Novice With Large Sum Of Cash

[luutzu]

Smurf,
you still rent DVDs? People still rent movies and sign up to pay TV?

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Like most things, it's relatively easy to know the basics of stock investments... but to really do well, a little better than knowing the basics... will take a lot of work - work to both know what you are doing, and doing it often enough that you are likely to find the rare opportunities to make it all worthwhile.

So unless you have the interests, or a large enough savings to make it interesting, best is to put in an index fund(s) and grow with the general economy over time... which averages 7 to 9% p.a. over the long term (a decade or more).

But as some have said above, you shouldn't completely just hand the money to a manager and hope for the best... a little research on what they do, how have they been doing, what are they charging etc.. will still be required.

I mean the Maddoff ponzi goes on for over a decade, with investors (both retail and professional managers/bankers, from around the world) losing $65 Billion [?] when all it took to know it's a ponzi scheme (according to the guys that discover it and raise alarms bell no one at the SEC do anything about)... was a few hours of basic calculations on the reported performance.

So either diversify across a couple/few unrelated index funds or follow one of those "In God we trust, everyone else pay cash"... "God help those who help themselves" kind of advice.

It's not the best position to be in, but then it's not half bad either.

 

[Judd]

Say I have a sum of cash (around 400k) sitting in a term deposit that is about to mature at only 3.25%

Could anyone recommend some alternative options I could look at that would give me better returns?

It would need to be uncomplicated because I am a COMPLETE novice.

I don't want to buy a property or attempt and choose individual shares etc...

I am thinking some type of passively managed property fund?

Any ideas?

I am Princess Nagara from Nigeria. I can help you.

Just don't tell anyone on any forum in any shape of form you have money. Geez.

 

[trainspotter]

Surely this is a set up right? My opinion is try the Martingale System at your nearest casino and put 100k on Black 13 :

{Please note the tongue firmly implanted in cheek}

 

[Faramir]

Hi Jude and Trainspotter.

Anyone can be a beginner and very naive. Lots of people get conned constantly. At least the OP come here to ask. Imagine if he asked a 'friend' or a Financial Planner working for one of those dud companies.

I thought there were no dumb questions in the Beginners Lounge. Although most of us were shaking our heads and expressed our disbelief at first. We stated our opinions and the OP decided that he will educate himself more.

One day when I have a question, I hope either of you can give me some insights, valuable opinions or something that will contribute to my learning (which is only at its beginning stage.)

I know how you feel about the original post. I felt the same originally but at least we tried to help the OP.

The best thing about this thread is that any future people who are fortunate enough to find themselves with excess cash will realise that they need to educate themselves. Unfortunately I am at the other end, I am trying hard to save. One day, I hope I can ask the same question as well.

 

[CanOz]

Yeah, agree with Faramir that there are no dumb questions and indeed the person seems to be reaching out for some help on where to start.

400k is not a large sum of money anymore, heck neither is a million, but still significant.

The best advice given is to start to do some research, educate oneself. You may not have an interest in it, but i assume one has enough interest to ask for for help. Its your money, manage it.

 

[Wysiwyg]

Unfortunately I am at the other end, I am trying hard to save. One day, I hope I can ask the same question as well.

Now that is being a silly billy. You have the goal set so you prepare before, not after. Gee whiz.

 

[trainspotter]

Yeah sure Faramir to you it is not a dumb question. I never said it was. As we are not allowed to give advice in here and can express an opine only on the subject matter I find it very difficult to come to terms with "naive" people "suddenly" coming into X amounts of large sums of cash and then request advice in a stock thread.

The Martingale system I suggested is a system of strategy nonetheless. Double up after every loss. The original post asked for an "easy" way with not much hands on practice. Could not be any easier then casino money really now can it? Red or black on roulette with a 50% chance of getting it right. Apply the same strategy to Forex trading (a lot harder admittedly) and the results "could" be the same.

If you play Martingale, you start by betting the lowest amount on the colour you choose. Let's say, that the lowest bet is $1. If you win, you win $1, because you get the double for hitting the right color at roulette. If you lose, you are $1 in the red. This loss is exactly what the Martingale system should deal with. If you lost $1, in this method, you bet $2 in the next round on the same colour. If you win in this round, you will get $2, which will compensate for the loss in the last round and you will also get another $1. If you lose in this round too, you will be losing $3 which doesn't matter, because in the next round you bet $4 and if you win, you will be again $1 in the black. You keep doubling your bet until you win and get $1. From then, you will start over with $1 bet and follow the same pattern, until you guess the colour right again and get another dollar. Ideally, a player can get by on small steps to (hopefully) large winnings.

Unless there is a terrific run on either colour then you walk away after 10 throwdowns with a loss of $1023 in total.

 

[MichaelD]

Red or black on roulette with a 50% chance of getting it right.

It's not 50%. It's less than 50% because of 0 and/or 00. Therein lies the casino's edge.

 

[trainspotter]

It's not 50%. It's less than 50% because of 0 and/or 00. Therein lies the casino's edge.

OH DEAR GOD !! What are the odds of hitting 0 or 00 ?? 2.77777777777778% IF you were playing doubles that is !! If you read my post we are playing the Martingale system which is either red or black

 

[So_Cynical]

It's not 50%. It's less than 50% because of 0 and/or 00. Therein lies the casino's edge.

Single 0 roulette house edge on black/red/odd/even/high/low bets is 2.70%.

 

[trainspotter]

Single 0 roulette house edge on black/red/odd/even/high/low bets is 2.70%.

Depends if it is a French or American roulette wheel but thanks for agreeing with me So_Cynical.

 

[So_Cynical]

Depends if it is a French or American roulette wheel but thanks for agreeing with me So_Cynical.

An extra 0 doubles the house edge, i have never actually seen a double 0 wheel...likely we will never agree on anything again, and im cool with that.

 

[trainspotter]

An extra 0 doubles the house edge, i have never actually seen a double 0 wheel...likely we will never agree on anything again, and im cool with that.

In American roulette, there is a second green pocket marked 00 ... SO yes the house edge would double. Agree to disagree duly noted :frown:

 

[Faramir]

Now that is being a silly billy. You have the goal set so you prepare before, not after. Gee whiz.

Hi Wysiwyg
Yes I do have goals. Yes I still want to asks questions. It will give me an opportunity to review what path I am taking. Sorry if I said it the wrong way, open for misinterpretation. I should have said I would like to ask questions that may be similar. As I save, hopefully I am also learning more as well.

 

[MichaelD]

OH DEAR GOD !! What are the odds of hitting 0 or 00 ?? 2.77777777777778% IF you were playing doubles that is !! If you read my post we are playing the Martingale system which is either red or black

Martingale, even with an infinite pot of money, on a roulette wheel is always going to lose in the long run because of the casino's edge inherent in the 0. It's a negative expectancy system, as are all casino games.

 

[sydbod]

Sorry folks, but most of the information given in this thread is totally useless to a novice.
The best information given currently is to go out and learn ....... no mention of what is to be learnt, or from where one should learn.
Yes, I was in this situation many years ago and boy!!!! was that learning expensive, so I want to throw a few pointers on the table.
1) do you truly want dividend stock .... are you sure, or do you want some sort of mix based on your personal situation. If one has a good income, then capital appreciating stock tend to be a better situation (less tax until time to sell). If you require an income stream then YES dividend stock tend to be the better choice since one can get the advantage also of the franking credit especially when one is on a low taxable income level.
2) NEVER ... NEVEREVER take what is recommended and praised as good advice in the local press. They tend to overstate on the upside and understate what is on the downside. YES you do have to do a lot of research on the companies that you want to buy into. You want to look for things like the future outlook for the company, does it pay dividends and how much, what is the future growth potential of the company and its income, how stable is the market that that company works within. There are many sites on the Internet that give cut down versions of this information, but analysts reports are usually the best source of general information (at least from my experience)
3) if you do intend to be lazy, then at least try to follow investments that have a proven track record. Most self managed super funds tend to invest in basically only 10 shares. They just happen to be mainly dividend shares, and have a good success rate for investments for a long time. 4 are banks, 2 are consumer staples, 1 is a telecommunications company, and 3 are in the mainly mining area but some of these are a bit more diversified. Do a bit of lazy research to find out about these 10 companies and see what you think of them ....... NO, I will not tell you their names.

Hope this is a bit more help to the poster or future readers.

 

[qldfrog]

To try to help:
Someone mentionned ETF:
fair but this is usually seen as an exposure to the share markets (or a market)
If ETF, maybe go for a mix of ETF:
currency, gold/silver(maybe physical vs paper ETF), asx 20/200 , small caps ex ASX20; O/S markets: Asia,US,emerging countries,
with that plus let's say 25% in TD, you should be cruising and always have a buffer;
I would maybe also scale the entries with such amount: averaging in 15% of target amount every second month
-> will reduce the risk of going in on the very bad day
REIT could also be a way to get relatively low risk 7% return (I said relatively as GFC pointed to some nasty issues there)

Hope it helps; and there areno stupid question;
And DYOR: I can not provide advice, this is just what I would do