Here's $100,000 Grand...so

[Distantdrummer]

Let's say I'm about to be forced into taking 100 Thousand dollars.

Oh I can think of lots of ways to spend it....but this thread and my question is not what I could spend it on particularly.
I want to hear ideas of what you all would do to make it pay at least 9-10% per year.

Yep it has to make me at least 9000 dollars per year.

And I need your thoughts. Just might be a diamond in the rough out there.

thanks

btw I know I messed up the title of the thread, I put Grand instead of Dollars.
But it's just 100 thousand not a mil.

[AlumaCave]

Wow, good question, in this market I don't know.

I'm a buy and hold kind of guy. 9-10% is hard to find with any kind of safety, If you like to take risks there are a lot of places that you can put it.

The question is, can you sleep at night with the risk. I can't and most people don't want to lose their money.

I think gold is a good buy right now for 10-15% of you assets.

I also think stocks are a good buy, almost any stock you buy now, if the company is still in business in 5 years, you will look like a financial genius.

Just MHO.

[Aage]

I'd take 80 grand and buy a great! AS TT, then gamble with the rest in Las Vegas, carefully making sure to win and NOT lose...

By following that strategy, I feel confident that I will not only enjoy the trip down and back, but that the 10% is a conservative estimate of potential return.

OK, so where do I collect the $100K?

[Foiled Again]

and now one from left field.

AlumaCave's advice is reasonable but after the crash it's obvious that "Financial planner" is a synonym for "consultant" which has two definitions:

1. someone who borrows your watch so that he can tell you what time it is
2. someone who cons and insults you

The economy is complex. Every quarterly statement is an exercise in grandiloquent obfuscation. Use your own logic. My take? Only three things are certain:

1. we are all going to die
2. most of us will spend a lot of money on medical care - then we'll die anyway
3. getting born can be more expensive than dying - got any idea of the cost of fertility drugs, in vitro and and neonatal units?

Investments? Pharmeceutical companies, Medical manufacturing companies, for profit hospital chains, funeral home stock, memorial gardens (formerly known as cemetaries, and before that graveyards) are also big business. With us aging boomers... it's a growth industry. Have you noticed how many "golf cart" dealers have sprung up in the last 5 years - and not around golf courses. I've seen three local campgrounds add golf cart rentals in the past month.

Of course you could learn to cook meth or deal marijauna. Theoretically the ROI is there. And advertising/marketing expenses are non-existant. The risk is substantial... and then there is that inconvenient thing called a conscience... and the pragmatic fact that one's ineptitude will cause one to end up in a Turkish jail or dead.

Return to pragmatic reality and normalcy. Take the money, put it in CD's, get a weird job, live small, and fulltime in your Airstream for a couple more years.

(Wierd job example? A semi-retired man shows up periodically at my favorite campground. He has a water tank and small hydraulic bucket on his rusty ole truck... and washes and waxes RV's. He really knows the correct way to do an Airstream - and charges accordingly. I pay and smile, he takes the money and smiles too. I think he only does about 2 or three per week then sits back and has a brew or two. I never asked if he'd take anything other than cash... and no I don't need no stinkin' receipt.)

[shastavalley]

But pleasure! It's later than we think.

[hampstead38]

In general, the higher the level of return, the greater the risk. You also have to account for inflation. The target $9,000 won't be worth $9,000 next year. The real (adjusted for inflation) compound annual growth rate on the stock market from 1950 to 2008 is about 6.8 percent. So, you are essentially seeking an investment that will beat the historic rate of return of equities by three percent... not easy without substantial risk. This is much harder if you need to make $9,000 every year because you simply won't find many investments with a nine percent fixed rate of return.

In some respects, it isn't hard to make nine percent a year... if you are willing risk losing some or all of your $100,000 investment. Last year I bought shares of Starbucks at $8.60 a share. If I had purchased $100,000 worth, I would own about 11,600 shares. SBUX closed at $12.94. If I sold 11,600 shares I would realize a profit of about $50,000. Of course, those capital gains would be subject to taxation. Putting all of your money into a single stock is very risky, but it can be very rewarding... if you pick the right stock. It is much safer in the long run to simply invest in an S&P 500 index fund... since most analysts cannot consistently beat the average and the transactional and management costs are lower. But honestly, you can't expect to make $9k a year on a $100k of capital. The only sure bet is to park the money and simply withdraw $9k a year for 11 years. You may get lucky and have someone else force you to take $100k before its gone.

Oh, there are other options like buying into a small business, but everything hinges on your tolerance for risk. Good luck.

[Silvertwinkie]

To net $9k you'd have to gross $13k as most short term cap gains are at 30% unless you have tax shelters and things that can help lower your overall taxes come April 15th.

Long term cap gains for now, are taxed less, but that is for now.

As has been said, bigger risk, bigger return--or loss. I like real estate and the stock market. Too bad you didn't get the $$ in early March...I think that was when it hit bottom. Still some good deals, but not as good as early March.

[Ifihadtime]

Well if it were me I would trade in the stock market, making 10 to 15K in a year is fairly easy with 100,000 to work with (I would raise my goals a little). Of course you will need to learn how to trade otherwise you'll end up with an expensive lesson or become a buy and hold investor and missing your mark.

[nkeeler]

i would go with real estate. either pay off my house or buy a rental

[redstart]

How about my idea from the "would you rent your airstream thread"? Only trouble is, i don't think it would make 9K a year:

I would not rent my airstream.
But what I would rent is this:
We'd like to buy a lakefront acreage in northern Ontario and put in full rv hookups (expensive!). I'd rent out the spot to fellow rv'ers for a little more than campground rates, for people looking for a nice spot with full hookups and privacy. I wonder if it would work or is it worth it....

So you buy a piece of land on a lake, put in septic and solar or hydro, and charge 75$ a night. I am paying 40$ at a campground right now, cheek by jowl with other campers. Maybe your piece of land is big enough to have two private spots on it.

Good luck!!!

[RBolton]

Dd,

Send me the $100,000. I will send you $9000 every year. Guaranteed.

Bernie M.

[mandolindave]

Invest in a few mutual funds, bonds, 6 month CDs, 1 year CDs, some stock. But most of all remember that your personal earning power could easily double the earning power of 100 grand. Get a job doing anything while your 100 grand grows. Be patient, the hare won the race. One thing that I have learned........It takes a long time to save money , and a short to part with it. Nine per cent seems unlikely this month. But buying low soon, seems like a good plan. ( DISCLAIMER: just an opinion, I am a mandolin player, not a doctor, but I play one on TV )

[pageclot]

Pay off debts. Car loans are usually at 8 or 9%, so that'll save you 8 or 9% on that debt, plus, that 8 or 9% is paid out of after tax dollars, so you'll save about 11 or 12% in real dollars.

Mortgages, in Canada anyway, are not tax deductible, so paying off those will also earn you higher than stated rate in the way of returns, but hey, mortgage rates are low these days, so that won't get you 9% even in real dollars.

Buying a rental property in a small stable town will probably get you more than 9% return (in the small town my parents grew up in, there was a $130K rental triplex for sale, which generated $18K per year in rent, plus the tenants paid for utilities, so that's 13.8% before maintenance expenses), but that would require monitoring, maintenance, etc.

It's do-able, but I don't think there are worry-free ways to make 9% or more. Not even the drug trade is worry-free.

----

Kevin

[Air-Hal]

A 9% ROI would be pretty risky, BUT, you could come close by doing this:

Purchase "T" (A T& T) stock, currently selling at about $26.70 with a quartely dividend of 42 cents. This will yield 6.24 per cent. The stock is rated 5 stars by Standard and Poors (Strong Buy), and I think you can reasonably expect a 3 percent annual increase in the stock price, especially if you buy and sell smart. If you do that, you will be over 9 percent. Standard and Poors "5 stars" rated stocks consistently yield better than 3 percent increase.

Of course there are never guarntees, but it is also possible for them to raise the dividend (as well as a risk of them lowering the dividend). Check with your financial advisor before buying.

[Wayne&Sam]

Originally Posted by RBolton

Dd,

Send me the $100,000. I will send you $9000 every year. Guaranteed.

Bernie M.

[Wayne&Sam]

Wait a minute- I'll give you $9,500!!

[pmclemore]

Not a bad recommendation so far - when you consider the rest of the market, the fact that the stock price has held ($26.84 today) can be considered a gain against the rest of the market. But even with the dividend, you're still short of 9%. Danged if I know how to get there.

And with some folks in DC wanting to tax dividends at ordinary income rates, danged if I know what to do even worse.

Pat

[hampstead38]

An old thread... just an update. I sold my SBUX for around $24.50 a share earlier this year. The tax man cometh later.

[nvestysly]

I did not notice this thread when it came around the first time but it caught my eye today. I think 9% might be possible with a portfolio of income stocks. Another approach might be rental real estate - You buy it with your 100,000 and charge rent equal to 9% but that's a lot of "ifs."

Take a look at another Social Knowledge Forum listed at the bottom of the page. There are lots of good ideas at the Early Retirement & Financial Independence Community forum. Search for income investing, browse for related topics. As I said, 9% is probably possible, but not very likely and certainly not guaranteed principle.

There are some good fee only financial planners out there. Check out Home Page - NAPFA - The National Association of Personal Financial Advisors

There are also several good, straightforward radio talk shows that discuss income investing. One I listen to regularly is on WSB in Atlanta - you can stream it on the web from 9 - 11 (Eastern) on Sunday mornings AM750 and NOW 95.5FM News/Talk WSB on wsbradio.com

Lucius

[AIR-Quarius]

Buy silver- or whats called 'slick silver'. The Rothchild family is busy buying up their gold.
And silver one day if we ever evolve into a cashless society...silver will still holds it's value. You could also go to Austrialia and go under ground and dig wonderful Opals out of the walls of your own dwelling and live like a KING!