$400k

I received a little over $300k a few years ago in a judgment. I paid off my student loans with $100k and invested the other $200k into real estate (split 2/3 tax liens and 1/3 renovation of an investment property I already owned.) I don't trust the equity markets at all and stay far away from them.

"my wife and I make more than enough money to forget the settlement even exists"

Assuming i had that problem as well I'd prob start a scholarship in my name.

toss that shit my way, I'll help you forget it exists.

Grabbit Allworth_sl said:

I've got 400k sitting in my checking account (it's what was left over after a settlement) and I have decided to invest in Vanguard because I know enough about investing to know that I don't know enough about investing.

I've always been very financially responsible. I have no debt, I have a managed 401k that I have contributed to for years, and my wife and I make more than enough money to forget the settlement even exists.

So, this post is more of a game, as I don't plan to literally take any advice given without a lot of my own consultation with a professional.

That being said, how would you handle the investment? If you're a fan of Vanguard, what tips can you provide going that route?

I've even considered starting a business (capping start up at 75k). The problem is I am not sure what I would want to do with it. A liquor store is pretty hard to fail at, but doesn't make much money unless you're an owner/operator.

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what made you choose Vanguard first of all? Note that you should be working with a financial advisor. Choosing your own mutual fund manager on 400k is a serious step in the wrong direction.

If i were you id put 100% of it into a money market fund until i paid someone to advise me.

With 400K you'll get free advice and personalized planning with pretty much any broker. Call up Schwab and say you have 400K to invest and they'll set you up with a dedicated analyst and a choice of managed funds.

Yep, to mirror what people are saying above - don't just run to a random site, get someone that you can sit down and feel out - unless you're feeling confident enough to micromanage your investing personally.

And on the liquor store concept - not sure what the wait times are nationally - but I know that was a big stumbling block for any restaurant start up in Maryland because they were so restrictive and slow on giving out liquor licenses that if you wanted to open a liquor store in 2018 you'd need to start working towards the license today.

Vanguard is a dead horse, you need to invest in Pantheon to get that thing flying.

It usually goes like this:

1) Make sure you got no debts, so pay down any high interest loan and credit cards
2) Keep an emergency fund with 3-6 months of expenses
3) Fund all of your retirements accounts to the max, IRA, 401k, Roth IRA, etc. If you don't have an IRA, just open up one with Vanguard and just use the target fund when you want to retire.
4) Now with the extra cash, you follow up with what the guys have been saying, call, meet, whatever with someone from Vanguard or Schwab for an investing account and look at your options. Conservative? Bonds might be a good idea; Aggressive? Stocks.

Either way, make sure 1,2,3 are done before you consider #4.

Dumping it in Vanguard or Betterment is fine. I would be super hesitant about going to Schwaab and telling them you have 400k or whatever. Anyone that suggests managed funds or funds with ER above 50 basis points should probably be ignored immediately.

If you go with the Vanguard route, you probably want to sit down and figure out a target asset allocation. Check out the Bogleheads wiki, come up with a plan, and then figure out what changes you need to make in order to hit that target allocation (including how to invest that 400k).

The more I've dealt with stuff, the simpler I've gotten to the point I basically just run the lazy portfolio now.

Good luck!

The "set it and forget it" option should be a Vanguard Target Date Retirement Fund. You don't have to use the money for retirement, but what it does is progressively take on less risk over time. That's a pretty good option if you think you want to use it to supplement future income -- and in the event that you want it all sooner, you of course always have the flexibility of selling the investment. Early on, it's largely identical to an aggressive portfolio (higher risk, meaning a greater potential for losses, but also higher expected gains). The disadvantage of such a fund is that you can actually re-create it on your own with a slightly lower expense ratio, thus saving money on fees. The advantage is that you don't have to remember to rebalance in the future, and there are some potential tax advantages with rebalancing as well (when you do it outside of a Vanguard mutual fund[*], you have to sell and buy stocks, which means you get hit with capital gains taxes). Most people seem to forget to do so and end up at retirement age with 100% in stocks, which can end pretty horribly. Whether that's worth a slightly higher expense ratio depends on how much you trust yourself to stay on top of things.

The more hands-on approach is to build your own portfolio consisting of index funds (with the help of a fixed fee adviser, not someone who takes a cut of your investments and/or gets a kickback from funds) and rebalancing at least annually. That's going to have slightly lower fees and also doesn't automate you into less risky investments over time. So this is particularly useful if you don't intend to use the money for retirement and simply want to grow your assets. Nothing prevents you from adjusting the portfolio's risk over time, of course. You can either do this on your own by decreasing the percentage held in stocks, or consult again with a fixed fee adviser.

[*] I believe this only holds for Vanguard's Mutual Funds, as they have a patent on the structure of their funds that makes them tax-equivalent to Exchange Traded Funds.

God damn nets system...

Blazin_sl said:

Financial advice for people who will quite likely become millionaires is not the same as advice to a regular middle income worker who will hopefully follow the standard advice and save up a few hundred grand to help make their retirement easier when they turn 65.

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$400k isn't remotely enough to talk about different investment strategies. Suppose he follows your calculation and ends up with $600k 30 years from today and buys an annuity that doesn't adjust for inflation. First, $600k in 30 years given 3% inflation is $286,500 in today's dollars (which is significantly less than he started with, I might add). At Vanguard today, that'd get him an annuity paying about $1,500/month in today's dollars, which is going to be $750 in today's dollars when he's 90. That's not much of a safety net.

Seriously, do not underestimate the effect of inflation. It's an exponential curve for which we simply have no intuition whatsoever. Warren Buffett notedin an interviewthat he saw the Dow at 100. At the time, a value of 17,000 would have seemed insane. It'll take less time for it to go from 17,000 to 1,000,000 at the same rate of growth, although it's much more likely that the index simply gets rescaled at some point. Much like currencies will have to drop a zero at some point.

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Grabbit Allworth_sl said:

I'm 37. No debt. No kids and no plans on any. 40k in a 401k.

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40k or 400k? If the former, I'd highly recommend using the money to boost your retirement savings. Make sure to contribute the maximum amount that your employer will match. Beyond that, do you have an IRA (or a Roth IRA) that you max contributions for? If not, that'd be the next step. Then, you should also have savings intended for retirement (but that can also be used for other things, as needed) in a taxable investment account -- that's probably where the $400k would come in.