Where to put savings? ($170k)

Hey Guys,

My question is the following: where would you invest your $170k cash-equivalent inheritance given that housing is already secured for the rest of my life? (I am 24, living in Central Europe and planning start a family here, though I would work abroad in the next couple of years )

Comments (21)

Most Helpful
Aug 9, 2020 - 2:00pm

Approach 1 would provide dogshit returns...if you're ok with underperforming the market (or at best matching market performance when you could've just bought an ETF...)

On Approach 2, unless you work in this field individual stockpicking is way, way too hard. Think about your competition, it is people who spend 50-80hrs a week only doing this. Equities are simply far too hard to dimension unless you both a) have the expertise and b) can put in the requisite hours to understand the full landscape / threats / opportunities.

OP, I highly recommend you put your money into a fund. I'd recommend active as I'm biased but even putting money in an index would be far less stressful / not expose your capital to excess risk

Aug 11, 2020 - 9:56am

Nowhere in my statement does it say that you can't. If telecom gets assigned 10% of the portfolio and you split it 5% VZ, 5% T then the portfolio probably is still on the efficient frontier or very close to it. The problem arises when you want to do 10% telecom, but you take 10% VZ and 10% T when they have a r=0.4 correlation over the last 3 months. That's kind-of the whole idea behind MPT - avoiding excessive weights in similar positions because they behave in the same way to the same risks.

Aug 13, 2020 - 6:19am

People might have been a bit harsh with the MS, but they do have a point that both strategies you're recommending are more likely to underperform the market rather than outperform.

In Approach 1, this has been one the worst performing strategies in the last 2 years, and I'm not sure it will recover soon. Screening purely for high dividend yield also gives you companies that have very poor outlook, but have not yet cut the dividend. Especially this year, loads have cut their dividend and as such they share prices have done even worse. A better strategy, if you want income based, would be screening not just for dividend, but also for quality, profitability etc.

In Approach 2, I don't think you mean value investing when you say value investing. Slack and Zoom are definitely not value stocks. Value investing is more based on picking cheaper stocks, low P/B; low P/E etc. Also value investing has been one of the worst investing strategies in the last 10 year. It might come back with the economic recovery after Covid, but no one knows for sure. What you are actually describing sounds more like thematic investing (which is what I have done in the past). That does work in delivering alpha over the cycle, but you need a lot of time to do research and travel to sites, access to experts, and financial expertise. That's why most financial advisors and people in the field recommend ETFs and funds for non-experienced retail investors.

  • Prospect in Other
Aug 9, 2020 - 8:45am

Man why would you work. You have enough capital to start a business, don't be a bitch and take some risk - you're too young

Aug 9, 2020 - 7:03pm


"Out the garage is how you end up in charge It's how you end up in penthouses, end up in cars, it's how you Start off a curb servin', end up a boss"
Aug 11, 2020 - 11:37am

Prospect in Other:

Man why would you work. You have enough capital to start a business, don't be a bitch and take some risk - you're too young

Came in to say this

Aug 11, 2020 - 9:15am

put it all in 2-3 very cheap and broad index ETFs that cover the world equity market. Fidelity, Vanguard, and Schwab all have great options in the 0.00%-0.10% expense ratio range that will work fine. A fine example if you use Fidelity would be about 66% ITOT and 33% IXUS. Keep anything you might need in the next 12 months in cash. You can also use a SMALL % as "fun money" to pick individual stocks/options if that interests you, but I wouldn't use more than about 5% for this, since you'll likely underperform the index funds anyway.

  • 1
Aug 13, 2020 - 6:05am

Initially I would've recommended broad market ETF (similar to what the others have said), and then, depending on the time or financial expertise you have, leaving between 0-30% of that for a concentrated stock picking portfolio. For the stock portfolio you need quite a bit of time to do the work in order to get any decent returns (or you could just be lucky).

But given I come from around that region myself, I would also recommend looking at the real estate market in your country. I think real estate in some countries in the region is not as overheated as most developed markets. So you get much better rental yields. $170k in could be a decent starting amount in your country, especially if you use some mortgage leverage.

Some specific suggestions (these apply primarily to Central/Eastern European markets without real estate bubbles and with high rental yields):
1. If you don't have housing in your name yet, some countries give very favorable conditions for first time buyers, with preferential rates and low initial deposits. If you have a long term girlfriend/fiancé etc, you can sometimes apply separately for these preferential rates. Again, check conditions in your country. Effectively, with leverage in a decent real estate market, you may be able purchase 3-5 properties this way (first 1-2 preferential, and next at regular terms). Do this as long as rent+maintenance exceeds the mortgage payments. In 20-30, you're left with several properties which would have likely appreciated in value significantly.
2. This requires more involvement from your side. Find 2-3 other families with a similar level of cash ready to be invested, with one of these preferably having some experience in real estate. Then use the combined capital to build a small, upmarket apartment building in your city (or a major city in your country). It could be as small as 5-6 apartments. Land purchase and paperwork tends to take 3-12 months, then hire a developer to build it in 2-3 years. You can rotate responsibilities and project management between the families investing. In some CEE markets, this can yield about 30%-60% in 3-4 years in flat real estate markets.

Dec 27, 2020 - 4:38pm

Dollar cost average into low-cost, passive index funds such as VTI. This will provide maximum diversification and minimum hassle. And you'll also get superior long term returns compared to active funds net of fees.

Sure, it's not sexy, but who cares? I wholeheartedly believe that by minimizing fees, taxes, and ego, you'll do better than 95% of the population.

If you want to get a little fancier, consider tilting your portfolio towards small-cap names with funds like SLYV. Small cap value stocks have underperformed the broader market for years. I like investing in reversions to the mean.

Wall Street by Day | Personal Finance Nerd by Night

Helping Young Professionals Create Wealth to Earn Time


  • Associate 1 in PE - LBOs
Dec 27, 2020 - 7:44pm

I like investing in reversions to the mean.

Good luck as reversions to the mean only work for probability-based events. Stock performance isn't probability based but driven by market fundamentals. Why the hell would you bet on something that has proven to underperform the broader market due to their obvious competitive disadvantages?

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