patrick.net

inflation is going to make cash worthless. Housing in Las Vegas is the safest place to put your cash

I'll give you 4%.

Strategic Renter says

inflation is going to make cash worthless. Housing in Las Vegas is the safest place to put your cash

Not sure that is the case. It may just as well be deflation. As much money as Ben has been printing and there still is not inflation, at the middle class level, says that when he quits the QEs there will be not be any inflation but deflation. YMMV and I could see it going the other way too. But considering the demographics, the downward pressure for China and automation and advances in technology, the likely shrinking of government in Calif, the lowering of labor cost through immigration, I would just sit tight for a while. Buffet has record amounts of cash, which may be because Ben is paying him interest along with the rest of the cronys or because he is thinking lets see how this play out.

You said that you are thinking
meetyaks says

I feel this is not the right time to buy a house as well because interest rates are just going up

You should always make your own decisions, period NO exceptions.

http://www.bankrate.com/cd.aspx

waiting_for_the_fall says

http://www.bankrate.com/cd.aspx

Like I said, I'll give you 4%.

Hookers, blow and wheesky.

meetyaks says

Please let me know what would you do. Thanks.

Judging from the peoples responses above,
who want to take it away from you...

I suggest you invest in a AR-15, Shostakovich can fill in how to
lay down suppressing fire on multiple attacking targets..

APOCALYPSEFUCK is Shostakovich says

Gatling guns! Gatling guns! AR-15 will get you nowhere when CANNIBAL ANARCHY descends.

AF,

Have you priced transferrable miniguns lately? IF you can find one it'll set you back most of that nest egg. And that's not counting ammo to feed the beast.

http://www.everydaynodaysoff.com/2009/10/21/ge-m134-mini-gun-fully-transferable/

Even the non-civilian rebuilt ones run $60k

http://www.autoweapons.com/photos05/mar/minigun.html

That's a lot of AR15s

5%. My final offer.

Your predicament is largely why myself and some others on here think housing isn't going to catastrophically collapse. Gold is still on its way down, stock market is going to be a roller coaster through summer... People rife with cash are still buying and don't give a hoot about the interest rates. Those that have a nice nestegg care about the interest rates, but 1% won't be enough to significantly deter them from plunking down their cash into a place they can call their own and grow old together in..

That being said, I'd be willing to top Moderate Infidel and go as high as 5.5% :)

Strategic Renter says

Housing in Las Vegas is the safest place to put your cash

With over 40,000 empty houses in LV is not too much gambling?

Gold

Physical, not paper.

APOCALYPSEFUCK is Shostakovich says

Yams.

Fresh water.

Dynamite.

This is where you want to put your money.

Add a Gatling gun and lots of ammo.

APOCALYPSEFUCK is Shostakovich says

Yes, of course. Why dig out a sniper's nest at your siege if you're not going to arm it appropriately?

Do you have a philosophical disposition against can goods?

You have it in the safest place on earth, an American bank.
If we have learned anything in the last 10 years, that is, Banks are too big to fail.

Keep making deposits and sleep tight at night. Or at least until our economic policy stops doing Keg stands, and sexting it's junk.

Banks are nothing but sensible given the recent track record of the alternatives.

You can try to get a few more folks with cash and open up a business so you are not the only one shelling out cash, after all that's enough cash for a well funded start up.

Or if you know what you are doing wall street is a place to be. Just don't gamble with it. If you don't understand how a company makes money or will make money, don't buy their stock.

Keeping it in the bank isn't bad either... emergency cash is always good to have.

I would second the business, but only if it's something you've been mulling over for a long time, and have some idea what it takes to make such a business a success.

I'm never surprised when dart board entrepreneurs fail.

CaptainShuddup says

I would second the business, but only if it's something you've been mulling over for a long time, and have some idea what it takes to make such a business a success.

I'm never surprised when dart board entrepreneurs fail.

The odds are 4 in 100 after 5 years. No not the business idea.

FortWayne says

You can try to get a few more folks with cash and open up a business so you are not the only one shelling out cash, after all that's enough cash for a well funded start up.

$300K is 2-4 weeks worth of money for a reasonable sized startup which can expect to spend $20,000,000-$200,000,000 before a liquidity event with a 50% chance the investors won't get all their money back (the last two craters I experienced saw the investors get $4M out of $20 back and $13M out of $35). Smaller endeavors with less experienced investors and principals are far less likely to succeed. Also note that while over-night successes get a lot of press a 7-10 year period in which investors are illiquid is more common.

My vote after cashing out of real estate in 2006-2007 is FDIC / NCUA insured bank accounts. Annual losses in real money won't be worse than inflation and you remain liquid for when things become less stupid.

FWIW, the early withdrawal penalty for bank CDs (there are other sorts that are less liquid) with terms of one year or longer is usually 6 months interest. A 1% CD you cashed out after a year would still yield 0.5% / $4500 annually / $375/month. I didn't consider that and was kicking myself when my 1-3 year CDs paying 5% matured and the current market alternatives had negative real returns.

My wife and I get $70/month from a pair of Provident "super reward" checking accounts which pay 1.75% on the first $25K when we jump through the hoops - trivial $50/month direct deposit into each account, buy 10 $2 VTA tickets with each check card.

Id say buy a bunch of rope, fasten a noose, and climb a tree and hang yourself. I mean, what better thing could one do with money then to leverage themselvges into uber awesome coastal calif real estate. Its like so effin cool!

Do you really want to buy a house to live in one, or is it something you want to do because you've heard that's a good place to put money?

I was in a similar boat as you, sitting on a bunch of cash, half invested and half earning almost nothing, but my wife and I are in need of a nicer place to live, so we decided to buy right now, despite the horrible prices, because we need a home. Renting in the areas we like is very expensive, so purchasing isn't too bad compared to that (though still, the numbers favor renting, it's just that the rental market for SFH is very tight). So, I spent $250k+ on a down payment, and bought a house at a time I think is a really dumb time to buy, and I fully expect to lose money if I have to sell in the next decade, and even after that, I expect that while I may not be underwater in dollar terms, that money will have done worse than investments.

We are in a real estate bubble, but it's really hard to time when it will pop. The stock market is just as overvalued as housing for the same reasons. Banks have a lot of exposure to these assets, and the Fed exists only to help banks, its dual mandate is bullshit. This environment makes it impossible for us unconnected people to protect ourselves from the inflation, so I just figured, screw it, I need to live my life like I want and not wait for stuff to get cheaper, since i don't know how long to wait and I'm not immortal.

Take it out in bundles of ones and build a cash fort in your living room.

zzyzzx says

APOCALYPSEFUCK is Shostakovich says

Yams.

Fresh water.

Dynamite.

This is where you want to put your money.

Add a Gatling gun and lots of ammo.

And a barrel of whiskey.

indigenous says

APOCALYPSEFUCK is Shostakovich says

Yes, of course. Why dig out a sniper's nest at your siege if you're not going to arm it appropriately?

Do you have a philosophical disposition against can goods?

Do brass caseings count as cans?

Since May I'm sitting in about 50% cash as well. Even if it's earning next to nothing, it's doing better than PMs or the stock market.

Strategic Renter says

inflation is going to make cash worthless.

This is precisely why I despise inflation. A person should not have to gamble with his savings in order to prevent those savings from losing value while he saves up for a reasonably priced house. This is simply not socially just.

Keep piling the cash, their is no right time, the key is to live where you REALLY want to live, if you have to rent until then, so be it. If your able to stack that much cash, just keep going!, and invest conservatively, your doing well and many will never be able to amass wealth like you are doing.

Dan8267 says

A person should not have to gamble with his savings in order to prevent those savings from losing

This is an idea especially supported by those with the most money. Way better not to even think about working while massive income arrives at the door. Of course the love making money hand over fist when the opportunity arises but don't want to lose any.

FunTime says

This is an idea especially supported by those with the most money. Way better not to even think about working while massive income arrives at the door. Of course the love making money hand over fist when the opportunity arises but don't want to lose any.

Money devaluation hurts all savers, especially on the poorer end who saved for retirement and now live on fixed income.

everything says

Keep piling the cash, their is no right time, the key is to live where you REALLY want to live, if you have to rent until then, so be it. If your able to stack that much cash, just keep going!, and invest conservatively, your doing well and many will never be able to amass wealth like you are doing.

I would like to buy now, but can't see myself paying alot of money for a fixer, even if I could find one in the limited inventory available. If the bubble doesn't pop in the next 2 years, I won't buy and will continue renting and saving.
In 10 years I will be retired and move out of state, buying with cash.
California is not the best place to retire, unless you bought 30 years ago.

myob says

I was in a similar boat as you, sitting on a bunch of cash, half invested and half earning almost nothing,

Agree with you 100% . its almost like you are describing my personal situation.
I also waited along sidelines for 9 years (reading patrick.net) resisting the urge to buy. I finally bought house in Mountain View in Feb.
time will tell if this was a right decision.

FunTime says

Dan8267 says

A person should not have to gamble with his savings in order to prevent those savings from losing

This is an idea especially supported by those with the most money. Way better not to even think about working while massive income arrives at the door. Of course the love making money hand over fist when the opportunity arises but don't want to lose any.

1. I've worked for every dollar I have.
2. I'm working right now.
3. The rich are not nearly as affected by inflation as the middle class. The rich can avoid inflation with preferred stocks, art, farmland, etc. The middle class has little recourse except gambling in common stocks.
4. If you want to prevent a growing rich-poor gap, you should be against inflation and for a progressive wealth tax.

Keep the cash until:

1) The fed starts getting really frustrated about the lack of efficacy of it's QEternity. At this point, put 50% of your money in.
2) The fed makes an official statement that, no matter what, they will target inflation higher, without a specific number to target. Then go 100% in.

Oh, i forgot. If you have so much cash, and do not know what to do with it: Donate 0.1% of it to the poor. This will make you a better person, something that the best investment in the world will never be able to do for you.

1) If your 300k is in one account, you're FDIC insurance may not be enough to cover you should your bank ever fail. [not likely, but just thought I'd point that out]

2) A high yield checking should pay you more than $50/month

3) Don't buy based on trying to time the market. Your post makes it sounds like that's what your doing.

4) Interest rates going up historically (and I wish I had the data - it was in a different thread a few years back) cause prices to RISE, not fall.

5) With $300,000 you can probably buy a home in 90% of the country, for cash. Most people don't like uprooting - particularly if they have familial ties to an area - but it never hurts to look at all potential options.

6) don't buy into your comfortable with the idea. Buy because A) you can afford it B) you get "fair value" for your money C) you're going to live there for a while. [Unless your buying a portfolio of investment properties - but my guess is that ship has already sailed]

Remember Singe Family Homes are (rarely) an investment.

Thanks a lot friends for your valuable suggestions. Now, if I decide to buy a home - I am confused for couple of things.

1. When I look at houses worth 700k in the areas I am interested in, basically I am getting value for money. Houses are really small and in fact I might have to move again after 5 years or so (I have 2 small kids).

2. Other options is going for 1M range in which case I put down 200 and keep the remaining 100 as backup.

My question to you is, is it work going for such a big house and paying higher property taxes? Should there be a down town, will that difference (between million dollar house and 700k house) remain same?

Man, an $800,000 mortgage is a huge leap forward from a $400,000 mortgage. Have you done the numbers? Just from my cursory glance, the monthly nest egg would be drastically different especially since you would be over the conforming limit, so it really depends on what amount of money you are willing to spend on housing per month.

FunTime says

Dan8267 says

A person should not have to gamble with his savings in order to prevent those savings from losing

This is an idea especially supported by those with the most money. Way better not to even think about working while massive income arrives at the door. Of course the love making money hand over fist when the opportunity arises but don't want to lose any.

The wealthy invest in stocks because it offers the most growth potential in the long term, beating inflation is not necessarily their #1 objective.

meetyaks says

Thanks a lot friends for your valuable suggestions. Now, if I decide to buy a home - I am confused for couple of things.

1. When I look at houses worth 700k in the areas I am interested in, basically I am getting value for money. Houses are really small and in fact I might have to move again after 5 years or so (I have 2 small kids).

2. Other options is going for 1M range in which case I put down 200 and keep the remaining 100 as backup.

My question to you is, is it work going for such a big house and paying higher property taxes? Should there be a down town, will that difference (between million dollar house and 700k house) remain same?

Use bubble to your advantage. The rich invest ahead of bubbles and get out when the "retail" investor gets in.

I read where Buffet has 47 billion in cash. That might mean something?

dublin hillz says

The wealthy invest in stocks because it offers the most growth potential in the long term, beating inflation is not necessarily their #1 objective.

The wealthy also have access to information you do not.