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Very very low risk tolerance

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  • jacoavlu
    replied
    Originally posted by East coast View Post

    Right - typo. Curious why have you stated that number multiple times?
    bc I think that's a fair number of what inflation really is

    Leave a comment:


  • The White Coat Investor
    replied
    We're all losing purchasing power right now. Stocks, bonds, real estate, cryptoassets all negative YTD while inflation is pushing 9%. Even TIPS and I Bonds after tax aren't keeping up. There's no guarantee of maintaining purchasing power at all times by investing in risky assets. You're in a race with inflation and sometimes you win, sometimes you lose. Hopefully in the long run you win.

    Leave a comment:


  • Zaphod
    replied
    Originally posted by jacoavlu View Post

    “safest”

    that’s kinda the point. Some people think a guarantee getting their dollars back at a future date plus some guaranteed fraction of a penny of yield is safe, when it’s not safe at all bc inflation is 15%+
    exactly, you're trading volatility for longevity risk, greatly losing purchasing power over time.

    Leave a comment:


  • Lordosis
    replied
    Originally posted by East coast View Post

    Right - typo. Curious why have you stated that number multiple times?
    8% doesn't sound sexy enough so trying out a number almost double it?

    As for the op. What is the purpose of this money? Is this cash reserves for a emergency fund is this person going to retire? Is this money that is needed in the next few years? If they're income is covered by real estate and other passive means then I don't see the harm in keeping the money in cash or short-term bonds.

    However it is funny that this person is able to invest aggressively into real estate but as fears of the stock market. Real estate can be risky as well especially if in the localized area. But it sounds like as if this person already won the game so passing up some earnings for Capital preservation is not unreasonable.

    Leave a comment:


  • East coast
    replied
    Originally posted by jacoavlu View Post

    inflation
    Right - typo. Curious why have you stated that number multiple times?

    Leave a comment:


  • Tim
    replied
    Originally posted by chocolatebear11 View Post

    You’ll be surprised. Not everyone has financial literacy. Most servers and a lot of my technicians aren’t invested. Actually if you take a poll of medical student class, Im sure there’s a large portion that don’t understand the market.

    anyways, he’s doing well because of his passive income through real estate, so he’s not worried, but it’s just so much wasted opportunity. Just wondering if there was a low risk tolerance investment but I guess there’s not really one.
    100% correct. Everything has a risk. Cash, gold, CD’s, treasuries, real estate, bonds, stocks. As an immigrant, your friend understands risk and returns. Conceptually, your friend will understand the value of diversification. Collectively, diversification is safest. Buy the whole basket, pretty simple just diversify.
    There is a piece missing.

    Leave a comment:


  • StateOfMyHead
    replied
    Some don’t feel they can afford to take chances later in life due to not having any wiggle room although at 60 I’d say this person has time. He took chances, invested sweat equity and made money with RE so good for him. Not everyone feels a need to continue squeezing every penny after amassing millions or agonize over leaving the absolute maximum legacy.

    It sounds like he would be fine even if he decided to keep stacks of 20s under the mattress so if he’s not interested in learning about the market I would recommend ladder CDs and maxing I-bonds for safe, ultra conservative options.

    Leave a comment:


  • Hank
    replied
    No kidding, it sounds like offering this 60 year old friend a copy of If, Only Investment Guide You'll Ever Need, Bogle, Bernstein, might be the better use of time and money. Three decades ago would have been better. Tomorrow is good enough. (Also offer those same books to the next generation or two for your friend.)

    Leave a comment:


  • chocolatebear11
    replied
    Originally posted by bovie View Post

    Sounds like neither he nor his friend have any understanding of the stock market or how to make money in it.

    Which is a shame, because a five-year-old can grasp the concept.

    Earn money. Invest money in broad market index fund. Keep hands off money until retirement.

    Sounds like his next investment should be a book.

    Also sounds like he needs to get a grip or will suffer the financial consequences.
    You’ll be surprised. Not everyone has financial literacy. Most servers and a lot of my technicians aren’t invested. Actually if you take a poll of medical student class, Im sure there’s a large portion that don’t understand the market.

    anyways, he’s doing well because of his passive income through real estate, so he’s not worried, but it’s just so much wasted opportunity. Just wondering if there was a low risk tolerance investment but I guess there’s not really one.

    Leave a comment:


  • bovie
    replied
    Originally posted by chocolatebear11 View Post
    There are certain immigrant workers that believe the stock market is a “game.”…

    …I asked about putting money in index fund, but heard stories of his friend losing money in the stock market.
    Sounds like neither he nor his friend have any understanding of the stock market or how to make money in it.

    Which is a shame, because a five-year-old can grasp the concept.

    Earn money. Invest money in broad market index fund. Keep hands off money until retirement.

    Sounds like his next investment should be a book.

    Also sounds like he needs to get a grip or will suffer the financial consequences.

    Leave a comment:


  • FreshPaint
    replied
    banana stand

    Leave a comment:


  • jacoavlu
    replied
    Originally posted by East coast View Post

    curious why you keep quoting 15%+ interest rate
    inflation

    Leave a comment:


  • chocolatebear11
    replied
    Originally posted by jfoxcpacfp View Post
    What is the purpose of the money? Leave to kids? Nursing home protection? The biggest risk of keeping $200k in cash for many years is not that they will lose it all in the stock market (assuming they appropriately invest, which is really quite easy) but that the nursing home costs double or triple by the time they need it. Huge risk of being “risk averse”. Of course, the kids won’t be calculating the inflation erosion and can just spend it to upgrade to 1st class on their next overseas vacation.
    Thank you all for the replies. The money is for retirement.

    I believe there’s a cultural difference in terms of investment for certain groups especially immigrant worker. There are certain immigrant workers that believe the stock market is a “game.” The friend immigrated to US for better opportunities. Built 2 different business and eventually invested into a real estate, which is generating passive income. Never placed any money in stocks.

    I asked about putting money in index fund, but heard stories of his friend losing money in the stock market. His net worth (mostly from real estate) would probably be more than enough for most physicians. Like many from his background, investment in tangible assests like real estate and gold appears safer to them.

    He does not want to invest in real estate anymore and, understands that his money is losing to inflation each year in the bank.

    Leave a comment:


  • East coast
    replied
    Originally posted by jacoavlu View Post

    “safest”

    that’s kinda the point. Some people think a guarantee getting their dollars back at a future date plus some guaranteed fraction of a penny of yield is safe, when it’s not safe at all bc inflation is 15%+
    curious why you keep quoting 15%+ interest rate. Is that your estimate for future?

    Leave a comment:


  • jacoavlu
    replied
    Originally posted by Larry Ragman View Post

    Maybe. Perhaps the OP has a situation where it is imperative that principal is preserved. Regardless, I was trying to answer the question asked, not change the paradigm.
    Perhaps. Perhaps not. Im not changing the paradigm. Risk is not defined. That’s the point.

    Leave a comment:

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