Investment Guidance Request - Thanks

Discussion in 'Professional Trading' started by Neet, Nov 4, 2006.

  1. Neet


    I recently sold my house because my spouse and I decided to leave this small town. Long story short, it took a lot of balls but we finally did it.

    As we make sure our new destination fits our lifestyle we will be renting for a while.

    In the meantime I have 200 grand I'm not sure what to do with. I'm a daytrader but I honestly don't need more capital there to succeed (use 85k), just more experience, getting there but not quite there yet, soon though. 2+ years so far.

    I don't trust brokers but I trust the brilliance of a lot of the users in this forum, not all but some do have brains around here :) Not you, the other one ! Just kidding :)

    Anyway, I could place the 200k in a money market account, possibly tax free or I could develop a portfolio to beat the lousy 5% I can get from CDs etc. The market right now looks a bit oversold, especially some of the primary indexes like DIA/SPY/Qs etc. I could invest on the sectors that have taken a hit, energy/oil/housing but investing is not really my strong here. Even short the overbought sectors, but I don't really want to risk my "house money", it could be devastating.

    I'm an ok daytrader (13% YTD) and a future investor that has never invested except in real estate. Any help appreciated, thank you for listening and good trading.

    Did I mention your help is appreciated ? ;)
  2. MTE


    It's really simple. If you cannot afford to lose this money and your investment time horizon is short, like six months to a year, then risk-free interest bearing instruments are the only option, really. On the other hand, if you can afford to lose a bit and wanna invest for 5 years or so then investing in stocks may be a good idea.

    Another alternative is set up a capital-guaranteed structure. That is, say your time horizon is 1 year. You can get 5% on some risk-free instrument (generally, a zero coupon instrument is used so that you buy it at a discount). So you take 95% of the cash (well a bit more to be exact) and stick it in there. This way no matter what you're guaranteed to have your intial capital back in a year, you'll lose a bit due to inflation though. Then you take the remaining 5% and leverage it up with options. You can use other leveraged instruments, but the key is to not lose more than these 5% (that's why options are good alternative - you can't lose more than the premium paid).

    Worst case, you get you money back in a year, best case, you generate some good return.

  3. Well you have revealed you want the 200k to remain liquid as you prolly won't rent forever.

    You have not mentioned your ages, but you have revealed that you are a moderately successful daytrader in this bull market still learning, so that means you partially understand risk

    With all the recent changing going on in your life, I would concentrate first on staying liquid and keeping out of fast decisions as your new environment will be presenting to you what YOU think to be opportunities.

    So I actually agree short term with your money market account idea, and I cannot give you any advice this year. I am not licensed to give such advice either, but you asked.

    take your time, you have the rest of your life...I think you to be in your 30's or on the outside ...your 40's...

    Michael B.

    P.S. There is going to be some tax due on that 200k if you continue to rent...a daytrader friend of mine forgot about that and had to sell his house in Texas...(he made his money in daytrading during the time when "pigs could fly")

    P.P.S. You need to get an "equipment hungry" business where you can take a "tax credit depreciation" write-off to shelter some of your taxes in exchange to get income dribbled in later. Check out those first year tax credits for small business's that Bush signed. It always nice to have a profitable small entrepreneurial business on the side to buffer your income through...its the American way...get yourself or build yourself a small vending route.

  4. nonam


    Can Royals have taken a hit lately due to the threat of taxation, which might actually be a few years yet.Good time to get in.I regard them as pretty safe long term.
  5. Neet


    Thank you for all the input.

    I have no idea what Can Royals are.