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You have $800k in cash - what do you do?

Smallcock

Active member
Jun 5, 2009
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What would you do with $800k cash available?

Invest in real estate? What kind? Multi-unit?

Invest in stocks? Index? S&P500?

Other?
 

Denmae

Active member
Jan 30, 2013
578
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Real estate. Apartment buildings. Way more control than the stock market.
I would look for undervalued buildings. Do some work to them and increase the rent,
which would increase the value of the building.
 

Smallcock

Active member
Jun 5, 2009
13,703
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Downpayment on cottage in Muskoka
haha no! I want the most bang for my buck and want to invest the money for more passive income!
 

oil&gas

Well-known member
Apr 16, 2002
12,223
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Ghawar
Buy gold and raise cash - our world is about to be turned upside down

Note that Gordon Pape has never been much of a gold advocate.

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Gordon Pape
Jan 21, 2017

For better or for worse (almost certainly the latter in Canada’s case), Donald Trump is now President of the United States.

His inauguration speech on Friday did nothing to calm the fears of those who view the new administration with trepidation. Instead of being conciliatory, he was combative and belligerent. His dystopian description of “carnage” in the country he inherits made it sound like the Panem of The Hunger Games rather than the richest nation on Earth.

Most disturbing to Canadian politicians and investors was his pledge to put America First in everything he does. His administration is going to focus on two goals: “Buy American and hire American”. No talk of compromises or give and take there! Canadian exporters, you’ve been put on notice.

Surprisingly, the TSX rose 138 points on the day. Virtually every sector showed gains except health care and utilities. Even industrials, which stand to hit hardest by American protectionism, were ahead 0.69 per cent on the day.

The two biggest gainers were materials (up 1.64 per cent on the day) and gold (ahead 1.27 per cent). That makes some sense. The new president is focused on bringing back U.S. industrial jobs and our materials sector doesn’t get in his way. As for gold, which is by far the top-performing sector on the TSX this month (up 19.6 per cent) it’s the traditional safe haven in turbulent times, and we’re certainly headed into that territory.

Mr. Trump’s populist speech signalled that he intends to turn all his campaign rhetoric into political action, from building a wall along the Mexican border to eliminating ISIS as quickly as possible. His administration is intent on upending many traditional U.S. policies, although no one is clear on what will replace them.

This man is an historic disrupter. Even before he took the oath of office he was hard at work undermining the international status quo. Here are three of his targets in the days leading up to the inauguration.

He talked down the U.S. dollar. Breaking with the tradition that the President does not comment on currency movements, Mr. Trump told The Wall Street Journal that the U.S. dollar is “too strong”, saying that compromised the ability of American companies to compete with nations like China. A strong dollar also makes it more attractive for U.S. companies to ship jobs overseas. The greenback immediately lost 1.3 per cent against a basket of foreign currencies, although it snapped back later after Federal Reserve Board Chair Janet Yellen said in a speech that more interest rate hikes this year are in the works.

Of course, the weaker U.S. dollar that Trump wants would drive the loonie higher, jeopardizing Canada’s efforts to rebuild our export markets. The Bank of Canada zeroed in on this in last week’s policy statement, saying the Canadian dollar “has strengthened along with the U.S. dollar against other currencies, exacerbating ongoing competitiveness challenges and muting the outlook for exports.”

He threatened a trade war with China. This is nothing new in one sense. It was always part of Trump’s campaign rhetoric. However, both the President and his nominee for Secretary of State, Rex Tillerson, have raised the stakes by implying the new administration will try to tie a one-China policy to trade negotiations. Mr. Tillerson went a step further in his confirmation hearings, musing about blockading China’s access to the artificial islands it has created in the South China Sea. That would be an act of war.

Meanwhile, in sharp contrast, Chinese President Xi Jinping was praising the virtues of globalization and international trade at the World Economic Form in Davos, Switzerland. With each passing day, it becomes clearer that the two countries are on a collision course that could sideswipe everyone else.

He encouraged the break-up of Europe and questioned NATO. Vladimir Putin must be rubbing his hands in glee today. The new American President has endorsed policies Putin has long pursued – the demise of the European Community and the dismantling of NATO. Of course, Mr. Trump didn’t put it quite that bluntly. Regarding the EU, he simply commented that Britain is doing the right thing by pulling out and predicted that other countries would soon go the same route. As for NATO, he called it “obsolete”, in contrast to the new Secretary of Defence, General James Mattis, who has described it as “the most successful military alliance probably in modern history,

In Moscow, Dmitry Peskov, Mr. Putin’s press spokesman was quick to agree with Mr. Trump’s assessment saying: "The systematic goal of this organization is confrontation." Well yes – that’s the point.

All this and more explains why the Bank of Canada said last week: “Uncertainty about the global outlook is undiminished, particularly with respect to policies in the United States”. The Bank warned that if Trump implements his protectionist policies – which the President made clear in his speech he plans to do – it would have “material consequences” for Canada’s economy.

Our world is about to be turned upside down and I don’t think it will end well. For investors, this should be a time for caution. We are venturing into unknown territory and the surprises that are coming will rattle the markets. If you haven’t already done so, increase your cash reserves and add to your gold positions so that you can breathe a little more comfortably while we wait for the Trump era to unfold.
 

oil&gas

Well-known member
Apr 16, 2002
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Ghawar
Having as much as $800k in cash to invest, an allocation of 5% to gold
and silver bullion shall be sufficient for the purpose of hedging against
a significant depreciation of the loonie and USD. I will not count on a
2008/9 type collapse in 2017 to decide on how big the cash
position is appropriate for a possible market correction.
I think a 20--30% position in cash is good enough. The key to success
in making the most of that much money is to make the right
guess of future return of medium-term treasury bonds. I believe the
yield of 5-year Canadian government won't rise above 2% over
the next 12--18 months. If this prediction plays out putting money into
REITs or dividend stocks with current yield in the range of 4--6%
would hopefully turn out to be better investment than cash.
 

Smallcock

Active member
Jun 5, 2009
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Thanks for the suggestions oil&gas
 

Big Sleazy

Active member
Sep 13, 2004
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I would suggest that with that much cash you want to invest in tangible assets. Gold/Silver, Real Estate, and Art. At this point in History I would surmise that all markets are way over valued except for Gold and especially Silver. If interest rates were to normalize, and they will. Real Estate is going to get clobbered. Art is over valued as well right now. Again due to the extremely dangerous interest rate policies we've been subject to for over 8 years. The fallacy is that people believe the Central banks set interest rates. They set inter Bank lending rates. The market sets the interest rates. We are awash in a World of unpayable debts. When rates rise this whole charade crashes.

Buy tangible assets. Physical Gold/Silver, Art and Real Estate. They'll always be worth something. And right now IMHO Real Estate and Art are in a bubble.

If you want to know how and where to buy Gold/Silver. PM me.

Oh, and I personally invest some funds into private equity funds.
 

oil&gas

Well-known member
Apr 16, 2002
12,223
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Ghawar
..........................
If interest rates were to normalize, and they will. Real Estate is going to get clobbered. Art is over valued as well right now. Again due to the extremely dangerous interest rate policies we've been subject to for over 8 years. The fallacy is that people believe the Central banks set interest rates. They set inter Bank lending rates. The market sets the interest rates. We are awash in a World of unpayable debts. When rates rise this whole charade crashes.
.........................
If interest rate is ever normalized the path to normalized rate is
anyone's guess at present. One scenario I envision is that the U.S. Fed and
central banks in Canada and the rest of the developed world will cut
the rate again after they get a taste of the impact of Yellen's promised hikes
on the global economy in 2017. Rates will not be normalized by monetary
policy. Panic selling of government bonds driving up yields will do the job.

This is hopefully the worst case scenario. My wishful thinking is
that there will be no more rate hikes from the Fed and inflation
turn out to be moderate. The world can live through a stagflationary
without unduly pain.
 

Barca

Active member
Sep 8, 2008
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If interest rate is ever normalized the path to normalized rate is
anyone's guess at present. One scenario I envision is that the U.S. Fed and
central banks in Canada and the rest of the developed world will cut
the rate again after they get a taste of the impact of Yellen's promised hikes
on the global economy in 2017. Rates will not be normalized by monetary
policy. Panic selling of government bonds driving up yields will do the job.

This is hopefully the worst case scenario. My wishful thinking is
that there will be no more rate hikes from the Fed and inflation
turn out to be moderate. The world can live through a stagflationary
without unduly pain.
With Trump's policies, inflation is certainly a risk.
 

oil&gas

Well-known member
Apr 16, 2002
12,223
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Ghawar
Why Interest Rates Can Never Go Back To Normal

http://dollarcollapse.com/interest-rates-2/2017s-real-milestone/


January 24, 2017

Forget about NAFTA or OPEC or TPP or crowd size or hand size or any other acronym or stat or concept that obsesses the financial press these days. Only two numbers actually matter.

The first is $20 trillion, which is the level the US federal debt will exceed sometime around June of this year. Here’s the current total as measured by the US Debt Clock:
.....................
.........................
To put $20 trillion into perspective, it’s about $160,000 per US taxpayer, and exists in addition to the mortgage, credit card, auto, and student debt that our hypothetical taxpayer probably carries. It is in short, way too much for the average wage slave to manage without some kind of existential crisis.

It’s also way more than it used to be. During his tenure, president George W. Bush (2000 – 2008) nearly doubled the government’s debt, which is to say his administration borrowed as much as all its predecessors from Washington through Clinton combined. At the time this seemed like a never-to-be-duplicated feat of governmental profligacy. But the very next administration topped it, taking the federal debt from $10 trillion to the soon-to-be-achieved $20 trillion. And the incoming administration apparently sees no problem with continuing the pattern.

The other meaningful number is 6.620. That’s the average interest rate the US government paid on its various debts in 2000, the year before the great monetary experiment of QE, ZIRP and all the rest began. When talking heads at the Fed and elsewhere refer to “normalizing” interest rates they’re proposing a return to this 6% average rate.

But of course the last time that rate prevailed our debts were just a little lower. Run the numbers on today’s obligations and you get, well, let’s see:

$20 trillion x 6% = $1.2 trillion a year in interest expense. To put that in perspective…


It’s $15,000 a year per family of four, or about a fourth of what the typical American family earns.


It’s 31% of the federal budget, which would mean massive cuts in every other spending program.


The conclusion: It can’t happen without causing one of the following:

Government spending cuts and/or tax increases that impose Greek-style austerity on Americans who won’t respond well to their sudden demotion to Third World status.

A new round of monetary experiments involving the “forgiveness” of the government’s debts, financed with newly-created dollars. This will work – as long as dollars remain universally accepted as a store of value. History offers no examples of such a thing.

An overt effort to devalue the dollar, with the goal of paying the interest in full, but (again) with newly- created, much-less-valuable currency.

The resulting dilemma: If we hope to live within our means interest rates can never be allowed to rise. But if interest rates don’t rise, the Fed is forced to create a tsunami of new dollars to keep rates low, and must take its chances with inflation, currency war, crack-up boom, and all the other black swans that live in the land of monetary excess.

Which is why the sound money community keeps harping on gold. All the politically-acceptable policy options have inflation/devaluation at their core, and those things are always and everywhere great for real assets.
 

desert monk

Active member
Apr 22, 2009
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Get a good money manager. Someone who isn't commission based(this can cause conflict of interest), and can help you build a diversified long term portfolio that will steadily grow and weather the volatility of the market.
 

Timbit

Tasty and Roundish
Jan 7, 2002
1,696
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In Ecstacy
What would you do with $800k cash available?

Invest in real estate? What kind? Multi-unit?

Invest in stocks? Index? S&P500?

Other?
Depends on too many other variables. People are giving advice without knowing anything else about your personal financial situation - how old are you, are you employed, what's your income, what's your risk tolerance, your investment goals, what do you need this money to do for you? When do you need the capital back, if ever?

Talk to an advisor.

Timbit
 

bluecolt

Well-known member
Jun 18, 2011
1,440
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Depends on too many other variables. People are giving advice without knowing anything else about your personal financial situation - how old are you, are you employed, what's your income, what's your risk tolerance, your investment goals, what do you need this money to do for you? When do you need the capital back, if ever?

Talk to an advisor.

Timbit
Timbit,

Yours is the best and most prudent piece of advice of all of the inane posts on this thread.
 

bassetto87

New member
Mar 29, 2014
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0
I would use the money to buy two condos worth $400,000 each. Then rent them out (assuming you already own a home that you live in). You should be able to get at least $2000 in rent per month for each of them, likely more. So that's an income of $4000 per month = $48,000 per year. So you make the $800k back in 17 years, just from rent alone, not counting the money you'd get when you resell the condos. Of course there are taxes to take into account though so the math is not really that simple.

Investing in real estate appeals to me because even if the world sinks into the a deep recession, you'll still have a place to live and another place to sell or rent out. No matter how messed up the economy gets people are always going to need a place to live.
 

oil&gas

Well-known member
Apr 16, 2002
12,223
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Ghawar
About two years ago I was looking around in a 2 br condo unit on
sale near Finch/Yonge. It was later sold for $330k. By now it must have
appreciated to nearly $400k. $1.8k is about the monthly rent you can
charge for that unit. Management and maintenance fees (hydro included)
alone cost $900 per month. After deduction of this and other expenses
earning will hopefully cover your mortgage interest payment.
 

onthebottom

Never Been Justly Banned
Jan 10, 2002
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Hooterville
www.scubadiving.com
Hookers and blow
 

oil&gas

Well-known member
Apr 16, 2002
12,223
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113
Ghawar
An overlooked investing story: The rebound in preferred shares

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Preferred Stocks
....

Rob Carrick, Globe and Mail
Jan 18, 2017

A happy but overlooked investing story of the past year is the rebound in preferred shares.

The S&P/TSX preferred share index was up 18.4 per cent for the year to Jan. 13, a good start on erasing a few years of pure misery for the sector. The cumulative three-year loss for the index was 15.7 per cent, even after the rally of the past 12 months.

The plunge in preferreds represented a buying opportunity that was highlighted in a Portfolio Strategy column published last February. Let’s revisit that column for some thoughts on what investors should do if they bought preferred shares at depressed prices a year or more ago. Dustin Van Der Hout, a portfolio manager with Richardson GMP in Toronto, highlighted three preferred share issues that have moved up nicely over the past 12 months:

- Brookfield Asset Management Series 24 (BAM.PR.T): Up 28.1 per cent to $17.96

- Royal Bank of Canada Series AZ (RY.PR.Z): Up 21.7 per cent to $20.17

- Toronto-Dominion Bank Series 5 (TD.PF.C): Up 21.5 per cent to $19.78

All of these shares are a type of preferred called a rate reset. Rate resets were designed for a rising rate world – their yields are reset every five years using a spread over the five-year Government of Canada bond. Rate resets were shunned a year ago because it seemed interest rates were headed lower. Now, with government bond yields on the rise, they’re suddenly attractive again.

Mr. Van Der Hout said he recommended rate resets to clients mainly for a capital gain. After the price increases of the past year, he has sold three-quarters of the pref shares his clients held. The remaining quarter is held by people who want to continue to receive the very good yield offered by rate resets based on current prices and dividend payments. The Brookfield shares have a yield in the low 6 per cent range, and the two bank issues are just below 5 per cent.

Why sell when sentiment has decidedly turned in favour of rate resets, the most common form of preferred share? Mr. Van Der Hout wonders if investors are overly confident that interest rates will continue to rise. “The completely bearish view a year ago was overdone,” he said. “We have a completely bullish view today, and I think prefs have probably got ahead of themselves.”
 
Ashley Madison
Toronto Escorts