What to do with $300k?

[fakeaccount100]

A friend of mine was telling me that he has $300k saved up and he wanted to see if I have any advice for him as far as what he can do with it. It got me thinking, you hear a lot about how cash is king these days, but what can really be done with $300k? Buy a commercial property? You have to pay 30% down, so $300k would buy you a $900k property, which isn't much in CA real estate market. And who's gonna rent it? Seems like there are plenty vacant ones already. Invest in stocks, that would be a total roller coaster ride? Start a startup?

The sad truth that I realized last night was that $300k isn't a lot of money these days.

What do you gals/guys think he should do with the money?

DISCLAIMER: This is a fake account to keep my friends identity confidential.

[noonespecial]

You could live a comfortable lower middle-class life in fly-over America for more than a decade on 300k. I think I might take a 10 year vacation and just work on all of the little projects I've always wanted to get around to trying.

[fakeaccount100]

Yea, that would be nice. But he was looking for investment/business ideas. He's in his mid 30s and I don't think is ready to retire just yet.

[ScottBurson]

This is a tough one. I'm not sure there's any answer I could recommend to someone who didn't want to invest the time and effort required to gain some expertise about it. Certainly there are opportunities in the stock markets, the commodities markets, and the currency markets right now, but I wouldn't recommend any of those for novices. Real estate is probably easier, but this is not a great time for it. And yet leaving it in CDs isn't very attractive these days either.

If he could find a good investment advisor, that person could show him how to set up a diversified portfolio. Really, that's probably the best plan. However, I don't know how to find a good advisor; I'm sure even this requires some work. And if they told him to put a lot of his money in stocks, as they might, I'm not sure that would be good advice at the moment.

Starting a startup is something that has to come from within. If he's not already doing it, it's not a good plan.

Really, I think the only good advice I can give is to do some soul-searching, and explore some possibilities (without actually spending any of it yet), and figure out what he wants to do with it. From the sound of it, that in itself is likely to be a big project that he could spend the next year or two on.

[_b8r0]

He should go and see a qualified wealth advisor - in fact several - and try to develop a structured diverse folio of investments.

300k isn't a lot now, but it can make his retirement a lot more comfortable.

[Swannie]

Do you know what that would cost? I'm just wondering if you're talking $300 consultation, $1000 or what?

Even 0.5% ($1500) spent carefully on advice could turn out to be the best thing possible.

[_b8r0]

There shouldn't be an initial consultation cost, especially with $300k.

[scottjad]

By far the best investments are the ones where you can play a major role in determining their return. So basically business ventures.

As for passive investments, if you buy David Swenson's argument that asset class is almost everything (timing and picks are really hard) then what to invest in depends a lot on your macro outlook. Personally I'm bearish on bonds, US residential and commercial real estate, and USD/euro, and bullish on Asian stocks and commodities.

[aihui]

There are target funds that your friend can invest in. Basically you pick a retirement date, and the portfolio will auto adjust as your retirement approaches, e.g. it may invest more in stocks in the beginning and become more risk adverse over time. I'm not a financial advisor, just an engineer, but I do like Vangaurd funds because it's low cost.

[JoshKalkbrenner]

RED is a safe bet!

[mapster]

Well...Apple stock could do well.

[ig1]

What's his risk tolerance?

[fakeaccount100]

I don't know, but I assume moderate. I guess it wouldn't be terrible to lose 20% of his investment if there's an 80% gain chance.

[spitfire]

BRK-B or 2 shares of BRK-A

[avstraliitski]

Move to a developing country and retire. If you get bored, you can always work again.

[SoWink]

I'd take 50% of that, invest in a highly diversified portfolio, earning me an aggressive average of 12.5% with little to no diversifiable risk. Then take the other half and seed my own start-up earning me a significantly higher RoR. Before you know it that measly 300K is now worth 30Mil

[fakeaccount100]

What's a diversified portfolio these days?