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


By Kevin   Follow   Sun, 17 Oct 2010, 11:53am PDT   11,224 views   55 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.

iwog   Sun, 17 Oct 2010, 5:16pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 1

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.

SFace   Sun, 17 Oct 2010, 6:10pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 2

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.

pkennedy   Mon, 18 Oct 2010, 3:01am PDT   Share   Quote   Permalink   Like   Dislike     Comment 3

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.

KP   Mon, 18 Oct 2010, 3:08am PDT   Share   Quote   Permalink   Like   Dislike     Comment 4

sell options

theoakman   Mon, 18 Oct 2010, 9:17am PDT   Share   Quote   Permalink   Like   Dislike     Comment 5

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

iwog   Mon, 18 Oct 2010, 10:18am PDT   Share   Quote   Permalink   Like   Dislike     Comment 6

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.

Kevin   Mon, 18 Oct 2010, 3:08pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 7

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.

LarryPatrickMaloney   Mon, 18 Oct 2010, 3:17pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 8

Buy physical silver.

iwog   Tue, 19 Oct 2010, 1:29am PDT   Share   Quote   Permalink   Like   Dislike     Comment 9

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.

Done!   Tue, 19 Oct 2010, 6:34am PDT   Share   Quote   Permalink   Like   Dislike     Comment 10

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?

iwog   Tue, 19 Oct 2010, 7:27am PDT   Share   Quote   Permalink   Like   Dislike     Comment 11

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.

joshuatrio   Wed, 20 Oct 2010, 1:50am PDT   Share   Quote   Permalink   Like   Dislike     Comment 12

Here's what CNN recommends (lol):

http://money.cnn.com/galleries/2010/pf/1010/gallery.how_to_spend_50000.moneymag/

pkennedy   Wed, 20 Oct 2010, 6:46am PDT   Share   Quote   Permalink   Like   Dislike     Comment 13

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.

Traci   Thu, 21 Oct 2010, 10:49am PDT   Share   Quote   Permalink   Like   Dislike     Comment 14

trade in the currency market.

clambo   Thu, 21 Oct 2010, 2:46pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 15

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.

iwog   Thu, 21 Oct 2010, 3:32pm PDT   Share   Quote   Permalink   Like   Dislike     Comment 16

Traci says

trade in the currency market.

Ignore this. You have better odds in Vegas.

iwog   Fri, 22 Oct 2010, 6:30am PDT   Share   Quote   Permalink   Like   Dislike     Comment 17

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?

SFace   Fri, 22 Oct 2010, 7:21am PDT   Share   Quote   Permalink   Like   Dislike     Comment 18

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.

B.A.C.A.H.   Sat, 23 Oct 2010, 8:36am PDT   Share   Quote   Permalink   Like   Dislike     Comment 19

Dollar cost average into the same allocations I have now.

Bap33   Sat, 23 Oct 2010, 9:23am PDT   Share   Quote   Permalink   Like   Dislike     Comment 20

hmmmm ..... $50K ... lets assume tax free

$10K would go to Iwog, and the deal would be 25% of the profits would be shared 50/50, with 75% of the profits being reinvested. Payout/reinvestment would happen every 7 years for 28 years (4 total cycles). Just letting it roll as he seen fit. If it all went bust, so be it. If it exploded, he still gets half the profits. Again, we come together every seven years and share the profits. His investing, my $10K. In the event my $10K is returned to me through the profit sharing, then Iwog will have right to change the % of the profits that are invested, but the 50% sharing of profits continues until eaither all monies are gone, or the 28th year (2038), 4th cycle is completed. I'd be 69 at that time, and I guess we could have this set up as a trust to avoid taxes ... ? ,,, I'd trust Iwog to figure the best way.

Another $10K would go to Doc Nomo for the exact same thing wioth the same agreement.

$10K would go to new racing engines

$20K would be enough to off-set my cost to build and I would just build my house instead of dicking around with REwhores and waiting for REOs to get down out of the dreamer clouds.

Now, if it were $500K, I'd buy a house here outright, as house in Lubbuck Tx outright, and still have the $50K to do the same investing and racing engine buying.

For 1mil I do the same $500K plan .... and take the other $500K and start my own automotive service and detailing chain from LA to Monterey to Frisco .... even offer pick-up and delivery ... simple oil change/filter (like jiffy lube $15-$30-$50 type stuff) but also offer a wash($10)/super wash($20)/extreem hand custome detail($100-$200) too. Have full recycling systems for water and oil to get green credits in Cal, really push that with the college and professional crowd ... focus on the big medical schools where people would be really happy to have their car picked up and done while they are at work/school/asleep, walk out to a super clean, serviced car, that smells awesome ... even if the service work is set up at a dealer for more major service the delivery and pick-up can include a supreme detail billed to the dealer if a contract is set up with them .... may be cheaper to put their cars in an portable enclosed car trailers and perform services remotely, retruning to a base station for oil droping, filters, and water/soap ext. One thing is for sure, an enclosed trailer insures containment for recycling. I may be onto something.... might work best as a franchise offer like Stanly Steemer does ... have folks buy into my system and my customers .... or just dreaming outloud.

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