200k New Money

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Mar 4, 2009 5:30 pm

Client comes in sits at your desk. Tells you he just got 200k bonus and doesn't know what to do with it, but doesn't need the money for 10+ years. He is 42. Where do all of you gurus put it with Dow at 7000 ?

Mar 4, 2009 5:33 pm

Muni bonds in the state of California.

Mar 4, 2009 5:40 pm

Already did that. It was initially 500k and I sold them all out for 40 cents on the dollar, thanks.

Mar 4, 2009 5:43 pm

Buy them back at 40 cents on the dollar...

Mar 4, 2009 5:44 pm

I was going to go 100% gold because the market will never rebound from this.

Mar 4, 2009 5:49 pm

I still just don't understand where the 40% payout comes from. I work at EJ and if I do 20k gross I never receive more than 39.5% or $7900. Then they take out 400 for insurance and 700 for qualified expenses. That leaves me with $6800 net or less than 35%. The bottom line is unless you are grossing 25k all the time, which in my region takes usually 5 years, you are getting paid much less than 40%. Then it takes about 5 years beyond the initial 5 to earn back those monthly 5% figures that Jones takes just for you personally to break even at the 40% number you assumed when you started. So at 10 years you are looking great, but still getting killed overall compared to an INDY.   Ron 14











 
 
 
I would direct him to a smarter broker.
Mar 4, 2009 5:56 pm

I put him in to the market 100%. I want to hear the bright ideas from all of you gold/cash/"wait until things get better" idiots

Mar 4, 2009 5:58 pm
Ron 14:

Already did that. It was initially 500k and I sold them all out for 40 cents on the dollar, thanks.

 
Now you can tell him they are a good deal.  Just say that the first time you tried it, it didn't work out. 
 
 
Mar 4, 2009 5:59 pm

So he just got this bonus of $200m, but it was $500m, which you had control over in order to sell out of muni's?  Bonuses are given in muni's?  You are a moron.  Work on your little lies next time before coming on this board so you can insult people.

Mar 4, 2009 6:21 pm

Sam, I was kidding about  putting him in Cal Muni's and then selling them out for 40 cents on the dollar. I was also kidding about the 100 percent gold comment. I was trying to find some honest answers to how people are allocating new money these days. I am going all in to the market, but most seem to think the sky is falling and wont get in.

Mar 4, 2009 7:43 pm
Ron 14:

Client comes in sits at your desk. Tells you he just got 200k bonus and doesn't know what to do with it, but doesn't need the money for 10+ years. He is 42. Where do all of you gurus put it with Dow at 7000 ?

 
Ron, should all 42 year old clients with a 200K bonus and a 10 year time horizon invest in the same manner?
Mar 4, 2009 8:03 pm

Yeah, what if he wants a bigger house and a (sale-priced) golf club membership. More cash, more insurance, more fun. Instead of throwing it into VTV.

Mar 4, 2009 8:03 pm

50% in pimco total return and the rest split among 20 ind stocks, blue chips with killer div yields.

Mar 4, 2009 8:40 pm
Ron 14:

Client comes in sits at your desk. Tells you he just got 200k bonus and doesn't know what to do with it, but doesn't need the money for 10+ years. He is 42. Where do all of you gurus put it with Dow at 7000 ?

 
Tough to choose the asset allocation with limited data on the guy (net worth, lifestyle, etc), but I would definitely be DCA'ing into the market over the 12 months, not all at once.  That's too much money to risk in this market.  We know it will eventually go up from here, but the last thing you want is for the guy to go all-in the day before a 5% drop.  If you need the commission today, put it into short-duration funds and DCA into the market. 
Mar 4, 2009 8:49 pm

If the market has a huge 50% return this year, how much has the guy lost by DCA into the market?  The right answer is only known in hindsite.  However, it seems to me that someone invests because they expect the market to go up more than it goes down.  With this being the case, DCA is more likely to hurt him than help him.  

 
 
Mar 4, 2009 9:28 pm

Would say go to a single "0" roulette wheel in Vegas.  Put 99,000 on 1-12; put 99,000 on 13-24; if you win you make 50% on your money.  Much better odds than you will have in the market for the nrxt 5 years.  Less stress, its over in 30 seconds.  You have a 24 out of 37 chance to make 50%.  If you lose take the last 2K and go to gentlemens club and have a great couple hours.

Mar 4, 2009 9:54 pm

1/2 into DOG.  1/2 into DOW.   Very limited downside risk.

Mar 4, 2009 10:35 pm

I would advise him to come work for Edward Jones. The 200k will cushion him in the early years.

Mar 4, 2009 10:48 pm

Put 50% into a good etf-based annuity.  Get one that guarantees to double in 10 years and take the payout.  Worried about beneficiaries? Put 50k into a SUL policy.  At his age, could probably buy 1-1.5mil.  If he doesn't have a pension, put 10-20% in one of those deferred payout annuities, make it start
at age 65-70, you can get a nice IRR depending on his longevity.

Lots of ways to stay in the market and have some nice numbers for worst-case scenarios. 

Mar 4, 2009 10:52 pm

Two words: lap dances



Instant pleasure, and the karma from the contribution to his community by putting several MILFs through college (this should be a write off)