T Nation

Investment Options Besides Stocks


#1

I've got some money in a portfolio I'm building, right now it is about 85% stocks, 15% cash-equivalent. This is not my 401k, which is an actively managed fund. I have several different stocks now across different industries and different sizes (e.g. large mid and small cap). I'm 26 so I'm willing to take on some risk, but at the same time I think most of the market is overvalued (average P/E ratio is hovering around 20 and that is way too high for me), thus Id like to branch out from stocks.

Id like to put that 15% cash-equivalent to work but I'm not sure where to start. It isn't enough to get into property (a long term goal is own rental property), but enough to maybe buy into some bonds, a few shares of royalty trusts, or maybe something more creative. I was originally going to put some money in peer to peer lending, however Lending Club has been in the news for fraudulent lending practices so I am reluctant to put my money down on them or a similar business.

Really, Im looking for suggestions for further research, not direct financial advice. That 15% cash also isn't super liquid (it will take about a week to get to me) so if Im going to spend it on hookers and blow Ive gotta schedule than in first.


#2

the chemicals they cut cocaine with are worth more than actual cocaine these days. That shit is lucrative

Seriously, invest heavily in benzocaine


#3

Guns rarely go down in value. Maybe some of the gun enthusiasts can recommend the hottest guns.

Heavy equipment, like bulldozers. You can make money if you can absorb the transportation costs flipping that stuff.

Send me some money, I'll make a few moves. I got ears, I hear things. In a couple weeks, I'll start sending you some dividends.


#4

Straightforward investments:
Equities -> Mutual Funds, ETFs
Real Estate -> REITs
Individual Bonds -> Bond funds with appropriate duration
Precious Metals -> Metals Funds

Higher risk investments:
Futures/Options
2x and 3x Long/Short ETFs

Gambling:
Futures on VIX
Bear Butterflies
Reverse Iron Albatross
Call Ratio Backspreads
et al


#5

I don't know anything about the gambling stuff. I don't have the money or the stupidity to take on that kind of risk now. ETFs seem to be trendy, I know about index funds and mutual funds, but I don't know what separates them from an ETF. Ive never invested in metals/raw materials, but that might be lucrative. The interesting thing about royalty trust is that they are similar to an investment in a mine or piece of property, except you invest in the rights to the property rather than the property itself. I have no idea how to invest in those though, as their price approaches 0 as the raw material is used up. Ive read they can take about 10 years to mature (like a bond) but aren't as stable with higher returns.

EDIT
but my long term investment goal is to own rental property. Id love to buy a 2 family home in a neighborhood with young people (near a college for example) and rent out rooms, maybe $500/ each.


#6

I have been contacted by an exiled African prince who seems like a nice guy. He has some interesting investment strategies and you can help get the royal family safely out of the country at the same time.


#7

Aero, how much money are you playing around with? I am also curious if you have a 3-6mo living expense fund built up in addition to the investment endeavor?

I would also like to get into some sort of investments soon, but I would only do this after my $10k (6mo living expenses) is established in a 1% savings account. I was there, then I just got a motorcycle that set me back some, which was obviously the most important investment :stuck_out_tongue:

I've got my 1% savings account and 401k going, now I need to fill in the middle.


#8

1) A few thousand, not counting what I have in my savings.

2)Honestly, I wouldn't wait to invest. I started with a meager $200, but added that same amount every month and made a good amount of money being careful where I put it. Im investing so I can afford something like rental property down the line. At the same time it would not be a good idea to follow arbitrary advice, pick up a book with a solid reputation and read it cover to cover, taking notes as you read.

3)Id never buy a bike because Im the kind of person that would kill myself joyriding.


#9

Wow, I didn't think you could buy much with $200, where did you put it? And if you killed yourself on a bike, you wouldn't have to ask about where to put your money lol.


#10

Nope, lol.

I brought individual stocks. Everyone says don't do that, but I read a long book (400 out of 500 pages), and decided Id like to learn for myself what to do following the advice in this book. I put a lot of time into reviewing different stocks, comparing and contrasting their benefits. But the end result was phenomenal - I made a profit on all but 2 of my stocks. I own 11 now FWIW. Yes, I took on more risk, but I now have a good understanding of the stock market and I feel better equipped to make any financial decision. Based on the fact that many stocks now don't meet my criteria, Im holding off on investing. We'll see what happens.


#11

And 400 pages might seem like a lot of time. If you set yourself a goal of reading 1 chapter a week you can get a book like that done in 2 to 3 months.


#12

Japanese Candlesticks---->READ IT

Real Estate---> there are tons of creative ways to buy RE; research it and you will be surprised.
RE is by far the best option. You can create various different forms of income from it depending on the strategy chosen.


#13

I thought you were saving to buy a house...? Might of been someone else.


#14

Nah, I have no plans to buy a home for some time. If anything Id buy rental property to offset my mortgage. I don't believe in the American way of debt. It ruined my father.


#15

You might want to look into Index funds. I read an article recently where Buffet suggests the 20-30 crowd should look here for growth after their 401(k) is taken care of. It's something I'm interested in possibly jumping into in the next year or so. The few I've looked at on Fidelity require a $2,500 minimum, though.

Ah, must of been someone else. I can't say I blame you in regards to debt. The only caveat I'd add is that fixed interest rates are disgusting low right now and if you're renting, imo, it makes much more sense to buy in the long term. To each his own, though.


#16

Before you buy do your research. Make sure the fees are low, you like the stocks in the index fund, and they are selling at a discount. You wouldn't want to buy an index fund in 2007, for example, as it would have taken a few years for you to break even. One I was thinking about is the vanguard high dividend yield index fund. Check out the graph in the lower right corner to see my point about researching before investing:

https://personal.vanguard.com/us/funds/snapshot?FundId=0623&FundIntExt=INT


#17

Thanks, I appreciate the link.


#18

Again, do your research. Im not laying it out for you here. You can buy rental/investment properties if you are willing to learn, research and spend the time exploring. You dont need banks et al.


#19

I feel like without a butt-load of cash, one cannot get into real estate. I have a friend who is offering me $500 if I can help him close a property though.


#20

I'm the reason they're called "donor cycles". Never met a bike I couldn't wreck.