patrick.net

Nomograph says

Iron Ranger says

Where to safely invest $3.5M?

I would spend it on snorting coke off a stripper's tit.

For $3.5 million, I'll be that stripper.

Iron Ranger says

Where to safely invest $3.5M?

Celebrity body parts! Body parts only go up in value. Recently John Lennon's decrypted tooth sold for over $31,000 at an auction. And the tooth fairy only offered a quarter.

Note: Do not look at John Lennon's tooth within an hour of eating.

If a tooth can catch over $31k, image what you could get for Ted Kennedy's kidney, Helen Keller's eyes, Ann Frank's writing hand, or Bill Clinton's, well, ok, that's kind of disgusting.

The point is, celebrity body parts are the new gold. Act now, before Glenn Beck becomes spokesman for Bodyline and the prices go up.

With 3.5M, you really should get in touch with someone from Goldman Sachs, wealth management etc. Chances are they already have thousands who are like you aready and have a financial product that suits your need. Give them 1M to start out, that should be plenty enough to get their attention. It doesn't hurt to get some free advice anyway.

In my opinion, it sounds like you want safe fixed income, but with a better return than good old savings account. I would probably do a mix of short/medium term Corporate and treasury bonds. That should be minuscule risk for 3% - 5% returns.

Never pay cash for a house!!! Try by all means to get a FHA loan where Obama takes the whole risk of negative equity. Just pay a sloppy 4% in interest (considering inflation, 4% is the same as 0%=free money) and invest your money in something with a better return than the currently negative investment returns in real estate. Then, after the market fully tanked buy the house next door with your cash for half the price you owe on your FHA mortgage, turn in your keys and Obama will be happy to eat the loss, no matter how high. Don't worry about your credit rating. Good credit only means that the bank can give you a lot of loans to get rich of you. Bad credit means you pay cash, save tons of interest and don't make the banks richer than they already are.

Kevin says

*california* is great. I was specifically referring to the bay area as a shit hole. It's an endless stream of poorly maintained strip malls and suburban decay.

OK, Silicon Valley is shit, but compared to suburban Chicago shit, it still wins by a long shot because of the weather alone.

Lots of the Bay Area is exceptionally nice, not strip malls. San Francisco is still only semi-believable to me each time I go up there and look out across the bay. I just can't believe I'm allowed to live nearby without some special passport or proof that I regularly blow Congressmen.

It's actually like that all up the CA coast to Oregon and even OR and WA and Vancouver. But the jobs are here. Not that it matters much since I waste all my time working on this website.

Kevin says

*california* is great. I was specifically referring to the bay area as a shit hole. It's an endless stream of poorly maintained strip malls and suburban decay.

OK, Silicon Valley is shit, but compared to suburban Chicago shit, it still wins by a long shot because of the weather alone.

Lots of the Bay Area is exceptionally nice, not strip malls. San Francisco is still only semi-believable to me each time I go up there and look out across the bay. I just can't believe I'm allowed to live nearby without some special passport or proof that I regularly blow Congressmen.

It's actually like that all up the CA coast to Oregon and even OR and WA and Vancouver. But the jobs are here. Not that it matters much since I waste all my time working on this website.

There are plenty of jobs in Portland and Seattle. The weather isn't as nice though.

the best advice: "put it somewhere as secure as possible. ... don't touch it for a year. spend this year to plan what you're going to do." Educate yourself. Read as much as you can. Itulip.com is a very good start. nakedcapitalism.com is a good one. jessescrossroadscafe.blogspot.com is a good read, safehaven.com, nowandfutures.com Good luck!

1) Decide when you would like to retire (what age?)
2) Decide what your personal "living standard" would be in retirement (monthly required cash-flow to cover expenses, hobbies, vacations, etc.)
3) Annualize the previously calculated monthly cash flow amount
4) Calculate the amount of capital needed, at a certain rate of return (use historical average of 30 year T-bonds as a place to start), that will throw off cash matching (or better) than the amount from point '3)'

Ex: You decide you would need/desire $5,000 a month to live "comfortably" in retirement. That is $60,000 annually. At 7.5% (35 year historical average 30yTbond--hey, it might be back up there by the time you retire) you would need $800,000. At current 30yT rates you would need about $2m (divide annual cash flow requirement by rate of return to get investment principal amount)

5) Now decide how to get to amount 'X' (calculated from point '4)', see example). Stocks, precious metals, real estate, IUL, franchise, whichever investment vehicle you feel most comfortable with and like, that's the one (or some combination of) you should use to get to 'X'.

Note: The example of treasuries to be the fixed-income investment at retirement can be any investment of similar nature--cre, munis, MBS, etc. I just use treasuries as the assumed "safe" investment benchmark though "safe" is certainly arguable.

Another Note: I don't particularly care for the term "retirement". I prefer "point at which the majority of your income (51%+) comes from passive sources as opposed to active i.e. salary/wage sources"--I just haven't figured out an appropriate word or phrase to describe that scenario yet.

Yet Another Note: Taxes were not taken into account and neither was a more sophisticated model of determining required "retirement" capital saved that allows periodic liquidation of said capital to a determined 'death' target. This would leave little or no inheritance upon your death in theory--useful if your kids/nephews/nieces are jack wagons.

Disclaimer: I have worked as an investment adviser but currently work in commercial real estate and may or may not invest in the assets mentioned previously; any and all information is hypothetical and should not be construed as investment advice in any way.

kochevnik says

You must have gone to Cherry or Cook or one of the other St. Louis county schools - I also grew up in the same area (Embarrass), same time frame, same lower 99%. I can go thru the same stories, heated our house with wood - but all those cords the first year by hand with a crosscut saw & a bow saw - and I was 12. -60 below one winter in the early 70's with 40 mph winds - we dressed up and went outside just to see what it was like LOL. 59 in my high school class and I was a National Merit Scholar. Tough place, tough people - almost no one can relate.

You got it! rural St. Louis County school district. Uff-da! Nothing like splitting poplar after hauling it out of the swamp in -20F weather. Easy splitting when frozen. The best motivation to get to California. Have you ever been to Mesaba Lake Park? Commie country there. I had friends in Babbit. Embarass takes the all time cold temperature record though.

kochevnik says

I read your missive and I would be more than a little concerned that you seem to be completely ignoring (or unaware) of the current macroecon situation.

I am more than aware. I read John Mauldin -- The End Game. The next great depression is a real possibility. The Eurozone might bring us all down. Good advice fellow Ranger!

Iron Ranger : Glad you are aware, hate to see you lose that money.

I left the Range in the 80's for CA and it was quite an experience - been back to live for short stints, but I've had enough winter to last a lifetime. I have a lot of family back there still, and I love them but not -50 degress love them LOL so I'm staying on the west coast. CA is in deep deep trouble financially IMO and the plethora of laws and regulations is too much for me so I don't go there much any more.

Anyways, never read mauldin before, went and looked his book up - synopsis looks spot on to me. If you grokked that then I think you've got it covered.

If you have money and are wondering what to do with it (like I do and you do), a lot depends on how far down the rabbit hole you think we go. If this is 'investable', then the best thing to do right now would be to park your money to wait for the massive deflation still to come.

I just think we go a lot further down that hole than people want to consider. Only good news is that I think it takes some time (another 5+ years to get there). I don't think the US gets away with stiffing China for a couple of trillion without some kind of war. Having lived in China for a while, the chinese are a lot smarter and sneakier than the govt and the citizens of this country understand.

Anyways, best of luck - we all pays our money and takes our chances.

kochevnik

lots of advice to buy US bonds. Why would you buy that 1% paying below inflation crap of a country that is likely to default.
Buy a house.
Buy inflation-protected stocks (an advisory would help). Don't buy inflation adjusted bonds.. Government will lie about the rate.