/biz/ - Business & Finance

[Anonymous No.553224]

What to do with $1.4 million?

Assuming you didn't want to work, and just live off of dividends.

[Anonymous No.553230]

>>553224
Bryants need not apply

[Anonymous No.553233]

>>553224
You can make around 100k /year returns with that kind of capital, by placing it into a well diversified portfolio .
State your country, age , and current income / yearly expenses so we can tell you how to allocate

[Anonymous No.553234]

I'd buy me some $SDIV

The investment seeks investment results that correspond generally to the price and yield performance, before fees and expenses, of the Solactive Global SuperDividend™ Index. The fund invests at least 80% of its total assets in the securities of the underlying index and in American Depositary Receipts ("ADRs") and Global Depositary Receipts ("GDRs") based on the securities in the underlying index. The underlying index tracks the performance of 100 equally weighted companies that rank among the highest dividend yielding equity securities in the world.

[Anonymous No.553237]

>>553233
Age: 25
Country: USA
Jobless, but expecting $60,000 from welding. The money I have is actually inherited in.
Yearly expenses: 25 grand

[Anonymous No.553247]

>>553224
buy PND

[Anonymous No.553252]

>>553224
http://www.multpl.com/s-p-500-dividend-yield/

most of your returns wouldn't come from dividends, there are some companies offering high dividends but their price could drop and they could lower or discontinue their dividends, larger lower risk stocks have low dividends which mainly exist to offset inflation

you would gain much higher returns through value investing, your strategy would have to take into account risk, fees, taxes on long and short term capital gains, diversification etcetera, dividends are just a minor factor in it all

[Anonymous No.553253]

>>553224
windstream

[Anonymous No.553254]

>>553247

Literally this

pic related, the numbers speak for themselves...

[Anonymous No.553258]

>>553233
How am I supposed to make 100k a year? Thats seems pretty high, 14% is pretty difficult at a steady rate

[Anonymous No.553259]

>>553254
> 4kb
Yeah for ants maybe

[Anonymous No.553278]

>>553224
buy t-bills, they're risk free and with 1.4m and assuming a ~3% yield you will be living off 42k a yr, before taxes.

[Anonymous No.553292]

put it all on SPY

[Anonymous No.553312]

>>553278
ayy, now thats what im talkin about. thanks m8

[Anonymous No.553326]

>>553234

>$SDIV

>2014
>sacrificing MORE THAN ALL of your capital gains in exchange for a shitty 6% dividend

The yield on a balanced portfolio of stocks, bonds, and real estate is around 3%, plus another 2%+inflation in capital appreciation. That's a healthy $40k in income per year (at low/no taxes, too!) plus another $50k in capital gains.

[Anonymous No.553361]

>>553278

unless your 80 yrs old you'll have to worry about inflation

[Anonymous No.553383]

>>553361
Inflation is still something to worry about. A rise of one percent in inflation reduces the actual growth of your account considerably.

[Anonymous No.553384]

>>553312

Just don't put more than 20% into one thing. It shouldn't be hard to find at least 5 good investments to put 1.4 million into.

You should still do some work at age 25. Take some money and put it into the required schooling or certifications needed to do whatever work you want to do.

Your goal should be to establish an income and lifestyle where you don't have to touch that money. Once you get good at managing the money and generating what you need from it, then you can try living off of it.

[Anonymous No.553388]

>>553383

>What are TIPS?

[Anonymous No.553391]

>>553237
Alright at 25 you should be investing:
75% in stocks and REIT's
25%in bonds

Stocks div/up :
50% domestic (35%of over all investments)
20% over seas (14%of over all investments)
20% domestic REIT's (14% of over all investments)
10%emerging markets REIT's (7% of over all investments)

Bonds div/up:
50% high quality corporate bonds
30% inflation adjusted funds
20% municipal or junk bonds

[Anonymous No.553395]

>>553258
100k isn't 14% of 1.4million is about 7.3% mate! An yes you will have to undertake a fair amount of risk, but at 25 that isn't a huge deal

[Anonymous No.553400]

>>553391
thanks m8, screencapped

[Anonymous No.553453]

>>553400
you're just going to trust his info like that, no questions asked? this is your money we're talking about.

[Anonymous No.553458]

>>553453
I'm putting it into consideration, im not going out right now and doing it silly.

biz is a starting place, kinda like wikipedia

[Anonymous No.553464]

>>553400
If you go to your local bank and look at their mutual funds, they will make an asset allocation similar to this and they will offer you different options to diversify your investments within this guidelines . My advise to you would be to focus on growth oriented funds while you are under 35 and index after, also if you do continue to work,contribute the maximum amount to your retirement fund to minimize your tax bill

[Anonymous No.554067]

>>553224
lol bring your $1.4 kk here to my country my dad owns lots of lands..most of them arent in use, come live with me we can grow Sugar Cane as for example or Soja.
If you invest 500k in Sugar Cane that would need 500 H of lands at a cost of 1k each H of invest that covers everything seeds,growing,threatment of the sugar cane, harvesting and carrying it to the factory 20km away <-- privileged zone 20km is nothing diesel here is USD 0.54 a lt so is a win win ..
The first year investing 500k USD the return gonna be the same as your invest..b-b-ut the second year you just need 100k USD to grow the same 500 H as the first year so the return gonna be 400k(300%more than the first year lmao) and the same for the next year..Maybe 2 but it is better to start again every 3 years because of the % of "zacarosa" in the sugar cane gonna decrease and you are not going to get the same amount of money, this is because they pay depending on the % of your "Zacaroza"<<-- this is the % of sweet on ur sugar cane..so you do the maths.. I myself i'm a lawyer we can do a great contract.
You can try investing 100k returning 100k first years same as above.. the second season you just need 20 k invest to return 100 k again and the same for the next year giving a total of 80k usd every year in the next 3 and just investing 20 k. 160k USD for 2 years w/o moving a single finger seems good to me.. Now imagine yourself investing 700k ro maybe 1 kk incomes gonna be crazy. One last point.. this is a bussiness with an amazing low risk % i cant speak with the true but i think the % of fuking it up are less than 7-10% These 7-10% are climatological setbacks wich never happens sometimes it rains a lot but that just means 2-3 weeks maybe a month of delay in harvesting and the other risk wouldbe a social conflict 2-3% of the mentioned 7-10%. Man if i had the money to invest..
Hit me up if interested [e-mail]
Going to FL, USA on February 1st
Im from Santa Cruz de la Sierra,Bolivia

[Anonymous No.554068]

>>554067
this is the weirdest pitch i have seen for a while

[Anonymous No.554071]

>>554067
sosa plz

[Anonymous No.554073]

>>554068
haha sry mate english isnt my main language, want me to write it down in spanish to you ?

[Anonymous No.554078]

>>553388
TIPS are good, but the IRS will consider any adjustment to inflation as a taxable revenue even thought the gains only purely on paper.

TIPS should only be bought for tax deferred retirement accounts.

[Anonymous No.554079]

>>554078
TIPS are good, but the IRS will consider any adjustment to inflation as a taxable revenue even thought the gains are only on paper, until you sell them that is.

TIPS should only be bought for tax deferred retirement accounts.

[Anonymous No.554080]

>>554068
the reason you dont have any income in the first year it is because seeding its prety expensive if you want top tech seeds.. but when is time to harvest they dont take off the plant from the field.. they let 15-20 cm of the sugar cane and it would grow again thats why you just need 20 k to re growth again because you are not going to buy seeds again and u repeat the same for 2 years. Believe me or not is a great bussiness you can boost your money easily in 4 years then jump to SOJA wich is an expensier bussiness with greater returns.

[Anonymous No.554081]

>>553388
TIPS are good, but the IRS will consider any adjustment to inflation as a taxable revenue even though the gains are only purely on paper.

TIPS are better to be bought for tax deferred retirement accounts.

[Anonymous No.554083]

>>553464
why not 100% swing trades

[Anonymous No.554086]

>>554080
and if you want you can plant separately a few hectares of sugar cane to never buy expensive tech seeds and use you own seeds, so there you delete the high initial investmen for this 3 years harvesting.

[Anonymous No.554087]

>>553224
Don't take any advice blindly, take your time and educate yourself. I'm reading this and it seems solid:
http://www.fxf1.com/english-books/The%20Intelligent%20Investor%20-%20BENJAMIN%20GRAHAM.pdf

[Anonymous No.554106]

>>553224
I would invest in the following:

>PBP
A yield-centric approach to the S&P 500 index through covered calls.

>SPFF or alternative PFF
Provided exposure to and higher dividend yields from preferred stock.

>PFN
Provides floating rate income (income which, by and large, is not subject to interest rate risk).

>Specific floating rate preferred stock (or bonds) such as GS-C
Preferred stock which has built-in interest rate protection.

>Specific convertible preferred stock (or bonds) such as WFC-L or BAC-L
Provides exposure to convertible securities (convertible securities which can be converted from a preferred stock or bond into X shares of common stock at a specific conversion price).

>WYDE
For the purpose of hedging credit risk

After those would include various specific securities, too many to list but they would include individual stocks, preferred stock, municipal bonds (and muni bond funds), MLP's, and TIPS.

[Anonymous No.554112]

>>553224
You could probably get 3% in a diversified dividend portfolio. So that's 42k a year. That's before taxes though.

[Anonymous No.554120]

>>554106

>buy shitty bonds
>buy expensive CDS on other shitty bonds

Congratulations, you've built a t-bond with counterparts risk and tracking error. This is literally the worst idea I've seen for generating income.

[Anonymous No.554127]

>>554080
>SOJA
You can grow phony rastafarians in a field?
That explains a bit.

[Anonymous No.554135]

>>554120
>Buy PFN with a 9.09% yield and a 1.14% expense ratio
>Buy WYDE at a 1:5 ratio with a .5% expense ratio
>Get 7.85% net yield with next to no duration risk
>7.85%=3.04% T-bond with full duration risk

lrn2math

[Anonymous No.554152]

>>554135
>>554135

That's great, but it's clear you don't understand that being long a CDS means you'll be eating theta decay just like being long an option or long vol. WYDE can be expected to lose 5-10% of it's capital if spreads remain the same. Suddenly your 7.85% return is now 35 bps on average, which, hey, looks a lot like the 0% you'd get on a t-bill plus a few bps for counterparts risk.

Now fuck off until you understand derivatives.

[xvd No.554156]

xddddddddddd

[Anonymous No.554164]

>>554152
Except the costs of buying CDS's are already included in the funds fees. The concern isn't the price of the fund's shares to speculate, it's to hedge broad credit risk.

[Anonymous No.554177]

>>554164

Yes, they are, in that the expenses cover the cost of managing the fund, i.e. paying people to buy the CDS's. The fund itself hold the instruments, which will then go up and down (but mainly down) and be reflected in the NAV.

This is a mathematical identity- no-arbitrage conditions mean that price(risk-free bond) + price(CDS on risk bond) = price(risk bond), modulo a bit for the credit risk of the person who wrote you the CDS. If a risk-free bond for 5 years costs $95, and a risky bond costs $90, then a CDS on that risky bond will cost $5, and will decay in value at a rate of $1 per year until maturity even if credit spreads go nowhere. This is what I mean by "you will usually lose money" pull-to-par means you're left with a worthless instrument if the bond doesn't go bust.

[Anonymous No.554196]

>>553258
>>553237


It's not 14%, and the fact that you can't do basic math tells me you should pay someone else to handle this. You will be making less by paying brokerage fees and such but it's a small price not to lose it all.

What >>553391 said is pretty solid, but it also depends on where you live, what your goals are, and what institution you'll be letting manage your money. Some people like wells fargo are absolute shit at picking foreign market and sometimes domestic bonds.

Also, I would put a small portion into trasury bonds as well just for added diversification.

[Anonymous No.554201]

>>554177
Yes, I get that. Perhaps I should have been more clear from the start.

The point is to hedge, not speculate. Since credit risk exists in parts of the original post I had made, I believe it makes sense to hedge that particular risk in a ratio like 1:5. Certainly not on a 1:1 basis. If lower grade debt returns to historically normal default rates or if the probability of that happening increases, funds which hold such debt would almost inevitably lose value. However, if you had a hedge against such an event, you would make money on the hedge while losing money on your other funds. Of course, being in a 1:5 ratio, losses won't be offset exactly but it would merely reduce your net losses. A comparable strategy could be purchasing a handful of specific stocks and then buying the VIX or inverse S&P at the same ratio. The purpose is not to sell the hedge at any particular point, but to offset potential losses.

[Anonymous No.554209]

>>554201

My point is that you have created an absurd portfolio in an attempt to offset losses. If you fully hedge, you just have a portfolio that looks like Treasury FRN's. If you partially hedge, then you have a portfolio that looks like 20% FRN's and 80% bank loan funds. So why bother with all the complexity (and, no doubt, tax nightmares) of CDS's when you could just say "Put a fifth in a Treasury money market fund and the rest in a junk debt fund"?

It's like saying "You should buy stocks, but hedge by also shorting them. So put 90% in a S&P 500 fund and then 10% in a short S&P 500 fund". Just put 80% in a fund and the rest in cash, it's the same thing!

[Anonymous No.554227]

>>554209
A key difference is that the CDS fund is not buying CDS's on the exact same securities. The fund intends to buy CDS's on debt which they believe are most likely to have a credit event, not just a simple shotgun blast of random high-yield debt CDS's. PFN on the other hand holds debt which is actually rated somewhat more highly and of better quality than WYDE would buy CDS's on. Historically, when defaults start increasing, it starts at or near the lowest credit rated companies and trickles up towards the higher rated companies so WYDE would see more defaults and greater gains because of that making it a more effective hedge. What you're saying would make sense if WYDE simply bought CDS's on the debt which PFN holds.

Also saying "90% in a S&P 500 fund and then 10% in a short S&P 500 fund" is a gross oversimplification of what I had said. I described a strategy (though not quite the same and not as hedged) similar to what a long/short fund might do.

[Anonymous No.554305]

>>553233
You need to account for inflation, so really he can only safely withdraw about 60k. Still plenty of money to live on though.

[Anonymous No.554311]

>>553224
1. Buy 1.4 million in weed
2. 420 blaze et fagget
3. ?????
4. PROFIT!