Million Dollar Question (asking for a friend)
 

Believe it or not I am asking for a rather wealthy friend who happens to have $1M cash lying around earning him next to nothing and has no ideas on how to invest it. He and I have known each other since junior high and we brainstorm on various matters from time to time. I told him I had no idea and was sitting on a lot of cash myself (not anything like $1M).

Anyway I thought it might generate some creative thinking as I am out of ideas. Stocks and real estate seem at present extremely overvalued to me. Anybody have any possibilities they would care to share?

I bought a TV home and flipped it.

Thank you. That is a good idea and likely can be done again and again with minimal downside risk if one is careful and sticks to The Villages which is unique. TV may be subject to some price slippage at this time in the real estate cycle but likely less so than most other communities.

My friend lives in Texas and is likely to stay there but I might look into flipping a home or two in TV.

A few years back my friend sold an office building for $3M he owned in New Jersey using a charitable remainder trust (CRT). He and his wife obtained multifaceted benefits from that and saved about $1M in income tax on the gain. He invested the proceeds from that sale in the stock market which has as we all know been on a raging bull bender.

I have almost all of my assets with Vanguard Investments. 40 percent in the S&P Index Fund, 30 percent in intermediate and short term bond index funds and their high yield corporate bond index fund, and 30 percent in the money market fund. I hate that the money market fund pays almost zero interest, but at least the principal is safe. I also have a very generous Federal pension, which provides all of my living expenses, so my investments are probably too conservative. I would be interested in any ideas on where to move my money market fund assets to earn more than nothing, with a low risk of losing principal.

Your last sentence reflects his conundrum - and mine. What can we do with our cash today in the current investment climate?

There is no easy answer.

Some people that got money don’t want to risk it. If you don’t need it why risk it? Never know where there another Bernie Madoff out there?

Tell him to spend 1% of it on Crypto. Stick to the top ten or so, BTC, ETH, ADA, XTZ, LTC, DOT, etc. Most should go into BTC and ETH though.

If it goes on a bull run and it should, it'll triple pretty quickly. Could go to zero, but chances are not good for that to happen.

Forestry - low risk, good long term returns (for his kids, if not for him, as it sounds as if he doesn't need it to live on) and ecologically beneficial

A married couple I know got into cryptocurrency early on and have done very well. They have traded stocks, options and commodities for years and have done well. The thing is they are at it every day like a full time job. My friend has no interest in trading or actively following the stock market. The proceeds from the NJ building sale mostly went into a variety of stocks and index funds but given today's stock market valuations he is loathe to add to those positions.

I'm not talking about day trading crypto, that's a recipe to get wrecked. Dollar cost averaging into Bitcoin and Ethereum is about as much of a guarantee of a winner as you're going to get. Some of the alt coins are solid too, like Cardano, Tezos and Dot.

We're talking buy and hold sell whenever you're inclined to.

Now that is a thought. Thank you!

For some reason your post reminded me he is a collector and has extensive collections of old Lionel train sets, engineering textbooks and high quality children's books from the 1930s, postcards and stamps. At one time he was into hot rods and still has a Model T with a blown Chrysler hemi. He is a civil engineer. Although he is not Jay Leno wealthy perhaps he could start a hot rod collection?

One word... "Plastics"...

Interesting to me is
 

what is the goal of the proposed investment. To a number of us at this point of our lives we may just want to preserve our capital. To some it may be to balance it all out between growth and preservation. To others it may be to take a big risk with the potential for big return. Maybe the point here. Guess it all depends.

He wants to invest it to generate some income and/or appreciation. He receives far more income from his business than he spends which is where this came from. He is conservative and maintains sufficient cash reserves. He was asking me if I had any ideas and I told him not really. And I don't as I am in the same quandary with a lesser sum.

If I had an "extra" million bucks, I'd probably just spend it. Or give it away, or donate to causes of personal interest. If it's "extra" it's because I already have enough that I don't have to worry about any upcoming expenses.

Might renovate the house, renovate my sister's house, do some travelling, buy a new car.

It would also depend on how old I am when I get this extra million. If it's now, at age 60, I'd sink a bit into some ordinary bank accounts so I can have cash in case of emergency. Pull the maximum out of the accounts every year to pad my IRA or whatever this thing is called that I invested in years ago every year until I'm old enough to be required to withdraw some.

If I'm already in my 80's, screw saving, screw investing. I'd spend it all on living as well as I can for the next 10 years. Maybe even get a face lift!