elect for 10-20 year loans.

------
tjansen
Right now is a very risky time to invest. It could be that it turns out to be
a good time, because stocks are about 20% below the all-time high. But there
could also be a second crash, when investors realize the real impact of the
economic crisis caused by Covid-19. In addition to that, there's the risk of
inflation caused by government bailouts. What I'm doing right now is keeping
about 1/3rd in gold ETF as inflation protection, about 1/3rd in stocks ETFs
and the rest in cash. Once the whole thing is over, I will probably move back
to stock ETFs.

~~~
basch
Are you familiar with [https://portfoliocharts.com/portfolio/golden-
butterfly/](https://portfoliocharts.com/portfolio/golden-butterfly/)

20% Total Stock Market

20% Small Cap Value

20% Long Term Bonds

20% Short Term Bonds

20% Gold

You could replace short term bonds with Cash, TIPS, CDs, Bitcoin.

~~~
tjansen
Not this portfolio, but I don't see the point of buying bonds anymore, at
least when you invest a relatively small amount of money. Low interest, risk
is relatively high compared to what you can earn, and no inflation protection.

~~~
basch
Long term bonds benefit from low interest rates.

[https://portfoliocharts.com/2019/05/27/high-profits-at-
low-r...](https://portfoliocharts.com/2019/05/27/high-profits-at-low-rates-
the-benefits-of-bond-convexity/)

------
jpn
1\. Open a margin account on Interactive Brokers.

2\. Choose a target volatility level you're comfortable with (I like 20%).

3\. Buy shares of BRKB. Buy enough such that volatility of your portfolio
reaches your target volatility.

4\. Every month, update your share amount to maintain the same target
volatility.

[https://alphaarchitect.com/2019/05/22/volatility-
targeting-i...](https://alphaarchitect.com/2019/05/22/volatility-targeting-
improves-risk-adjusted-returns/)

~~~
t0mas88
At step 1 I was half expecting this to go towards /r/wallstreetbets and some
terrible jokes.

~~~
s1t5
> some terrible jokes

I'm immediately shorting everything you own.

------
sneak
Short answer: Dump it all in VFIAX and ignore it for about 30 years.

Alternately, wait for the housing market freefall that is scheduled to hit
about 180 days from now, and buy a foreclosure or two.

EDIT: Cosigning the above recommendation about maxing out a Roth IRA each and
every year as well, and of course maxxing out any company-matched 401(k)
options.

~~~
cityzen
The problem (for me) with index funds is that you end up participating in
stocks for companies you may not want. For example, I don't want a penny of my
money to go to Facebook, Amazon, Google, etc. Here's the VFAIX top ten
holdings:

Microsoft Corp Apple Inc Amazon.com Inc Facebook Inc A Berkshire Hathaway Inc
B Alphabet Inc Class C Alphabet Inc A Johnson & Johnson Visa Inc Class A
Procter & Gamble Co

It has always blown my mind that the answer for "retirement" now is to put
your money in the online casino.

As a father of two young kids, the last thing I want to do is contribute to
the erosion of any sense of privacy my kids may have in the future. Using
Facebook as a tool for retirement is just as dumb to me as using Facebook for
anything else.

~~~
sneak
Choosing to invest or not invest in Facebook does not change a single thing
about whether or not society as a whole chooses to use Facebook and whether or
not, via that use, Facebook becomes powerful and further erodes societal
values placed around privacy. Facebook would still be Facebook (and thus
dangerous) even if it were privately held.

Facebook is Facebook because they have an app that people love to use, and
that gives them the power to sell and control placement in the communication
between friends and acquaintances back to those same communities. They're not
powerful because of their share price.

Index invest away. I have Facebook blocked at my router but I still own them
via index funds.

~~~
cityzen
Cool, I think you missed my point, though. _I_ personally do not want to have
a penny invested in Facebook/Google/Amazon. I do not care about the gains or
losses or the number of people that love to use their apps/services.

Money isn't everything.

~~~
blaser-waffle
There are ethical investing firms, and they offer ethical investing mutual
funds and ETFs -- my wife holds a few of their offerings. Their performance
isn't amazing.

You're also not obligated to buy an ETF -- you can create your own "index"
without much effort. The OP's $80k would let them do that, were they so
inclined. Maybe not all 500 in the S&P, but a lot.

~~~
cityzen
Eh, after seeing the pile of dogshit that VCs are pushing on the public
markets lately, I've lost a lot of faith in publicly traded companies.

------
gshdg
Dollar cost averaging into an index fund.

After paying down any high interest debts and earmarking at least 3 months
worth of living expenses into a savings account or other cash equivalent as an
emergency fund.

There’s a great decision making flowchart floating around somewhere or other.

~~~
BrandonSmith
There are a handful of them. Some simple, some complex.

Here is a complex one...
[https://i.imgur.com/c0p24cU.png](https://i.imgur.com/c0p24cU.png)

~~~
jklein11
This flow chart is awesome! I'm not sure I agree on the order of all of the
steps. For example you may want to put section 3 before section 2. Also, it
looks like this is recommending saving for a downpayment on a house before
maxing out your 401k. It makes sense but I'm not sure it is one size fits all.

------
orbifold
Pick one or two ETF and set up a monthly amount to invest into them. You don’t
need to invest everything at once and the monthly commitment averages out
short term effects. If you want to be more active with a part of your money,
you can also commit to buy a couple of stocks monthly. If you get rid of
poorly performing stocks regularly and rebalance the portfolio you can declare
them as capital losses that will count towards any future capital gains.

------
forgingahead
I would actually keep holding it in cash -- that is maybe 2 years of emergency
funds if you are married/have a family?

Keep it in cash, pretend you don't have it (create a separate account that is
just this sitting there), continue earning and saving. Anything extra you earn
after this 80k base you can invest (simple things like index funds, dollar
cost average in slowly).

~~~
basch
You could put 80K in the stock market, and if you have an emergency borrow
against it at 2%.

~~~
forgingahead
This is terrible advice. Cash is cash, you can pay bills, buy food, get
through hard times without needing to do anything but access it. Coronavirus
should be showing everyone that random insane things can happen, so be
conservative with emergency funds.

~~~
basch
And borrowing can be same day, same as cash. Or within 30-45 days to pay off a
credit card, using it as free float.

The nice thing about borrowing against stock is not having to sell the stock
while its down, unless you borrowed so much to hit a margin call. If it's
allowed, you could borrow against treasury inflation-protected securities to
protect you against runaway inflation. TIPS are up 8% on the year. I'd take 8%
gain for 2% cost and peace of mind that my cash isnt losing value.

80K is a lot to have in an emergency fund. Borrowing even a quarter of it
should be no problem, without risk of short term margin calls.

I believe pure dollar cost averaging to be a worse choice than picking and
filling an allocation with low start date sensitivity and high baseline long
term returns. Even averaging in over a year isnt enough time to tackle start
date sensitivity, you are better off with an array of stable equivalents, and
contributing into just stock allocation over time, as you make more, than
holding just cash and waiting to buy stock. Cash by itself is a sure fire way
to lose money over time. [https://portfoliocharts.com/portfolio/portfolio-
matrix/](https://portfoliocharts.com/portfolio/portfolio-matrix/)

Some combination of total world stock market, small cap value, reits and
bonds/tips, gold, cash, bitcoin. Rebalance quarterly. You'll be much more
diversified than holding cash, or holding a cash plus a mutual fund with 90%
stock, and cash will still be instantly accessible. It's really not that
different in concept than a HELOC, except your collateral is much more
diversified than your house.

------
andrewmatte
I used to be a stock broker. But right now I am not your stock broker. This is
not advice.

Great fundamental wisdom is that you can't (consistently) time the market but
you should try to Buy Low, Sell High. That said, we experience a massive COVID
crash. It's a great time to buy, but we don't know how long it will last or
whether it will be long recession afterwards.

Index investing through ETFs is a great way to get diversity in a single
financial instrument such as the S&P (large companies), NASDAQ (tech), or the
Russell (small companies.) The NASDAQ has largely recovered but the Russell
still has a long way to go back to February prices.

I have an old friend whose parents sold their home recently and gave him a
sum. He's putting in 10% per month for the next 10 months, all in the S&P.

~~~
Leherenn
What's the reason for splitting it in 10 if you know you're going to invest it
this way already?

I would assume to be more flexible and be able to change strategy if something
goes wrong?

~~~
andrewmatte
Dollar cost averaging means you aren't trying to time the market.

------
sloaken
Key question is: When do you need the money?

Depending on time frame is the key to deciding where to put it.

How to put it, the best advise, and I am doing this myself, is to put it in a
little at a time. For my needs, I have selected 8 places to put the money.
Based on 3 different times to need the money. I then looked at each to
determine where I thought they were going. i.e. money in emerging markets I
will not put into until a year from now. Real estate and banking I am waiting
to the start of summer. Others started a month ago. When I expected to be
fully invested. For each I assigned now much in total I plan to put in. This
gives me an amount over time to invest.

Using your 80K, assume you wanted 3 pots. Pot A is 35K, pot B is 25K and Pot C
is 20K. Assume you want to put pot A 35K in over the next 6 months -
assumption being you expect the bottom of that market within that time frame.
6 months is approximately 180 days - or $194 per day - $1361 per week. So I
would either once a week put in $1361 or every other week $2722. In your case,
I would probably do it every week.

I highly recommend vanguard.

Plan two, follow Warren Buffets advice - he said when he dies to put in 10
amount in short term government bond fund for his wife to spend every year,
and the rest in a S&P 500.

[https://www.investors.com/news/warren-buffett-sticks-with-
tw...](https://www.investors.com/news/warren-buffett-sticks-with-two-key-
pieces-investing-advice/)

------
uhnuhnuhn
Nobody can answer that seriously without knowing your situation in life. Age,
family, job, etc.

~~~
neilgodwin
30, no family, software engineer, male

~~~
rayhendricks
As someone in a similar situation, just throw it all in VTSAX vanguard or
FZROX fidelity and let it sit for the next 30-40years. Dollar cost average
over the next year maybe if that makes things less nerve wracking.

Obviously we are in a really crazy market right now, and while that might be
disconcerting it is the case that s&p 500 has existed through 2 world wars and
a Great Depression and still delivered returns.

------
ForHackernews
[https://www.schwab.com/resource-
center/insights/content/does...](https://www.schwab.com/resource-
center/insights/content/does-market-timing-work)

Just invest in a broadly diversified index fund.

Start here if you're a total beginner:
[https://www.bogleheads.org/wiki/Getting_started](https://www.bogleheads.org/wiki/Getting_started)

~~~
neilgodwin
Thanks.

~~~
DSingularity
That’s a great low risk way to proceed, but is lazy in my opinion.

For one, those stocks include weapons manufacturers and other poisonous
companies that maybe you wouldn’t want to support.

Second, it detached you from your underlying investment. In my opinion the
ability to evaluate businesses is itself worth investing in.

Go pick a sector you are interested in. Compile a list of small - mid cap
companies (I.e. companies worth hundreds of millions to a few billions). Read
up as much as you can on them. What’s their business model? Who leads them?
What’s their current state? Invest in the ones that stand out!

Not many people will tell you this because “investing in the index fund will
give you amazing returns after 30 years and Warren Buffet said some!!”.

------
jazzyjackson
I dunno man I'd go for precious metals and gemstones so you can at least look
at it while it collects dust. Personally I think old gold pesos are pretty
cool.

[https://www.apmex.com/product/1044/mexico-gold-20-pesos-
rand...](https://www.apmex.com/product/1044/mexico-gold-20-pesos-random-year-
au-bu)

------
sayun
You could look into investing it into crypto money. It obviously is risky,
there is no doubt about that, but can yield you very good returns, even in the
current crisis. There are a large variety of options depending on the risk-
level you are willing to take.

If you are interested in trading, I can warmly recommend starting here:
[https://hackernoon.com/all-my-trusty-crypto-trading-
wisdom-i...](https://hackernoon.com/all-my-trusty-crypto-trading-wisdom-in-
one-spot-d52f3413bca7)

If you don't want to go that deep, I can recommend the crypto.com
app/platform, one of the most approachable options right now imo with more or
less "safe" earning options for which you do not need to know anything about
trading (my referral code: aenfe3qkjz):
[https://crypto.com/](https://crypto.com/)

------
bmn__
Wisdom of the crowd:
[https://old.reddit.com/r/personalfinance/wiki](https://old.reddit.com/r/personalfinance/wiki)

You decide whether to trust it. Considering your circumstances, the advice can
be condensed to buying and continually investing into ETF and holding the
assets for a couple of decades, as a few fellow HNers already said.

------
CalRobert
What do you want? How old are you/how much career do you have left to fix a
screwup? How much of a catastrophe is losing everything? Are you responsible
for other people's well-being? Where are you located? How do you feel about
risk? What is your housing situation?

I used a similar amount to buy a very small house in cash, but this would be
considered a poor move in many ways (mortgages are pretty cheap debt). It
works for me, though.

------
paypalcust83
Find a _fiduciary_ financial adviser / asset manager perhaps who gets paid
based on service rather than periodic commissions.

------
PappaPatat
What about: nothing, just accumulate more, stach it and one day a need or
opportunity will arise.

Might not be a popular opinion since we all are expected to optimize
everything but 50 years in and this non strategy has made my financial live
rather dull, which I like.

------
byefruit
This might already be you but if not it gives some useful advice for your
situation:
[https://www.reddit.com/r/personalfinance/comments/geeq4t/i_h...](https://www.reddit.com/r/personalfinance/comments/geeq4t/i_have_80k_saved_up_do_i_leave_it_in_a_high/)

------
alexmingoia
I would keep 1-2 years worth of living expenses, then take the rest and put it
in an index fund, and keep putting new savings into the index fund.

I would also move to a country with 1/4 the cost of living so that you're
instantly 4x wealthier, and use the extra to take time off and enjoy life and
build your own company.

~~~
rambojazz
He has 80K, not 80M.

~~~
alexmingoia
I left San Francisco to live in a country where 80K can last 6 years without
working. IMO, arbitraging cost of living is the smartest thing to do with your
money if you’re an engineer and can earn USD anywhere, especially since OP is
single with no kids.

------
kratom_sandwich
Depending on your age and background, consider investing in yourself, e.g.
invest in things that help you finish your degree or boost your career or
invest in your physical health. Returns of such investments might be
considerable.

------
Myce
I would prefer to buy property any time. People will always need housing. So
while the price of the property is pure speculation, rent is a nice steady
source of income.

~~~
iso1210
Only if people want to live where you buy the property. If you bought property
in Detroit in 2005, how much rent would you have collected in the last 15
years?

------
wprapido
Burn it on hookers, booze, dope, travel, education

------
lowwave
Invest in local food and farmers.

------
zicon35
I am building a startup, invest in me. Not kidding. No really.

------
lcall
If you have any debt and less than 3-6 months of emergency savings, and do not
own your home, I recommend starting with a free BYU personal finance class (I
can dig if you cant find a link), and/or Dave Ramsey materials.

~~~
oicu812
I second this - pay off any non-mortgage debt (student loans, cars, etc)
before investing.

[https://www.daveramsey.com/dave-ramsey-7-baby-
steps](https://www.daveramsey.com/dave-ramsey-7-baby-steps)

~~~
lcall
thanks for the link

------
msms01
Donate a portion of it.

Spend it on the people you love (including yourself).

------
keiferski
Do you have any interest in building a startup yourself? If so, $80k will last
you 4-5 years for bootstrapping if you move to a low cost area and don’t have
any dependents or other expenses.

~~~
neilgodwin
I sure am, but as mentioned in one of the replies, I would need an idea that I
believe enogh in. Would you do it differently? How do you know if something is
worth it?

~~~
keiferski
Maybe keep the current job, don’t touch the 80k, and spend your free time
coming up with a good idea that you can see yourself working on for 5+ years?
That’s my advice.

------
RickJWagner
First, you have to ask yourself "When do I want to spend the money?"

Only then can you decide the best way to invest it.

------
mrvenkman
Buy property, silver or gold.

Or - in the current climate shares in the airline industry.

~~~
MaxBarraclough
Why precious metals?

~~~
blaser-waffle
The perception that they will hold value while other assets are in flux.
Because they're, like, metal, and won't rot, turn into water, or dry up, or
have their value crash because no one wants to live in Detroit.

~~~
MaxBarraclough
Gold's value floats just like any commodity. Oil isn't going to rot either,
but is famously volatile.

As I understand it, gold reliably appreciates in times of economic distress.
Whether now is a good time to buy, seems like a question worth taking
seriously.

------
neilsense
/r/wallstrettbets is your friend

~~~
blaser-waffle
Only if you like tendies and tears

------
arcadeparade
buy urbit stars

------
helsinkiandrew
Dear Mr neilgodwin, My name is Prince Bakare Abacha. I am a former Major
General in the N1gerian Space Force. I have several lucrative Lunar Mining
investment opportunities I would like to discuss with you via direct massage.

~~~
mback00
Salutations Mr. Prince Bakare Abacha,

I would love a direct massage on my next trip to Nigeria... In fact I have 401
reasons to look into your offer! I hope very much we can meet up for the
direct massage and mutually enjoy being fondled under your expert care.

Also I will be traveling to the planet Luna in the upcoming Russian mining
mission. I am looking for investors that are interested in sponsoring me in
exchange for a percentage of my cut in the mining operation.

Please respond with your interest. I am very excited about the direct massage
and the opportunity to work with you in a mutually beneficial business
opportunity!

Sincerely,

Sr. Cosmosnot Andropov Niet Bing Zhou

------
generalpass
Whatever you do, don't follow the advice of posters here at HN. If even one of
them has valid advice, it is coincidence.

~~~
Ohl7eeX8
This is basically liar paradox [1] :)

If it's true, then they shouldn't listen to you. But then they can follow
advice of anyone, including yours.

[1]
[https://en.wikipedia.org/wiki/Liar_paradox](https://en.wikipedia.org/wiki/Liar_paradox)

~~~
generalpass
This sentence is false.

"This sentence" = "This sentence is false."

[This sentence is false] is false.

"This sentence" = "This sentence is false is false."

[This sentence is false is false] is false.

"This sentence" = "This sentence is false is false is false."

[This sentence is false is false is false] is false.

...

