Where Do You Put Your Short-Term Savings?

jcc24's picture
Rank: Monkey | 64

As the title suggests, I'm curious to see where the monkeys of WSO are allocating their savings. I just finished my first year as an analyst and having some difficulty choosing how where to put my disretionary savings. I started out saving very aggressively for retirement (think 15% to Roth and 401k), just reached my safety net goal and now want to establish some general savings for future vacations, home purchase etc. I'm hesitant to throw them into index funds given how expensive equities are, but feel like letting them sit in a MM account would be wasteful. I don't consider myself skilled enough to select specific stocks so I tend to prefer ETFs and Indexes, but I have considered purchasing a few larger, high dividend blue chips as an alternative. Either that or treasuries which I do think are currently underpriced.

Again, these aren't necessarily long term savings, more for larger purchases and general flexibility within 5-10 years. What do the personal finance gurus of WSO think?

Comments (145)

Sep 9, 2017

I have similar questions.

  1. How do you know an ETF is not overpriced
  2. Is fixed income (dividend stocks) are they even worth it when all you're putting in is $100,000.00 ? Warren B hates fixed income.
  3. capital appreciation vs. fixed income ?
  4. what percent of your savings are in the bank getting ?
Sep 13, 2017

An ETF is composed of a series of industry stocks, so the only true way to know the price of an ETF is to look at the design and contents of the ETF, then value every single stock. Alternatively, you could look at the industry ETF and speculate whether it seems reasonable based on market multiples. ETF's are passive, meant for longer term outlooks.

Warren B is also a billionaire who has different goals and better advantages. Also, remember Buffet looks at companies that pay dividends, are financially strong, sell a good product in a strong demanding market, and are undervalued. Your investment decisions depend on your goals, solely. To generalize everyone's investment goals would be wrong. Your 100k could be better off in a FI account, it's all relevant. If you want to maintain the value of the money and hedge for inflation changes, then FI sounds reasonable - both investment grade and treasury. If you're up for more risk high-yield can be a nice addition.

Why not both, cap. app. and FI? Again, it all depends. Sit down and evaluate your long term goals. Do you have time to constantly track your own portfolio? Are you risk loving or risk averse? Maybe some sort of diversification between CA stock and FI would be best. Both have pros and cons (tax advantages/disadvantages, risk, etc.)

    • 1
Sep 13, 2017

ETFs are generally priced fairly based on the underlying, especially when they are liquid, because of the role of the authorized purchaser.

This paper goes into detail on how ETFs operate from a mechanical and legal/tax perspective. Good read if you want to understand the guts of the security you're buying:

https://www.ici.org/pdf/per20-05.pdf
Suffice to say that the authorized purchaser is the entity contracted by the sponsor of the ETF to manage creation and redemption of ETF shares. Essentially, when an ETF is trading above its NAV, the AP's go into the markets, purchase the underlying, and create more ETFs. They sell those into the market, booking a profit and bringing the price of the ETF back down to that of the underlying. Conversely, when an ETF is trading below NAV, the AP will purchase ETFs on the open market and redeem them for the underlying, and then sell the underlying, booking the spread as profit. It is therefore essentially an arbitrage mechanism that ensures ETFs are trading in line with their underlying.

Note to anyone getting involved in ETFs: you may have recently noticed levered ETFs hitting the market. Before getting involved with these for anything other than extremely short-term trades, you should read up on the concept of beta slippage, as these levered products will trade out of step with their underlying over the course of time.

Sep 9, 2017

I keep mine in bearer bonds under my mattress

    • 2
Sep 11, 2017

If a MM is wasting money then those savings aren't really "short term"

heister:

Look at all these wannabe richies hating on an expensive salad.

https://arthuxtable.com/

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Sep 11, 2017

I use wealthfront, it automatically diversifies it for you and the first $10,000 is fee free. After that it's a 0.25% fixed fee on your average balance. It generally uses different Vanguard ETFs. (It's a robo-advisor), however the minimum deposit is $500, and to get the benefit of tax-loss harvesting you need $5000. I use it for four reasons

  1. I don't have time to play the market, nor do I like to.
  2. Diversified portfolio
  3. Robo-Advisor, So it engages in tax-harvesting, selling a stock when it's down and buying something similair in order to maintain that Beta. Hence it automatically adjusts my portfolio to maintain the diversification it requires, while also getting tax benefits.
  4. Low fee

I'd recommend googling it a bit to see if it's something you'd like.
and if so PM me I can refer you and we both get an additional $5k allowance managed fee free!

Best Response
Sep 12, 2017

USE CODE TIMFERRIS TO GET A FREE MUG

heister:

Look at all these wannabe richies hating on an expensive salad.

https://arthuxtable.com/

    • 8
Sep 13, 2017

Not bashing your post but it can't sell a stock at a loss and buy something back to gain a tax advantage unless it waits 30 days. At which point the tax advantage gained might be outweighed by the loss of growth. This is called the wash sale rule. See here for details: http://www.investopedia.com/terms/w/washsalerule.asp

Sep 14, 2017

@Praesto That's not entirely true. You are certainly permitted to sell a stock and buy something else, as long as it does not look like you are attempting to gain a tax advantage. My understanding of what Wealthfront does is, after selling a stock/etf, find another stock whose performance is very correlated with the just-sold one, yet won't trigger the IRS to come knocking.

Sep 11, 2017

For short term, I use an Ally Online Savings account. I earn 1.20% a year, which isn't great, but it's a savings fund so I'm not running the risk of potentially losing a big chunk of it.

    • 1
Sep 14, 2017

Funny, got two calls today asking the same thing.

Sep 14, 2017

I'd say that you should keep 50k EMF (emergency fund).
The rest there are better answers here for that.

"It is better to have a friendship based on business, than a business based on friendship." - Rockefeller.

"Live fast, die hard. Leave a good looking body." - Navy SEAL

Sep 14, 2017

$80k in post-tax savings is insane for a first year analyst. Did you eat or rent an apartment?

Sep 14, 2017
NorthSider:

$80k in post-tax savings is insane for a first year analyst. Did you eat or rent an apartment?

Might be at a non-NYC location?

Sep 14, 2017

Clearly OP lives with his parents.

Sep 14, 2017

$80k after one year of banking.... You must be a miserable person

Sep 14, 2017

Clearly OP is no fun. Who saves $80,000 in one year of banking at the analyst level?

Invest in some index fund dude and forget about it.

Sep 14, 2017

I think you should invest the $80k in the TwoThrones scholarship. Basically, I need that money if I get into an MBA program next year.

Sep 14, 2017

Saving $80k in your first year in London is impossible. I have been there, and it is just impossible. Even if you hide under a rock, reheat the foot you got from your allowance and never go out, it is just not possible.

Sep 14, 2017

Lol @ $80 savings after 1 year. Even if you didn't spend a single fucking pound you'd still have less than that because of taxes.

But anyway, I don't really care how you got the money. In terms of investing it, if like risk, there must be some high beta funds out there. And since you're still very young it also makes sense to go for more risky investments. Look for high-beta, they must be out there. If not, EM is always a rollercoaster, or even worse frontier markets such as Nigeria or Turkey offer quite the spectacle.

    • 1
Sep 14, 2017
youjustgotlittup:

Lol @ $80 savings after 1 year. Even if you didn't spend a single fucking pound you'd still have less than that because of taxes.

But anyway, I don't really care how you got the money. In terms of investing it, if you want risk, there must be some high beta funds out there. And since you're still very young it also makes sense to go for more risky investments. Look for high-beta, they must be out there. If not, EM is always a rollercoaster, or even worse frontier markets such as Nigeria or Turkey offer quite the spectacle.

    • 1
Sep 14, 2017

shameless plug

if you have an emergency fund taken care of, max your retirement savings until the excess is spent, even if this means increasing your paycheck deductions (not sure if you guys have 401k or something similar) and living off your savings account for the money you don't get paid and then decreasing your deductions once your savings goes back down to just what you need for the emergency fund.

if you're asking for investment ideas on WSO, I'll tell you ignore everyone who gives you a stock tip or ETF strategy here. dollar cost average into some good funds (Sequoia and Tweedy Browne are 2 favorites of mine) and let it compound for 45 years.

    • 1
Sep 14, 2017
thebrofessor:

shameless plug

if you have an emergency fund taken care of, max your retirement savings until the excess is spent, even if this means increasing your paycheck deductions (not sure if you guys have 401k or something similar) and living off your savings account for the money you don't get paid and then decreasing your deductions once your savings goes back down to just what you need for the emergency fund.

if you're asking for investment ideas on WSO, I'll tell you ignore everyone who gives you a stock tip or ETF strategy here. dollar cost average into some good funds ..... and let it compound for 45 years.

This. SB'ed
.

Keep some money out to play with stocks if you like.

Sep 14, 2017

I would save most of it, but if you haven't already, set up a trading account. I don't know what your end goals are, but if you want to go to the buyside, it's better to show that you're committed. Having investments to discuss with buyside interviewers makes you that much more credible, and sometimes could lead to very interesting discussions about an industry or the overall economy; the type of conversation that will get you hired.

When I first started trading, I only put in $5,000, so a token amount is fine.

Sep 14, 2017

Bumping this to see if anyone has any more suggestions.

Thank you for the tips thus far. The EM funds idea sounds interesting, will look into that.

Unfortunately working in IBD, ofc dont have time to be researching and trading stocks.

Also, in regards to the other points people raised:

a) yes I live with my parents. No point spending money on rent if I'm never at home, right.
b) I can admit over the past year I have foregone any real social life in favour of keeping money in my pocket

Right now all I want from life is capital gains haha

You know you've been working too hard when you stop dreaming about bottles of champagne and hordes of naked women, and start dreaming about conditional formatting and circular references.

Sep 14, 2017
Zweihander:

b) I can admit over the past year I have foregone any real social life in favour of keeping money in my pocket

You will regret this at some point in your life

Sep 14, 2017

wow, just wow.

Sep 14, 2017
Zweihander:

Bumping this to see if anyone has any more suggestions.

Thank you for the tips thus far. The EM funds idea sounds interesting, will look into that.

Unfortunately working in IBD, ofc dont have time to be researching and trading stocks.

Also, in regards to the other points people raised:

a) yes I live with my parents. No point spending money on rent if I'm never at home, right.

Just want to point out that I was correct in my assumption.

Sep 14, 2017
Zweihander:

a) yes I live with my parents. No point spending money on rent if I'm never at home, right.

b) I can admit over the past year I have foregone any real social life in favour of keeping money in my pocket

Even without rent and a social life, this is insane. A top bucket 1st year is fortunate if his after-tax income is $80k, without spending a dime!

Sep 14, 2017

If you're after capital gains you might want to sit on the sideline for a year.

Sep 14, 2017

Second this. Wait a while for the correction that currently looks nearby and buy when the market tanks - even in IB, you should have enough time (if the correction isn't too soon) to research at least one company you may want to buy (if you want to move to buy-side etc).

Sep 14, 2017

Put $75k in gold bullion. Save the other $5k for strong drinks in case I'm wrong.

Sep 14, 2017

jesus dude, again with the gold? don't you work at a long only equity shop? how do those two work together?

Sep 14, 2017
jankynoname:

Put $75k in gold bullion. Save the other $5k for strong drinks in case I'm wrong.

Horrible advice, even if you end up being right.

Sep 14, 2017

In a diversified account with multi-year horizon, what is the argument against XME, GLD, etc. Cyclicals that seem to be in a trough now.

Sep 14, 2017

Probably mamas boy OP included his bonus in that sum.

Sep 12, 2017

Ally Savings account is where its at

Sep 13, 2017

They have some pretty impressive rates on their CDs, but CDs are still a pretty low-return way to go in this market. Plus there's a lot of inconvenience associated with their model, no? Aren't these the guys without physical branches?

Sep 13, 2017

CD rates are low, but if you are looking to do something with your cash savings they are a great idea.

Ally does not have any physical branches. The only inconvenience would be if you needed to deposit cash (you can do checks through their mobile app) or needed a cashiers check ASAP. Both of which I haven't had to do in the three years I have had them. I use Chase as my primary bank just in case of an emergency,

    • 1
Sep 14, 2017

Mutual funds are quite liquid. In my opinion, you should contact a financial adviser, they usually have a long list of mutual fund companies with strong returns. For safety go with bond funds, there are also middle of the road one's that invest 60% equities, 40% bonds etc..then there's aggressive..

Sep 14, 2017
CNB90:

Mutual funds are quite liquid. In my opinion, you should contact a financial adviser, they usually have a long list of mutual fund companies with strong returns. For safety go with bond funds, there are also middle of the road one's that invest 60% equities, 40% bonds etc..then there's aggressive..

Congratulations. Easily the worst advice on this forum in the month of March.

Bond funds for safety? I think you must have meant BONG funds. Bond funds are probably the worst place to invest right now.

Sep 14, 2017
CNB90:

Mutual funds are quite liquid. In my opinion, you should contact a financial adviser, they usually have a long list of mutual fund companies with strong returns. For safety go with bond funds, there are also middle of the road one's that invest 60% equities, 40% bonds etc..then there's aggressive..

I've heard money manager's opinions about bond funds... most are moving client $$ into ETFs

Sep 14, 2017

Be careful with mutual funds though Billy Ray. Stay away from any funds that are backloaded with fees to the FAs. Also, do some due diligence on the components of the mutual funds. They are not as always as "diversified" as they lead you to believe.

Sep 14, 2017

I have a lot of my longer term savings in ETFs. Specifically some tech, infrastructure and international funds.

Sep 14, 2017

do you guys invest in ETFs through FAs or brokerage accounts (etrade)?

Sep 14, 2017
Mandata:

do you guys invest in ETFs through FAs or brokerage accounts (etrade)?

I just buy ETFs through my broker (TradeKing). Why pay FA fees? I also have an account with Vanguard that I use to hold some funds.

Sep 14, 2017

Gold.

Sep 14, 2017

I agree with themacroguy, I keep stacks of gold bars under my bed (and some in my teeth for effect) -- much safer than paper currency with hyperinflation on the horizon

Sep 14, 2017

@CNB90 you don't need to catch up on the latest credit news to figure out where bonds will be headed in the next few years.

@ Billy Ray - if you're looking to invest long term, do the sensible thing and construct your own portfolio with index funds. Ask yourself how much risk you can bear, and then allocate your savings among large & small cap value etfs, emerging markets, hold a bit of gold, and if you're optimistic about a certain industry - buy some industry etfs. Check out Vanguard's etf offerings, and compare them with iShares products.

For a long term investor - costs are key. Keep them low and you'll be left with more.

Sep 14, 2017

Thank you Edmundo. There is such a misconception that bonds are "safe" and stocks are "risky". If you watch the flow of funds into these bond funds, it's overwhelming. The public is putting all there money into bond funds with the premise that they will achieve a fixed rate of return that is safe. Rates are so low, and destined to move higher.

The biggest problem I have is people that are chasing yield down the yield curve. Rather than collect 3.66% for 10 years, they go out another 20 years on the yield curve to pick up an extra 50 bps. Maturities should be kept extremely short right now so they can be rolled over when rates move higher.

Sep 14, 2017

I think stocks are a good way to go, as well as emerging market bonds with short maturities.

Sep 14, 2017

Invest in quality blue chips like P&G and such. Many are still priced below their value and offer dividends above that of bonds

Sep 14, 2017

1) $8,000 checking account
2) 3-6 months living expenses in a savings account (i.e. ING) or short term CDs
3) I assume you are in your early to mid twenties so I would throw the balance of your savings into ETFs or index funds as follows

30-40% Large Cap Domestic
20% Small-Mid Cap (i.e. Russell Style Fund)
20% Emerging Markets
10-20% commodities
0-10% bonds

Assuming your company has a 401-K match you should be plowing money in there first and then building a diversified portfolio consisting of ETF/Index funds. I like Vanguard and iShares.

Sep 14, 2017

In a stripper's g string

Sep 14, 2017

SPDRs... think of them as a mutual fund without the fees.

Sep 14, 2017

Index funds.

Sep 14, 2017

2nd Index Funds (For LT Money) & ally for savings account (6 Months or So of Cash)

Whatever you do - Do not invest in bonds. I just cant see how that is a smart thing to do.

Sep 13, 2017

Acorns isn't a bad option. I've gotten a 2.6% return over the last year, and I haven't had to do anything. I'm sure you could get higher returns somewhere else if you were a little more active, but I don't mind 2.6% considering I haven't done anything to earn it.

I read some of their prospectuses and it seems they buy mostly into different equity and fixed-income ETFs. The ETFs obviously differ between strategies as well. It's all pretty cheap though, they charge $1 a month if you have less than $5000, or .25% annually for accounts over $5000. Not a bad deal.

https://www.adviserinfo.sec.gov/IAPD/Content/Commo...

Sep 13, 2017

.

Sep 13, 2017

Not to be aggressive, but that's actually a really bad option. Had you just bought the Vanguard S&P 500 index on January 01, 2017, you would've paid ~$7.00 for the entry trade, put your head down for 9.5 months, and you'd be up 17.33% as of this morning. And you wouldn't be subject to the intangible risks of dealing with a fledgling adviser.

Sep 14, 2017

Max out your Roth IRA and 401k and dump the rest in a brokerage account (assuming you already have an emergency fund). Put them in some kind of index fund -- a mix of domestic large cap (e.g. SP500), small cap, and developed international.

Sep 13, 2017

I was gonna say this but you beat me too it. 2.6% is pretty bad for the risk you are taking. A CD would have gotten you not much less with almost zero risk.

    • 1
Sep 14, 2017

Do you honestly think the 'advantage' of a Roth is still going to be around in 30yrs when you go to collect?

Sep 14, 2017

OP, if you're a young single girl in NYC why would you want to buy a property? I would rather have my money in equities to grow it fast than in a property which is more or less a store of wealth.

You're at the age where you don't know where you'll want/need to live in 6 months for career moves or otherwise. I don't see any point in buying a property now.

Sep 14, 2017

Definitely too much cash; if once you are done with all the tax advantaged accounts, I'd consider opening a brokerage account AND giving Peer to Peer Lending a good look.

Sep 14, 2017

Buy PTLA

Sep 14, 2017

Put it all on red.

Sep 13, 2017

When you've been a friend as long as I have, you can call him Chucky Schwab.

"Work ethic, work ethic" - Vince Vaughn
Sep 14, 2017

Give it to me.

Sep 14, 2017

i use tradeking cause of how cheap trades are, 5 bucks, and .65 per contract for options

i think C at like 3.9 is a good bet

Sep 14, 2017

hookers and blow ofcourse what else...

Sep 14, 2017
adehbone:

hookers and blow ofcourse what else...

ha. close. blow and baking soda. heard you can make mad moneyz in them stuffs.

"I just want to be a monkey of average intelligence who wears a suit. I'll go to business school!"

Sep 14, 2017

haha I'm spending the remainder of my disposable income on hookerz and blow....where can I invest my money so I can afford Tiger and Spitzer's girls in a few years?

Sep 14, 2017

Damn, I was gonna say hookers and blow

Sep 14, 2017
RiskyBizness:

Damn, I was gonna say hookers and blow

Damn it! When I saw the title of the thread I was going to post "Hookers and Blow" and then I find out two other people already posted it............... I say invest it with the Nigerians, they have like a 1000% annualized returns.

Sep 14, 2017

speaking of which how much are the paychecks assuming 70k base? i'd assume they're pretty similar across the board...

Sep 14, 2017

Pay off student loans

Sep 14, 2017

start a college for your future kids

Sep 14, 2017

college fund

Sep 14, 2017

open Roth IRA and start contributing. market fundamentals are wacky so I would avoid the stock market for the time being. can buy some blue chip bond, invest in money markets, or just pay off debt. if you're williung to risk short term losses, you can buy some Citigroup... but be aware that a lot of people are expecting the bottom to drop out sometime in the near future.

Sep 14, 2017

Pay down student debt. Or stick it in a Roth.

Sep 14, 2017

^^ Best part about a Roth is you can pull out your contribution to pay for a car or business school or whatever with no penalty.

Sep 14, 2017
kote:

^^ Best part about a Roth is you can pull out your contribution to pay for a car or business school or whatever with no penalty.

On top of that, pulling money out of an IRA for B-school tuition is also a qualified distribution. No penalties- and if it's a Roth, no taxes.

For people who are WORKING and plan to go back to school in a few years, a very shrewd tax move is to make huge 401k contributions now and then take qualifying distributions for tuition when you are in school and are being taxed at a lower rate. It makes for an effective 15-20% discount on your tuition. (More if you plan on going to a school in a lower-tax jurisdiction than NYC.)

Sep 14, 2017

Having as much fun partying your last year of college because you know you won't be for a long time after that?

    • 1
Sep 14, 2017

^^^^ Probably where the money will end up going. But I'd like to put at least some of that cash to work. Plus I know if I leave it in a checking/savings account I'll go straight through it.

If I lock it up in some online brokerage, I'd have even more cash for, say, a month abroad before starting FT. The worst that could happen is I lose some money. The worst that could happen is I spend it all at the bars and countless other pointless shit I don't need in one semester. I

f the volatility keeps up for the rest of '10 and I limit my losses, I think I could return 10% maybe more in the last 5-6 months of the year.

....and speaking of travel, any ideas on where I should spend that month abroad??

Sep 14, 2017

Brazil's not too bad

Sep 14, 2017

Buy a pound of chronic and sell it by the eighth

Sep 13, 2017

You think treasuries are underpriced? Can you explain your thinking?

Sep 14, 2017

Geez, impossible to know.

Could be anywhere from a few million to 50 million.

  • Capt K
Sep 14, 2017

What is a realistic pay schedule for 20 years anyway?

Sep 14, 2017

I dunno. Thats why I asked.

Sep 14, 2017

assuming you get to md, it would still be pretty variable depending on how much business you bring in...

Sep 14, 2017

Well i guess the best assumption is a pessimistic one

Sep 14, 2017

What is a realistic base + bonus for 3rd year associate, VP, Executive Director, and MD?

Sep 14, 2017

There is a pretty good compensation survey that will tell you what different years make: http://www.wallstreetcomps.com/2007_Wall_Street_Co...
As others have pointed out though, a 20 year total is very hard to estimate. By about 10 years in you will hopefully be promoted to MD (although it could take several more years) and then once you are an MD you can literally make anywhere from $1M/yr to >$50 M/yr. Admittedly, the guys who make $50+ M are very rare, but from what I've heard most MDs make somewhere in the $2-$5M range. Over ten years that's $20M-$50M, which is still a huge range. And that's not even taking into account the market conditions/changes that could occur over a 20 year span.

Sep 14, 2017

That is a fantastic survey

Sep 14, 2017

All depends on the market

Sep 13, 2017

Index funds. Sounds like you're starting a regular investment plan (i.e. x percent of paycheck) rather than putting in a huge chunk of money all at once. In that case, than waiting for the "right time" to enter the market is, in fact, trying to time the market, and you could lose just as much upside as avoiding downside..

Just start investing now, on regular intervals, and you're essentially dollar cost averaging into the market anyways.

Now, if you're putting in $100k, that's different. But even so, it's better to invest some now and come up with a timeframe for the rest. Pushing off investing entirely is rarely the right answer. If markets dip, just don't sell. There's never a perfect time to enter the markets, everything is hindsight, start getting some money to work.

    • 2
Sep 13, 2017

This. The best strategy available for passive investors is to simply dollar cost average. Want to echo @BreakingOutOfPWM that you should be investing even if you think the market is rich. At the beginning of this year, had you invested, you would've seen double digit returns by now. Had you not, you would've missed out entirely.

If you're really concerned that the market is hitting a peak, then I would suggest diverting some (although not most) of the dollar-cost-averaging money into dry powder, and saving that on the side for when you see bargain opportunities. That said, that's a more active approach to investing which you said you wanted to stay out of.

All this said, I want to challenge your notion that you "don't consider myself skilled enough to select specific stocks so I tend to prefer ETFs and Indexes, but I have considered purchasing a few larger, high dividend blue chips as an alternative. Either that or treasuries which I do think are currently underpriced"

Seems strange that you don't feel capable of selecting specific securities, however you feel secure in your judgment that entire swaths of the market are either under/overpriced.

I know how it is to feel the way you do - I also had a lot of money piling up in my accounts first year or two out of school. At a certain point I said "This is ridiculous" and decided to have 60-70% invested in low cost indices, with a little of that in growth industry-focused ETFs (for instance, AI/online payments focused ETFs). The remaining 30-40% I began investing in shorter term trades, after playing around with an investopedia fake account for a while and convincing myself I knew how not to be a gambler. Turns out I'm not bad at making certain types of short term plays, have done many at this point and typically experience a per trade gain of 5-10%, sometimes more, but never a loss. Buy low, sell high, don't get into anything that is too exotic, smells of fraud, lawsuits, or the like. Know how to eyeball a 10q or 8K and decide whether there's something funky going on or whether this is essentially a functional, profitable business. Know your appetite for risk and don't exceed it. Most of all, if you want to get good at the markets, watch them. Familiarize yourself with the tickers. You may not be a machine learning algorithm with a strict methodology for entry and exit points, but despite what all the news says, there is a decent percentage of the population that, if paying attention, can make money in the markets without sophisticated algorithms.

EDIT: On the subject of brokerages - I see a surprising amount of love for fintech-y solutions like acorn, robin hood, and the like on WSO nowadays. I can only assume this is because there's a lot of young users that view this stuff as a great idea.

Look, I understand the allure of $0 commission trading, and it's not like you care that it's only mobile since you were weaned on a phone. But I want to caution you and others against investing your retirement with untested brokers/advisors. Sure, today these enterprises seem like the venmo of investing. Go talk to anyone that's been in the markets even casually for a few decades and they will tell you that it's not a matter of whether, but when circumstances will arise that will astound you and shake your faith in some investing startup.

Caps on daily withdrawals from your account in a bank run? That's happened. Flash crashes? Happened. Major brokerages like Schwab or Etrade, etc. having huge system malfunctions during an acutely bad day in the markets? Yep. Don't be a fool and entrust your nest egg to some startup that offers you free trades when you should be trading in blocks of hundreds if not thousands of dollars, anyway. The market for major brokerages is plenty competitive right now, is $6.95 a trade really so much to part with for substantially less brokerage risk?

Sep 14, 2017

cash is king

Sep 14, 2017

Yeah, structured products are not bad. Obviously, you want the yield to be above inflation. Check out a high yield fund

The difference between successful people and others is largely a habit - a controlled habit of doing every task better, faster and more efficiently.

Sep 14, 2017
mhurricane:

Yeah, structured products are not bad. Obviously, you want the yield to be above inflation. Check out a high yield fund

What if the Bank goes bust ?
Banks nomally invest 85% of your cash in 0% bond and invest the rest in stockmarket.

Some people in 08 invested in bank A. Bank A buys a bond from lehman and people lost all their cash even though the stock part didnt crash. as Struc invest are not protected by FDIC all in the pursuit of 5% extra intrest

With stocks its more transparent and you know your exposure but weaker returns

You still think its worth it ?.

Sep 14, 2017
jam011:

How are you guys investing your bonuses/ money saved from internships ?
that you wont need for 2-3 years

Are Structured Investments worth it ? or is the risk-reward ratio too in favour of the Bank ?

I prefer having a fixed income at the end so I can plan around it but at the same time dont want to get ripped off.

Don't buy structured notes. The embedded fees are very high, you are not getting anywhere close to fair value. Plus, you are taking the credit risk of the bank...you are most definitely not getting fair value for that. Plus, try to sell them early and see what happens...you will get your face ripped off. They tend to make them more complex, specifically to make it more difficult for you tell how hard you are getting f-cked.

Sep 14, 2017
SirPoopsaLot:
jam011:

How are you guys investing your bonuses/ money saved from internships ?
that you wont need for 2-3 years

Are Structured Investments worth it ? or is the risk-reward ratio too in favour of the Bank ?

I prefer having a fixed income at the end so I can plan around it but at the same time dont want to get ripped off.

Don't buy structured notes. The embedded fees are very high, you are not getting anywhere close to fair value. Plus, you are taking the credit risk of the bank...you are most definitely not getting fair value for that. Plus, try to sell them early and see what happens...you will get your face ripped off. They tend to make them more complex, specifically to make it more difficult for you tell how hard you are getting f-cked.

So stick to bonds and high yield stocks ?

How easy is it to buy eg 4 year bond for energy company just 1 year before it expires

Sep 13, 2017

I think this is a post for @thebrofessor

Sep 13, 2017

vanguard wellesley

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Sep 13, 2017

Looks interesting, would this be a viable strategy if you're looking at a 5 year period?

Sep 13, 2017

Curious what monkeys who know they're going to attend B-school and need to save do? I guess an s&p 500 etf is too risky (just incase there is a recession/severe correction), so do they leave it in a high yielding savings account, us treasuries, corporate bonds, REITs etc?

Sep 13, 2017

If you're within two years of pulling out money it should be in cash or shorter term bonds. Definitely not a REIT if youre going to be liquidating (go look at what VGSIX did from '07-'09 if you want to know why).

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Sep 14, 2017