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Where is the best place to invest $100,000.00?
I'm 51 and would like to live off the dividends from this $100K investment. I'm planning on living outside the US where cost of living is much cheaper. I've read that one can live comfortably in Ecuador on $2K/month. Is $24K/year in dividends (or interest) possible on a principal of $100K?
thanks
Answers
546 points
warren answered one year ago …
No it's not possible. But you sure can find some high yeilding income trusts as Penn West in Canada. Look there but have no illussions. If people could make them yeilds consistently...well Warren Buffet has averaged around that so now you know the rest of the story!
My bet is on Gold and Silver specifically and the junior and exploration companaies more specifically.
Best
Warren
www.preciousmetalstockreview.com
951 points
Grudun answered one year ago …
If you want to live off of just that 100k investment I think you are going to have to wait a few years. If you invest at a 12% return(not unreasonable) and wait just 6 years you will have about $200,000 and will be generating the $24k you need(maybe a year or two more to account for inflation). But to generate $24k per year off of $100K you will need to take some large risks and you have not even accounted for inflation. I would recommend holding off retirement until you have at leat $250,000 or can get some additional income(maybe early Social Securtiy will provide you with some income in 11 years to back up your small savings).
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2183 points
ChaosNantuko answered one year ago …
It seems to me like with the information given, you'd have to do something risky for this to succeed. I think your best chance of success lies in selling covered calls. It is less risky then holding stock outright, especially if you sell covered calls that are slightly itm, and it should get you that 2% a month you want. That being said, you'll still lose money on the occasional month, and this isn't bulletproof.
I would hold off until you another 50k, because that would allow you to substantially reduce the risk you take in your portfolio (you need a 16% annual return, vs a 24% annual return). Even better if you can hold off uyntil your at 200k, as you'd only require a 12% annual return, which should be attainable without high risk.
265 points
MaverickInvestor answered one year ago …
Just to follow up on ChaosNantuko's point about covered calls...you can, of course, bullet-proof your positions by buying a long-dated put at the same time as buying the stock and selling the calls. This will eat into your returns somewhat, of course, but it leaves you with virtually no exposure to risk and a reasonable return, especially if you roll a position over a few times.
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699 points
7million7years answered one year ago …
@ SeaUrchin - your greatest issue is Inflation; therefore, calculate how much you need to live on per year - INDEXED FOR INFLATION (say, $24k in Year 1; $25k in Year 2; and so on ...) and multiply by 20 to 40: that's how much money at a 2.5% - 5% 'safe witdrawal rate' (after some dividend reinvestment to keep up with inflation) that you will need.
Before you all jump down my throat that you can get 12%+ annual returns: this guy is planning his life here ... he has to be CERTAIN that his money will NEVER run out ... so he has to plan for the WORST, which is this: the worst 30 year stock trading period produced an average return for large cap. stocks of 'just' 8.5%.
@ Maverick - True; with the PUT you have covered the downside ... don't forget that a Covered call has "Opportunity Risk" in that you give away the Upside, when the Call Option is exercised at less than the stock is worth if it spikes.
Remember: ALL stocks purchases and Trades carry some risk.
149 points
Philip answered one year ago …
SeaUrchin Another major issue you will have is the source of your dividends. What currency will they be in? How does that currency project to match up when converted to the currency in Ecuador?
For example if all of your dividends came from US companies you would receive x Ecuadorian dollars.
(Sorry I dont know the name of their currency.) The US dollar over the past year has fallen significantly against the Euro and many other currencies. I dont know how it fared against Ecuador. Over the past 2 years the US $ lost 30% of its value against the Euro. In Mar06 you need 1.20US for 1 Euro. Today the exchange ratio is 1.60US for 1 Euro. If your local currency in Ecuador were US$ and you received your dividends in Euros you get 2400 Euros and convert it to US$ and get $3120.
If you are on the wrong side of that conversion instead of getting $2400 you would lose 30% and get $1680. This doesnt take into account the local infaltion rate, the investment risk in whatever source you use to get these dividends etc. You could eliminate the currency conversion risk/reward by investing only in Ecuador. I know next to nothing about the country but I would not recommend this!!!
Get your dividends from rock solid companies in stable countries with strong economies. It sounds like you need more time to grow your nestegg and add savings to it as much as possible before you take a lifetime plunge into the current plan. Good luck.
102 points
Amos answered 2 months ago …
There are many places in the world where you can comfortably live on $100.00/month.
It may surprise you to know that there also many places in the United States where you can live comfortably on $2000/month.
The question you want address is what standard of living would you like to have?
If you want to live like the rest of the Joneses - Nice Home with big yard and pool, New luxury car, New cell, phone, Cable with many channels, Club memberships,Plasma TV, Good looking girl friend or wife that needs a lot of attention, I will not be able to complete the rest of the list because you know how long it is, then I can categorically tell you that $100,000.00 is just a drop of water in the ocean. On the other hand, if you just want to retire and live a basic life like most of the people in the world live, $100,000.00 is a lot of money. There are several places in Africa where you will live comfortably well - living on natural ruits and vegetables for less than $20/Month.
3943 points
MNSL answered 2 months ago …
It all depend on how you live, where you live and how you are going to invest during next 18 months and where you keep your investment during next 5 years. Some currencies will go up and some will go down.
This world is not free from external risk factors and market forces. Even top investors, top banks and top fund mangers cannot outperform market all the time. Some have made more than 80% losses in some investments. Even currency, interest rate and insurance instruments also can become mass of destructions in the future due to so many reasons.
Concentrate on investments that you know very well. Do not follow the crowd.
Inflation will be one of the biggest economic problems in the future. It will destroy many industries. This will make some investments more vulnerable in the future. Inflation should control using prudent macro economic policy.
Keep your money in the best place according to the situation. Always there are opportunities in some part of the world.
If you need more information, please free to contact:
msglobalmarket5@gmail.com
