Here is some recommended reading for you: The Successful Investor by William O'Neill The Demise of the Dollar by Addison Wiggin Manias, Panics, & Crashes by Charles Kindleberger My personal pics for the future: Bernanke should bolster the S&P, maybe up 10-14% for 06', thereafter look into PAAS, ADM, TIPS, long term bearish options on the dollar (s/b another 2-4 years down dollar), the Canadian dollar (long) Riskier plays: MMM, TINY, NUVO Treat every dollar like it was your last!
There is a book that describes some well tested stock investment strategies. They are quantifiable and tested over decades of market returns: "What Works on Wall Street" I have no idea what will work in the future, only what has done well over the long term in the past. This is where a chunk of my net worth is going. Best of luck to you, Granville
I was in your exact position 5 years ago and I understand your dilemma. My suggestion is to learn how to trade BUT do not risk anymore then 10k per year for the first 3 years because that's about how long it should take you to learn. I think your fears of a market meltdown are irrational but not completely out there and if you learn to trade short term movements you can always be quick enough to capitalize on any big move either direction. A few other choices would be to buy a GOOD franchise in a business that you are interested in or just leave your money in Tbills because there is NOTHING wrong with that. Sometimes doing NOTHING is the BEST strategy of all because once an opportunity presents itself you will be ready to react. One final thought would be to do charity work while your being patient. Good Luck to you.
Samson77, The combination of Tbills, Charity work and continuing my trading education is very close to what I've come up with as a solution to my current confusion. I'm also trying to lower my family's expectation of what an "acceptable" lifestyle is (pretty tough in Orange County). I still can't decide what's sensible as far as my concern about the future of the US economy. AFter seeing the economic behavior of people around here for the last few years, there isn't any part of me that believes this debt-financed consumption binge can continue. Most of what I'm referring to is anectodal but it's supported by the data as well. The runup in housing is unprecedented AND not supported by any legitimate economic fundamentals. Job growth in California has been dismal and concentrated in low-wage service jobs or jobs directly created by the housing boom itself (those are already starting to disappear as prices start down). Wage "growth" hasn't even kept up with inflation. Not only is there a net ouflow migration but the people leaving are people with money and they're being replaced by illegals for the most part. The majority of economic "growth" (sorry so many quotes) is just people borrowing against their house and using it to consume. Even though there has been a HUGE runup in prices, equity in housing is lower than it was 10 years ago. Maybe I'm being unduly bleak about the country's prospects because things are so bleak out here in CA. Although many national trends start here first so I don't know. Anyway, thanks to everybody for the input.
There are some issues that you have to consider before investing this money. First of all, your money market is a "safe" investment although all your returns are being eaten away by taxes and inflation if you factor those in. Bank CD....rate of return doesnt even outpace inflation...have to pay taxes at the end of each year on the earnings. You are 45 years old, the question you should ask yourself is, "What are my goals that are comming up?" When do you need access to this money? Are these funds for retirment purposes or are they funds you need to live on? IRAs and some life insurance products offer tax deffered growth that you can take advantage of. Mutual Funds are another great way to diversify your assests. As long as you have over a 10 year window for this money to grow. There are funds that invest all over the world, so do your research. Most important, tie your goals and finances together, and it will make things alot easier.
I also agree with Samson77. Learn to trade (several years,as in an education), 500K is sure enough capital. 10-20% return should be attainable when you find your way. You might also be a little too negative on future prospects for the US/housing/consumer etc. etc., because of personal experiences. Nobody knows where the S&P will be in 6-9 months, just try to get a piece of every direction. Good luck!