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What would you do with $50,000 in cash right now?


By Kevin   Follow   Sun, 17 Oct 2010, 6:53pm   8,798 views   56 comments
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I currently have $50,000 sitting in a savings account that pays less than 1%.

This is basically a safety net. I have very little fear of losing my job, but you never know -- shit happens.

So, I'm looking for something that is liquid enough that I can get access to it in under two weeks if I need it, but which still gives me a better return, ideally at least keeping up with inflation over the next few years.

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  1. iwog


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    1   12:16am Mon 18 Oct 2010   Share   Quote   Permalink   Like   Dislike   Protected  

    Well I was initially going to say gold since I'm pretty sure gold is going to $2000 no matter what, but it's not the safest bet in the world.

    Put $50,000 into a blue chip stock paying high dividends. Altria (MO) paying 6.1% is eternally priced too cheap because people don't like tobacco stocks, but it's very safe and very undervalued right now. You'll earn 6%. Alliance resource (ARLP) is a coal stock with a good PE, 5%+ dividend, and good earnings growth. Brystol Meyers (BMY) is a good stable drug stock paying 4.7%. I like Verizon (VZ) because it has the best cell phone network by far and pays 6%. If you want more stock choices, find a website listing what Warren Buffett buys and copy him.

    Stocks will do well in an inflationary environment. That's a pretty diverse group right there and I would say all are very safe. If you want more risk, go with gold or silver.

  2. SFace


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    2   1:10am Mon 18 Oct 2010   Share   Quote   Permalink   Like   Dislike  

    Specifically, I would put

    20K on PBR. with dilution behind the company and no more dilution prospectively, it will be by far the fastest growing oil/gas upstream/downstream in the world. Little downside from here, terrific upside.

    10K on PHM. Trading at 80% of book value and housing starts at historic lows and no dilution prospectively, 2011 will be the year that homebuilders turn the corner. Little downside but huge upside from here. In 5 years when new homes sold are back to the 1M level, this stock will be in the 30's.

    20K cash/low yield account.

  3. pkennedy


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    3   10:01am Mon 18 Oct 2010   Share   Quote   Permalink   Like   Dislike  

    I'm guessing that for most, holding 40% in cash wouldn't yield better results, than investing most of it. You've definitely got the potential of finding amazing bargains, so having that cash ready to jump on them probably really benefits you. While the market might get bumpy for awhile, for most, having that 40% probably wouldn't do much. Perhaps leaving 10% in Cash in case of a great bargain would be great, or in case of an emergency, but 40% seems pretty high for most investors. The other 30-35% comes in terms of easy to obtain credit for most.

    This is also based on previous messages by Kevin, showing he has a good grasp on his expenditures, a good paying job and probably very employable even in the event of a job loss. Compounded with the fact that credit is extremely cheap right now, even if he needed the money, he could wait several months for the market to change direction.

  4. KP


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    4   10:08am Mon 18 Oct 2010   Share   Quote   Permalink   Like   Dislike  

    sell options

  5. theoakman


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    5   4:17pm Mon 18 Oct 2010   Share   Quote   Permalink   Like   Dislike  

    Gold miners
    Potash Companies
    Wait for oil to go below $70 and load up on solid companies there.

  6. iwog


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    6   5:18pm Mon 18 Oct 2010   Share   Quote   Permalink   Like   Dislike   Protected  

    KP says

    sell options

    Naked options were responsible for more multi-million dollar bankruptcies than any other source until the mortgage crisis.

    I'm approved for naked options and I would NEVER EVER EVER EVER EVER EVER advise any small investor to even think about writing options for a living. You could be a million dollars in debt before Christmas.

  7. Kevin


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    7   10:08pm Mon 18 Oct 2010   Share   Quote   Permalink   Like   Dislike  

    The stock suggestions are good, though I'm not sure if I can invest in most of those companies with a clear conscience. I mean, Altria is responsible for Kraft singles!

    With inflation picking up, it almost seems like I could throw this money in a mutual fund with a cheap, fast wire transfer, and be just as safe as anything else.

  8. LarryPatrickMaloney


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    8   10:17pm Mon 18 Oct 2010   Share   Quote   Permalink   Like   Dislike  

    Buy physical silver.

  9. iwog


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    9   8:29am Tue 19 Oct 2010   Share   Quote   Permalink   Like   Dislike   Protected  

    Kevin says

    With inflation picking up, it almost seems like I could throw this money in a mutual fund with a cheap, fast wire transfer, and be just as safe as anything else.

    You're probably correct. I'd look for a mutual fund specializing in high dividend shares.

  10. Done!


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    10   1:34pm Tue 19 Oct 2010   Share   Quote   Permalink   Like   Dislike  

    iwog says

    Put $50,000 into a blue chip stock paying high dividends. Altria (MO) paying 6.1% is eternally priced too cheap because people don’t like tobacco stocks, but it’s very safe and very undervalued right now.

    So let me get this straight, you Liberal Blue dogs lead the Cry for a SIN tax on Cigs and Happiness and comfort in general. To which end, it was reputed that it would A) Raise money to off set the ill health effects of smoking on society. and B) People were supposed to QUIT smoking.

    But at the end of the day, you're standing in the Trader line to cash in on those Burdened folks, imposed on by the very legislation Liberals championed.

    From my mouth to Gods ears, Democrats and Republicans will be historical topics one day, and not a party people take serious to make Policy for a "Democratic" "Regulated Capitalist" America.

    Like the Wig party perhaps?

  11. iwog


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    11   2:27pm Tue 19 Oct 2010   Share   Quote   Permalink   Like   Dislike   Protected  

    I'm really not much of a liberal. You'd find me quite at odds with most Berkeley hippies, tree huggers, and feminazis.

    I'm 100% for a sustainable economy providing a high level of comfort for anyone who wants to work. I'm also 100% for rich people being able to afford an airplane or a private yacht. Where I draw the line is when people become worth more than the GDP of entire nations, and use their wealth to crash the economy.

    I actually don't care about smoking. If people wants to smoke themselves to death, god bless em. I don't smoke and I'm not in a position to judge risk versus reward.

  12. joshuatrio


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    12   8:50am Wed 20 Oct 2010   Share   Quote   Permalink   Like   Dislike  
  13. Bitcoins arent the future?


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    13   12:07pm Wed 20 Oct 2010   Share   Quote   Permalink   Like   Dislike  

    Invest in Natural Gas long term. Its abundant, clean, and can generate energy in large amounts, at a time where oil supply is diminishing and oils environmental concerns are abundant.

  14. pkennedy


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    14   1:46pm Wed 20 Oct 2010   Share   Quote   Permalink   Like   Dislike  

    I haven't really looked at the pricing of Natural Gas, but I do know that it's price skyrockets when oil gets over a certain point, because it gets all sold to the Alberta Tar Sands, where it's used in the oil extraction process. Once it becomes cost prohibitive to use it there, the cost falls through the floor because they stop using it up there.

  15. Traci


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    15   5:49pm Thu 21 Oct 2010   Share   Quote   Permalink   Like   Dislike  

    trade in the currency market.

  16. clambo


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    16   9:46pm Thu 21 Oct 2010   Share   Quote   Permalink   Like   Dislike  

    If I had $50K that was my liquid safety net, I would send it to Vanguard. I would put some into their high yield tax free bond fund. I would put some into prime money market account. I would establish a brokerage account and buy a Gold ETF based on physical gold, not gold mine stocks. Gold is not a bubble, it's naturally rising because the dollar is being debased by low interest rates and increase in the money supply by the Fed, in addition to our increasing debt. The only time gold may be falling would be when our politicians have begun to act responsibly, and the gigantic debt of mortgages and the USA has been taken care of. I predict this may not happen within 10 years, if ever. It's not risky to have up to 10% of your financial net worth in gold. You could also put a few $ into Apple (AAPL) since this profit machine is not slowing down.

  17. iwog


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    17   10:32pm Thu 21 Oct 2010   Share   Quote   Permalink   Like   Dislike   Protected  

    Traci says

    trade in the currency market.

    Ignore this. You have better odds in Vegas.

  18. iwog


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    18   1:30pm Fri 22 Oct 2010   Share   Quote   Permalink   Like   Dislike   Protected  

    SF ace says

    20K on PBR. with dilution behind the company and no more dilution prospectively, it will be by far the fastest growing oil/gas upstream/downstream in the world. Little downside from here, terrific upside.

    You think PBR is a better trade than PZE? I've had PZE for a few months now and have been happy with both the price gain and the dividends. Etrade has been reporting no dividends for PBR since May. Is that accurate?

  19. SFace


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    19   2:21pm Fri 22 Oct 2010   Share   Quote   Permalink   Like   Dislike  

    I'll look into PZE as well later.

    Yes, PBR dividends have been cut drastically. They raised 75B recently in stock offerig (and 60B plan debt later) for the rights and capital needed to expand production. It is a huge expansion program and taking on a lot of debt for a 150B market cap organization. Wall street is spooked so the uncertainty (and Brazil election) is taking this stock to its 52 weeks low, which i think is a good buying point. Institutions are off this equity at the moment. Like RIG, V, BP and others, they'll come back eventually.

  20. B.A.C.A.H.


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    20   3:36pm Sat 23 Oct 2010   Share   Quote   Permalink   Like   Dislike  

    Dollar cost average into the same allocations I have now.

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