
Ask HN: What would you do with $100K cash? - alpine_glass
I have around $50k sitting in a couple 401k accounts.  The rest of my savings, somewhere around $100k, is sitting entirely in cash right now.  In all likelihood, I&#x27;m not going to spend the time required doing research to invest any of it in individual stocks, so what should I do with it? Mutual funds, index funds, real estate, crypto?
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ainiriand
It is my understanding that you want to achieve a certain amount of benefit in
the long term, not short term, isn't it?

If the answer is yes, you are absolutely right in not investing in individual
stocks. Where can be Google in 20 years? Facebook? Tesla? You don't know and
the owners don't know either.

The first thing that comes to mind would be a mixed index/bond approach using
Vanguard ETF's although any company will do. If you go for a conservative
approach you could invest 50% Vanguard all US market ETF, 30% Vanguard Whole
bond market ETF and 20% Rest of the world ETF market. In a more venturous
approach you could move the 50% up to 60% while adjusting bond and ROW
markets. I am a hobbist investor as well and I would very much like to see the
rest of opinions.

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LUmBULtERA
Vanguard VTSAX. Or the equivalent ETF with symbol VTI. This mirrors what
others are saying, just a specific recommendation so you don't need to bother
with much research. Total Stock Market Index fund with 0.04% expense ratio.

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cimmanom
My advice would be to echo those who suggest index funds or target retirement
funds.

BUT: there's reason to believe that the stock markets are currently near peak.
Instead of investing all your money at once, you may want to do something
called "dollar cost averaging", where you spread out your investment by
putting a bit into the market every month for years. That way you get some of
the benefit from a market that continues to rise in the short term but don't
lose your shirt if it crashes hard three months from now.

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stouset
There are always reasons to believe the market is at its peak and you should
hold off. Time in the market beats timing the market. DCA is also worse than
time in the market.

[http://awealthofcommonsense.com/2014/02/worlds-worst-
market-...](http://awealthofcommonsense.com/2014/02/worlds-worst-market-
timer/)

~~~
weltstub
The link you provide says DCA would have been a better strategy. Doesn't mean
it's the optimal strategy, but the link subverts your point.

~~~
stouset
The point of the link was that even having the actual worst market timing,
you’re still doing great. So stop worrying and just put your money in.

If you plan on investing large lump sums repeatedly and exclusively at market
peaks, then yes, DCA will be a better strategy. But this is just as unlikely
as you being a financial genius who only ever invests lump sums at market
lows. Actually, given the upward trend line of the market, it’s slightly
_less_ likely.

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brudgers
[random financial advice from the internet]

If you don't know what to do with it, don't do anything. Later, when you know
what to do with it, you can do it. To put it another way, right now, you have
insufficient information to make an _informed_ decision. You'll have more
information later, and if you don't spend the money now, $100k to put behind
that _informed_ decision.

~~~
chatmasta
This advice gets worse the longer you hold onto it in a place that provides
lower returns than inflation. Leaving $100k in your savings account for 5
years is definitely not a good idea, for example. Compound interest works both
ways.

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crazypyro
If you have 100k in cash, I feel like your 401k should be much higher. I would
look at using the cash to supplement income so you can maximize your tax
advantaged 401k savings.

Otherwise, personally, I would put 60% in low cost index funds like Vanguard,
20% in bonds and 20% in crypto, but that's because I have a high risk
tolerance.

~~~
stouset
This (minus the crypto suggestion). Maximize your 401(k) contributions. Max
your Roth IRA (via backdoor if you make typical tech incomes). “Pay” yourself
whatever shortfall is in your budget from these cash reserves.

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b3b0p
I was in a similar situation. I put it all in Vanguard. I look at it maybe
once or twice a year to only smile and see how well it does consistently over
time. The monthly returns is a enough on average so far to pay my rent. That's
a nice feeling.

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bsvalley
2 things: 1. looks like you already have that money in cash, 2. also looks
like you're saving a bit of money every month which is why you've reach that
amount in savings?

I'd do what others said and invest in S&P 500 index fund (Vanguard). But - I
would personally go for a regular index fund and not an ETF because ETF's are
too new in my opinion. Not enough history unlike VTSAX or VFIAX which are old
enough, so I trust them a lot more (also a suggestion from Warren Buffett
BTW). And - I would not use your $100K. That's the main difference... you
already have this cash in hand, don't invest it. Keep it as a back up just in
case you get in troubles for unexpected events in the future. $100K is a good
amount for that because it's not too much but still a lot of money to survive.
Indeed, start redirecting the money you save every month into your Vanguard
index fund. That's it. Start doing that today, let's say $1000/month. Buy VTAX
or VIAX with it every month no matter if the market goes down or up. It's
called dollar cost averaging.

Benefits with this strategy - You maintain a nice buying power (your $100K),
you're pretty much secured in case something bad happens, if the market
crashes tomorrow, not a problem, you're only investing brand new money. Worst
case scenario is your best case scenario today = $100k. Plus by doing dollar
cost averaging, it's actually good when the market goes down a bit because you
end up buying more with your $1000/month at a lower price.

That's it.

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baccredited
"I have $X, what should I do with it?"
[https://www.reddit.com/r/personalfinance/wiki/commontopics](https://www.reddit.com/r/personalfinance/wiki/commontopics)

~~~
cimmanom
This is wonderful advice about prioritization but is very vague about
investment vehicles.

~~~
stouset
TL;DR, put it into a Target Retirement fund (at Vanguard if possible) with a
date around when you want to retire. Add money automatically every month.
Forget it exists.

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psyc
I once had $100K in cash. I spent it trying to get a business off the ground.
If I had it to do over again, I would most likely buy a house. If I didn't
want to do that, I would stick it in Vanguard, and then promptly raise my 401k
contributions.

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AnimalMuppet
If you have any debt (even a mortgage), I'd use it to pay it down.

~~~
alpine_glass
My student loans will be paid off within the next couple months. I have no
other debt.

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eaenki
Two options:

1- If you're Relentlessly Resourceful { find something at the intersection of
what you're passionate about, a problem, and a global movement. Then, create a
company around it. If you're frugal enough you've got a shot at failing with
3-5 products (however similar between them) with $100k }

else {

2- pick 4-8 Tech and Biotech public companies w a 3-20B market cap w
compelling visions that have initially been backed from top tier VCs. 1
example: BOX

}

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Jack000
here's my algorithm for my passive investments:

\- if rolling average of VIX is below 15, all in on vanguard

\- if it's above 15, choose from a basket of historically defensive stocks
(Mcdonalds, Coke etc). Allocate more toward stocks with lower pearson
correlation to the index in the past year.

\- add hysteresis to taste

the idea is to avoid extended downturns while not really actively managing.
This strategy backtests pretty well and it's what I use personally.

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staticautomatic
Put it in an IRA comprised of Vanguard index funds. Play with other
investments in the future when you have more money.

~~~
cimmanom
FWIW, IRA contribution limits are $5500/yr. You can't put $100k in an IRA all
at once.

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staticautomatic
The limits don't apply to rolling over a 401K into an IRA. They're for
contributions to an already established IRA.

~~~
cimmanom
OK, but the OP said they have $100K cash, not $100K in a 401K

~~~
staticautomatic
You're right. I misread. Thanks for pointing that out.

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bdcravens
I'd put $10k in crypto if you're prepared to lose it. (or whatever ratio
you're comfortable with) I won't say it's a sure lock to go up, but given
history, returns of X00% are likely at some point.

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tobltobs
Considering that X00% can be 0% you are correct.

~~~
bdcravens
It can be 0, or it can any number greater than 0 in multiples of 100. I've yet
to hear a convincing argument as to why it's incapable to posting gains ever
again.

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dale14
Start a company in something you love and master! And maybe use a small amount
for a 3-month travel, you'll learn a lot!

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blizzyb
I'd buy rental properties. Invest out of state if it's too expensive where you
live.

~~~
bdcravens
My landlord did exactly that. I'm in Houston, where he has a handful of
properties, even though he's an attorney in LA.

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rayj
Put it all into VFIAX if you intend to hold onto it. Then forget about it for
20 years.

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path101
Definitely invest in a business idea of your own. Alternatively, invest in
real estate.

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barry0079
Does backpacking around the world interest you? Experience is a worthwhile
investment.

~~~
alpine_glass
Yes, and I'm planning to take off for ~6 months next year to do just that. I
should be able to set aside enough this year to fund that trip.

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vinceguidry
Put it down on a nice condo.

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thiago_fm
I will try to shortly give you a crash-course about how to invest.

First of all. Warren Buffet, on his whole life made around 17% p.a. average
returns. With 17% on your 100k, it's okayish money, but won't take you
anywhere, even in a few decades. And his average will be much higher than
yours, don't try to compete with him or a have high return. So, first give up
that you can get rich by investing or that you can outperform the market by a
wide-margin, or that you will even outperform it. What makes you rich is how
much you can save and then convert it into assets that makes you money. With a
few decades of saving an okay amount, investing like an adult you will get
rich. So, focus on making more money and saving more.

So, now, what to buy with the money you make?

Don't try to make those calculations people do: Hmm. I will get this
investment or this other because the other pays me 1% a.a. more.

Instead, your goal is to beat inflation, always. That way, you aren't at least
losing money.

Now, there are different investment products. Stocks, ETFs, REITs, crypto, all
the stuff you said.

Do some small research and find all the stuff you are excited about: tesla,
play monopoly(REITs?) etc.

Get like 20 options at least, diversify a lot. Get also some government bounds
and keep a percentage of your money as USD, so you can take opportunities. Go
very diversified. Returns doesn't matter, losing money(vs inflation) does.

Now, invest 5%(and strive to get even lower) on each. If you aren't
confortable with stocks, get ETFs, multiple ones. Buy the obvious stuff: not
the one everybody is buying, but also not the one not anybody wants to
buy(only crazy people that feels it is a casino). Do the obvious.

The more you diversify in different products, the better. Also, having money
in your bank account is also good, as if the stock market crashes, your
overall assets will definitely feel less pain.

Avoid selling. Once you buy something, stick to the end. Does it sound stupid?
Yes it does, but it will make sure you are always very diversified. If
something keeps you awake at night because you fear losing more money, or any
money at all, it just means you aren't diversified enough.

Avoid trading, buying and selling or whatever, because that gives money to who
owns the broker. The market will try to make you rotate your assets, don't
fucking do it. It is a terrible idea.

I've been doing the above and learning more about fundamental analysis of
companies(stocks). I know how to read balances well and have had a performance
better than S&P 500 on my overall assets, but I consider it partially luck. I
only invest in stocks which can give constant profits, have a good free-float
this and that. You don't need to learn this crap unless you want to. I do it
for fun.

If I do very well, I might make 2% p.a. than you, and this makes absolutely no
difference in that amount of money. If I would instead learn how to do make
wooden tables and sell them, I would make more money than what do I get 2%
a.a. on my assets(and by now, I think I've accumulated a lot).

Never buy into those early retirement schemes frugal lifestyle people try to
sell you. It is all bullshit, it won't make you happy.

Also, the most important thing: DO SPORTS. This is the best investment advice
you will ever get. Get at least 3x a week physical activity, maybe even more.

You can make muchhhhhhh more money by being alive for longer.

Time will always beat returns, always! Also, having assets invested means you
will carry some risk and the best way to deal with anxiety of risk is to
practice sports. You might think that risk has to do with losing money, but it
also happens when winning. Once I've made so much money with crypto(like years
worth of work, even more!) that I couldn't sleep well, even though I do my
sports and all and barely have any anxiety previously. Same happened other
times, with AAPL stock... also lost some. So things will go up and down, if
you are diversified, it won't hurt you much.

With diversification, you can even safely take from the ATM 1% of your
portifolio from the ATM and burn it in a party, just because you can, as it
barely makes any difference as the market will slide up or down. But don't do
it.

There will be people and studies whatever that will tell you that diversifying
too much is bad. It only is if you are paying too much to your broker to do it
for you, as everytime you buy something, you pay some dollars for it. Those
people who works for and own investment funds frequently don't even beat the
market and charge lazy rich people that don't want to manage their own money.
Don't trust them, ever! Just trust yourself. Don't buy the magazines that tell
you what to buy, always do your own research and if you are to lazy, just
diversify a lot.

My 2 cents.

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JauntTrooper
17% is an amazing annual return, not just ‘okayish’

$100,000 would be worth $2.3 million in 20 years and $11.1 million in 30.

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thiago_fm
Exactly, your example just reinforces what I've mentioned: if the very best
can get something that will make you rich only in 20 years, don't expect to
get richer faster than that.

Not to mention that I think this doesn't include inflation. If you would take
it out of it, you would see that it isn't that much money that is made with
extreme returns.

You get rich by investing a long time, a large quantity, not by having a good
yield. Even if you are the 0.01% who manage to get some crazy returns, it will
still take you a while. So patience is king.

