There are a lot of places to “park” money. I feel some people get so laser focused on single asset class with either a willful ignorance or just ignorance. I hope it is the latter. The best free lunch is picking from all the baskets, I’m paraphrasing some billionaire who wants to eat your lunch so let’s just dig into this already.
1.) Liquid Capital
Cash is king. How can your wallet be stoked if it is empty? I totally get having some money in a high yield savings account making maybe 2% is not sexy, but having that emergency/opportunity fund for a life event or the dip of the dip of the dip is nice to have. What if I told you, you could have a safety fund yielding higher than a money market or high yield savings account? More on that later.
Index funds and stocks are near all time highs as of this writing, but whether the market is due for a cool off or ready to melt up even higher there is always opportunity to be found here. Maybe your style is similar to mine where you want to set it and forget it by tracking a large index fund like $VTI or $VTSAX or earn income off dividends within the various sectors.
Still haven’t figured out if he invests in tobacco and alcohol. For you more risk acclimated investors you can always go the growth stock route. Picking winners gets harder in this area, but when you succeed your tax liability will not as taxable income like dividends but capital gains which is preferred by many investors.
Bonds are not sexy anymore because the yield is too low relative to inflation. This may change in the future, but while it has been quietly dropping off retail investor’s radar the yields have been rising especially if you are willing to go into some of the riskier graded debt like BBB. Investors be warned who tread in risky debt though.
4.) Real Estate
This has gone absolutely gangbusters lately and many people are waiting for the cool off when rates rise. There are opportunities here in land, residential housing, and commercial. Some land comes with wildlife preservation credits or oil/mineral rights, while residential and commercial can get you tenants. I prefer just owning mREITs and REITs (category 2) for this stage of my life, but I will reassess this asset class later.
Speculating outside of the top 10 cryptocurrencies is like asking for an uppercut to the mouth, but you can 3-100x your money here. People in cryptocurrency don’t talk about going up 20% they think in x’s. Do your own research should be the mantra for every asset class, but here especially this needs to be the mindset. If you can read whitepapers, look at the blockchain audits, look up the developers past work and you still love it then trust your gut. Non-Fungible Tokens (NFTs) are new and they may exist as a different form in the future, but this is the nexus of category 6 and category 5 so if you’re into this kind of thing find what you like.
6.) Collectibles/Precious Metals
I like collectibles and precious metals. Doesn’t matter if this is sealed video games, old Pokemon cards, silver, gold, rare 1800s stamps, or rare books there is a special kind of feeling to holding this kind of asset class. My only problem with this? Storage and liquidity. Air conditioner go out while its humid? It’s all ruined. These are notably easy to steal, so plan accordingly with a safe deposit box if your investments go heavy here. Plus if the bank’s air conditioner goes out they owe you*.
*read the contract don’t trust a cartoon wallet on the internet
This is for the uber wealthy among us (not me). If this is something that interests you people like Graham Stephan on youtube have talked about investing in start-ups like a lottery based bank account. You could potentially earn more yield here (~5%), but that isn’t my pitch – read below for that.
You mentioned earning more on liquid capital earlier?
Yes thank you for sticking around. I have alot of my cash in Blockfi and Celsius where I earn 9% and 8.5% APY respectively as of this week/month. If you join today you also get a bonus (Blockfi: signs up using referral code and funds $100 or more into their BlockFi Account, earn $10 in BTC | Celsius: $50 in Bitcoin when referred user makes a first transfer of $400 or more and holds with Celsius for 30 days).
Thanks for reading have an excellent day everyone.