What should I invest in?
If you have a mortgage free farm & $500,000 cash in the bank – what would you do with that cash?
Save it to pay the taxes on the farm.
Seriously though, the question can’t be answered accurately without knowing the answer to a whole host of other questions such as:
What are your goals; do you have income and how much and from what source(s); do you have other assets and how much’ how old are you; when are you planning on retiring; are you married and if so, how old is your spouse; do you have dependent children and if so, how many and what are their ages; do you need money for college for the children; do you have elderly parents that may need your help; is the farm a working farm and if so, how much income is it generating and how long do you plan on working it; what is your risk tolerance; what country or state or type of area do you live in (urban, rural, low cost of living, high cost of living, etc.); are you planning on stay there in retirement; what time frame are you interested in for your investment; etc., etc., etc.
I don’t think it’s a good idea to give the answers to all these questions on a forum like this but trying to answer that question without knowing the answers to those questions would just be a shot in the dark, if not irresponsible.
Theoretically, you should protect your cash right now. If you have 500k it should not be in the same bank since it is above the FDIC limit.
5 to 10 percent should be in hard gold/silver in your possession or safe deposit box.
i would not keep more than 100,000 in any individual bank.
short term treasury securities Less than 6 month maturities are the safest bet right now.
I think we are headed into a very volatile situation with the markets so unless you are a trader willing to follow the market hourly. you should stay in cash for the next couple months.
If you want to gamble 10percent (and i mean gamble) the Rydex Inverse S&P 500 strategy (RYURX) mutual fund is set up to rise when the S&P is falling — if you believe we are currently on the C wave down in the S&P.
I suggest taking out a fixed-rate mortgage on the farm and letting inflation slowly, automatically chip away at the debt, giving you a tax-free gain in wealth over time. Renting the farmland out would cover (roughly) the payments on a 50% LTV mortgage (i.e. a mortgage of $250K). As inflation takes off, your debt becomes smaller in real terms (increasing your wealth) and the payments also become smaller in real terms (increasing your cash flow, assuming that the rents somewhat follow inflation).
For more info, take Dan Amerman’s mini-course: http://danielamerman.com
What I really meant is we don’t need to worry about anything other than investing money.
What would you do with a pool of money without having to worry about shelter/dependents/food/where you will live etc.
Also we are not in America – Live in New Zealand but working abroad.
If you have doubts on where and how to Invest do not invest at the moment, but gather material. Give yourself at least 2-3 month to study and follow.
One of the sources I use is Q Wealth Report. Try to Google it and if you are not bored after 5 first messages you will enjoy reading it from time to time and to find new , fresh, legal , sometimes tax – free opportunities. Offshore and onshore. Enjoy!
Your already invested in the best assets…..farmland and the US dollar. Stay put for the time being, but find several of the “safer” banks to hold your cash in. That $500K could have the purchasing power of $600K+ in several months time. When everone else starts pilling into the dollar, take your exit into hard assets.
Just a heads up that Daniel Amerman’s subscriber list has either been compromised or sold, as I have just received an infected zip file attached to an email that I used ONLY to register for his newsletters. The email appears as if it was sent from the itunes store with a file called iTunes_certificate_697.zip. Looks like a new virus: http://forums.avg.com/us-en/avg-free-forum?sec=thread&act=show&id=86541
JAG – US Dollar…best asset ? The dollar is the tallest of the fiat currency midgets, but no means a good asset. After all, right now, the IMF, made of 25% U.S. taxpayer dollars, is funding the Greece bailout along with the E.U. The dollar is in the middle of a long (and continuing) downward devaluation trend.
We all need food and real money: read ag commodities and precious metals.
Interesting question and a nice position to be in!
I’m always cautious with investment advice but the following rules apply to most people;
2. Keep it simple.
Seriously, unless you have knowledge the markets are not privy to then diversification is the best form of protection whilst offering potential for growth. Ben Graham (The Intelligent Investor author) reccomends splitting between bonds and stocks according to perception of relative market value. For most people, i.e. the vast majority who do not have Buffets nose for value, this would translate into a roughly 50:50 split. Some argue including maybe 5-10% physical commodities (gold is easiest here) but this remains controversial.
You can diversify into international stocks/bonds but the benefits of this are limited IMO and you increase currency risk. Also most large US companies operate Globally. Same is true of UK stocks where I invest. Again for most people some form of low-cost index tracker is appropriate. However with $500,000 to invest it might pay to consider a basket of individual stocks instead.
It would probably also pay to get professional investment advice, not just about what to invest in but consideration of tax efficiency as well.