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What to do with $500,000?

Topic closed. 33 replies. Last post 8 years ago by pumpi76.

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ThatScaryChick's avatar - x1MqPuM
Idaho
United States
Member #56506
November 21, 2007
6537 Posts
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Posted: December 22, 2008, 3:53 pm - IP Logged

As long as you're looking for a long term investment, gold probably is pretty dependable. Then again, so are stocks, bonds, and real estate. Unlike those investments, however, gold is one single item. You have no chance of doing better than the market average, and failing to diversify means you have little protection from loss. The best you can do is buy and sell at the right times. OTOH, other than a few unusually bad days, there will be stocks that go up when almost everything else went down. That gives you the chance to do well by using general condtions to buy and sell at the right times, as well as investing in stocks that perform better than the Dow Jones, S&P, or whatever benchmark you want to use to look at average performance.

Long term, if you had bought gold in 1970 your annual return until now would have averaged about 9%. Within that period you could have done far better or far worse. You could potentially have tripled your investment from '79 to '80. You could also have lost about half, from '80 to '85. That's probably the main advantage of gold: there's a chance it will go up quickly, but it probably won't fall very fast. If you think you've got better options, there's probably plenty of time to get out.

By comparison, stocks can change dramatically in very short periods of time. GM is a good current example. The high for the past 52 weeks was just over $29, and the low was $1.70. You could potentially have lost 95% of your investment  over 10 months (or almost 90% over 5 months). OTOH, that $1.70 was on 11/20, and now it's back up to $4.49, for a 30 day gain to 264%. Even with that gain, right now may be a very good time to buy GM stock. If it takes 10 years to get back to $29, that would still be an annual return of about 20%. Of course it could also be a bad time.

Over the last couple of years gold has gone up significantly. That's probably a good indication that now isn't the right time to buy it as a medium term investment. You might do well over a few months or a couple of years, but it may take a very long time for it to mean a good return over that long period. OTOH, it may stay flat or even come down in the near future.

The problem with all investments is that it's easy to see what could have been, but much harder to see what is going to be. Investing long term is almost always a sure thing. Investing short term is always a gamble.  You might win, or you might lose. 

Thank you for that information KY Floyd. Very interesting.

"No one remembers the person who almost climbed the mountain, only the person who eventually gets to the top."

    savagegoose's avatar - ProfilePho
    adelaide sa
    Australia
    Member #37136
    April 11, 2006
    3315 Posts
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    Posted: December 27, 2008, 12:19 am - IP Logged

    start your own bank, what with fractional reserve banking thats like 5 mill you can have out on loans

    2014 = -1016; 2015= -1409; 2016  = -1171; 2017 = ?  TOT =  -3596

    keno historic = -2291 ; 2015= -603; 2016= -424; 2017 = ? TOT = - 3318

      dphillips's avatar - littleuns
      Albuquerque, New Mexico
      United States
      Member #5128
      June 18, 2004
      377 Posts
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      Posted: December 27, 2008, 11:17 am - IP Logged

      If a person is 20 or 30, perhaps investing in a long-term financial growth plan would be wise, including putting some of their money investments in a diversified portfolio.

      Assuming the above age group will hopefully be employed until retirement, along with their salary increases (if they are still with the same company), and setting aside some money for savings/retirement, that age group should do just fine. However, steady, financial commitment toward growth will be important.

      People in their 40s, 50s, or 60s, may have different strategies.  When you are 40, a person has approximately 25 years of employment (before they can retire), providing they are in good health. Now, a 40-year old, in my opinion, can't afford to invest aggressively in too many stocks because of the possibility of the fluctuating financial markets -- unless this age group are risk takers.  Perhaps, they may shift some their financial priorities toward more conservative investments with high interest bearing accounts -- and more toward savings. Notwithstanding, we don't know if Social Security will be around for the 40-year olds when they retire because they may have to invest in the markets toward their retirement nest egg -- unless Congress takes action in the future.

      Finally, people in their 50s or 60s, have a different priority, retirement focus. The later age group, 60s, more so than the 50-year old age group. Most people in their 60s have worked steadily for many years with a company with a profit-sharing plan or some other plan, they have social security benefits forthcoming, and they should have some savings set aside.

      Now, this information is not etched in stone as circumstances beyond our control can completely wipe out our future plans, especially in the area of medical insurance coverage. One major catastrophe can wipe out a family's financial bank account even with the best of  company insurance. I knew a lady (and I worked with her) whose medical bill was $1 million and the State of New Mexico paid her bill. Of course, after her medical payout, the State of New Mexico placed a sealing on how much they would cover, and you guessed it, no more $1 million medical payouts.

      Finally, since we don't have a crystal ball and we can't predict what is going to happen today, tomorrow, let alone future generational financial outcomes, we can only do the best we can by investing conservatively and wisely -- that means --living within our budget.

      See Ya!-- Bye, bye!  When you win, may you glow as brightly as theSun Smiley

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        Honduras
        Member #20982
        August 29, 2005
        4715 Posts
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        Posted: January 23, 2009, 12:09 am - IP Logged

        you can start a new: "Lottery Magazine" an actuall one, not an online one...I believe there is a great market for it....

        The Forex trades: 1.6 Trillion dollars EVERY day, that´s more than the GDP of the Carribbean Central America, COMBINED. Enough to feed every crook out there for centuries...To all Geniuses & Powers Countries of the World the Planet needs breakthroughs in all Medicine, Veterinary, Biology related fields, Psychology, Population Psychology/Sociology..They need to genetically ingeneer new plants species/types to give more variety of plants and thus have more resources for combating diseases¨