If you had 1 million dollars, how would you invest it?

[jazb]

all on red

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[allen0879]

I'm actually about to be in this situation. Leaving my slow lane banking job to take some time to travel, relax, and focus on health and happiness. Once my house sells, I'll be sitting on about this much in liquidity.

Presently almost all my net worth outside the equity in my house is in the stock market in various diversified ETFs.

The plan at present is to buy an established profitable business (e.g. a baby boomer owner looking to cash out and retire). It needs to be large enough to have leadership and processes already in place so I'm not replacing one job with another. I know the business will require some time commitment but I'd like to minimize that as much as I can. Goal would be to grow it with the intent to flip it in a few years with enough money to ride off into the sunset.

In the meantime, during my time off, I'm going to take a small amount of capital and explore option trading as a potential fastlane as others here have done. This is appealing on many levels, particularly as it's much less cumbersome than owning a business. That being said, I have no delusions of grandeur given the risk involved and the discipline it takes to do it smartly.

I just read this interesting article about buying an established small business:

Buying Your Way into Entrepreneurship

An increasingly popular route to success as a small business owner is “acquisition entrepreneurship”—buying and running an existing operation. If you’re considering such a path, the authors offer practical advice for each stage of the process. Think it through. Do you have the right qualities...

hbr.org

 

[Ing]

Coke and Hooters?

google translator!
In German we say "koks und Nutten", "cocaine and hookers" maybe better in english

 

[WJK]

Uh???? A bunch of you guys wouldn't have your million dollars for very long! Maybe that's why you don't have it in the first place...

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Bhanu]

In my country put all the money in Bank Fixed Deposit (Bank owned by the government) . With interest rate around 6-7% you will not have to work ever in life .(Though I wont recommend it)

 

[Ing]

In my country put all the money in Bank Fixed Deposit (Bank owned by the government) . With interest rate around 6-7% you will not have to work ever in life .(Though I wont recommend it)

Lol. Here its -0,55- -0,75%!
where do you come from?

 

[TreyAllDay]

I would repeat the same manner in which allowed me to obtain $1M in the first place.

If it was inherited, I'd invest in a business, or buy one with an existing track record of net earnings.

Agreed. It totally depends where you are in your life.

I "technically" received a 2000% return on my initial business investment. Can you get that kind of return on investment from the financial market? No. But would I work 18 hour days every day for two years for that kind of return again, given the risk? Maybe and maybe not.

But for those who haven't been through those initial pain in the a$$ years I think investing in a business is the best investment you can make.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[Process]

I’d put 80% in Rentals. I’d stay on expenses less than $700 a month like I am currently. I’m sure 800k in mobile homes or storage units should yield solid cash flow with good marking and management.

Let’s say $40,000 after taxes to be really conservative. 20,000 shouldw go to ads or something for my SaaS idea. I’’d round my living expenses to $12,000 a year to overestimate That would leave $8,000 to put into the FU money acct.

That would allow me to go all in on my business.

200k would go into making my service into a productivized software solution for my existing clients. Then I’d scale out from there once it is proven to massively skew value.

 

[raritee]

google translator!
In German we say "koks und Nutten", "cocaine and hookers" maybe better in english

I love your hookers. I imagine that sexual frustration does not exist in Germany. Anyway ... I hit a million in liquidity. All I can think about now is doubling it .... and hookers in Germany. I even like the 25 euro ones. I apologize for the perceived misogomy .... but truth be told it is a best value from my perspective like stated .... and by the way not illegal. Two million would be so much better. I kinda think that a million is a lifetime of slow lane. That's if you are lucky and live right .... as they say.

I tried a little tiny foray into real estate in the past. I'm not really into it. I don't want to scale it up. I'm going to get out of that. I make 15% with that if I am lucky .... which is what I'm after. It's small. It does tie up money. I'm more interested in a business of some type. I guess that is what a million buys you. It buys freedom from chasing money and a choice.

I don't think you let it park for long periods of time. I moved a chunk into a bond index fund. That is what I use for cash on hand in case I come up with an idea. Some of them only seem to fluctuate a little .... enough for me to stomach. Bonds by themselves tie up money? not so with the funds?

I moved a large chunk to an Emerging Markets Index Fund. Supposedly, they do well at the end of a bull market. Supposedly, they are not as overvalued as the others right now. That is not a long term play. I'm just going to see where that gets me for now.

I am putting a small chunk into individual high growth mid-caps. Things like Tesla. I am probably wrong, but I am trying to beat the market average. I've never tried that as a strategy before. They will most likely drop like a rock along with the rest of the stock market. Maybe over the long haul, it beats the market? and I double my money faster. I am on this kick where I judge things by how fast it doubles.

I might do some of the cash pot thing. I have some of those already from domestic index funds .... so I'm not in a hurry to do that. The index crashes and supposedly comes back. You can't really predict the future. The game changers are always unexpected? I get that from the Black Swan. I believe that.

I read that the purpose of a business is cash flow, and the purpose of real estate is capital appreciation. I haven't figured that out yet ... and how to get it in place. I guess I need initiative, skills, people and systems. That is a vague useless summary.

 

[A_Random_Guy]

Build one of the best PC models out there,
buy a lot of coding books and courses online and hire an intelligent but broke aspiring tutor from Asia to teach me coding in several languages.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[sparechange]

Get on the Grant Cardone REI cashflow baby, given a lump sum I'd get rid of cash right away and make myself broke on purpose.

 

[biophase]

I think he should invest most of the money in stocks, stay at his job until he proves that he can get paying customers and validate his business idea, then leave his job and use ~$100k to work on his business full-time for a year. If it doesn't work out he has the skills to find a great programming job.

If this is where he's at, he should not be investing any of it. Imagine he invests $1m in stocks and the market hits a small downturn and now it's worth $800k. No way he's ever quitting his job now. He's too risk adverse.

Basically he should keep it all in cash, use some of it to fund his start up and keep working until his business is making some money. He will never take that leap without alternative cashflow if he can't do it with a $1m cushion.

 

[biophase]

$4m worth of Real Estate

If going this route, I would say $2m maybe up to $3m real estate with 20% down. He needs cash reserves. At $4m worth, if a couple units are empty he will be hurting. Start at $2m, until he gets comfortable or rents go up, then expand.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[WJK]

Build one of the best PC models out there,
buy a lot of coding books and courses online and hire an intelligent but broke aspiring tutor from Asia to teach me coding in several languages.

Are you going to learn the Asian languages first? That would seem like a threshold issue to know what you are doing. Since you read and write English, you might start with that.

 

[WJK]

If going this route, I would say $2m maybe up to $3m real estate with 20% down. He needs cash reserves. At $4m worth, if a couple units are empty he will be hurting. Start at $2m, until he gets comfortable or rents go up, then expand.

I never recommend 20% down real estate deals unless it's your personal home... and that's all the down you can scrape up. I've seen too many people drown in all of that debt and go down in flames. If the property needs work, you can't do 20% down anyway. I would like to see him buy an ugly property for cash, fix it up and rent it or sell it. It's amazing the deals you can get with wads of cash.

 

[Envision]

I never recommend 20% down real estate deals unless it's your personal home... and that's all the down you can scrape up. I've seen too many people drown in all of that debt and go down in flames. If the property needs work, you can't do 20% down anyway. I would like to see him buy an ugly property for cash, fix it up and rent it or sell it. It's amazing the deals you can get with wads of cash.

What?

If the real estate cash flows at 20% down and they understand how to operate the asset they would be fine.

You're wrong on the property needing work and not being able to put 20% down too. It depends on the lender and what you define as needing work. As long as it's not condemned I cant see a lender not loaning to you unless you're completely incompetent or the property needs to be torn down in which they may still lend on the land.

If you buy an ugly property for cash, you lose the ability to leverage your capital on the asset and improve your return. You make money in real estate in the spread, cash flow, and equity appreciation.

You may think that by paying cash your return is increased but thats not true, your return is decreased but so is the risk. There is a balance in debt and equity that everyone needs to pick for themselves, but without contest having debt on property is one of the primary methods of wealth creation.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[William Ainslie]

Where I am right now - into my business.

If I can't see how to grow my business with that amount of income, I will invest it into a property and the rest into a money market until I know how to use it.

 

[Kevin88660]

In my country put all the money in Bank Fixed Deposit (Bank owned by the government) . With interest rate around 6-7% you will not have to work ever in life .(Though I wont recommend it)

India? I was pitching dividend portfolio to my Indian prospects who always told me they could get that kind of yield risk free at home.

Of course currency risk is a different game

 

[Kevin88660]

I'm curious about how Fastlane entrepreneurs would invest one million dollars. Would you put it in stocks? Invest in real estate? Bootstrap a business from scratch? Buy an existing business?

The textbook answer to this is it depends.

What is the financial goal of the person and does he has any other source of income.

The one I does planning and recommendation is that basically everyone needs more or less two source of assets

1) One that generates consistent income
2) One that is possibly a multi-bagger home run.
Having these two complement each other very well. I will explain.


The way I plan for myself is that whatever money I have in the financial market is used to generate yield and cashflow mainly, tactical trading in value and high yield securities.

The reason why I do that is that my personal self-employed business is the one that I am seeking for growth. I am a financial consultant in Singapore. Right now in December everyone here is flying oversea for holiday. My sales went down. A lot of opened business opportunities are being considered by my prospects and clients and I only get to discuss again or hopefully close some deals early next year. My target prospects are baby boomers who want to plan for their retirement. Deals are bigger than average but usually takes time to discuss, plan and close. I not really upset about not having too much business in December because in my brokerage account (Interactive broker) month till date I have over two thousand gains from various sources such as dividends, realized tactical trades profits, interest paid to me on idle cash, interest paid to me on stock holdings lent to short sellers. Imagine if my portfolios are full of crypto holdings of btc and eth waiting for the next “halfing”, I would not feel as comfortable as I am today.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[WJK]

What?

If the real estate cash flows at 20% down and they understand how to operate the asset they would be fine.

You're wrong on the property needing work and not being able to put 20% down too. It depends on the lender and what you define as needing work. As long as it's not condemned I cant see a lender not loaning to you unless you're completely incompetent or the property needs to be torn down in which they may still lend on the land.

If you buy an ugly property for cash, you lose the ability to leverage your capital on the asset and improve your return. You make money in real estate in the spread, cash flow, and equity appreciation.

You may think that by paying cash your return is increased but thats not true, your return is decreased but so is the risk. There is a balance in debt and equity that everyone needs to pick for themselves, but without contest having debt on property is one of the primary methods of wealth creation.

We see it completely differently. I started in real estate in 1976 -- 43 years ago. I was doing flips in the Los Angeles ghetto when we still called them Equity Purchases and it was an unknown business. So, I have a LONG perspective on things. Yes, you can use leverage. You can also lose your whole nut in a heartbeat. I have seen several business cycles come and go over the years. I watched friends go from owning fortunes to standing with their hat in hand, in bankruptcy court. I lost a huge amount during a riot one time. No, fire insurance doesn't work during civil unrest -- and the banks still came after me for their money... But, who am I to give advice????

 

[mikeyjd]

If going this route, I would say $2m maybe up to $3m real estate with 20% down. He needs cash reserves. At $4m worth, if a couple units are empty he will be hurting. Start at $2m, until he gets comfortable or rents go up, then expand.

#wisdom

 

[WJK]

If going this route, I would say $2m maybe up to $3m real estate with 20% down. He needs cash reserves. At $4m worth, if a couple units are empty he will be hurting. Start at $2m, until he gets comfortable or rents go up, then expand.

Slow and steady wins the race. Equity and cash-on-hand are the king. Collecting (not making) payments and receiving rents are the end goal.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[allen0879]

I have a friend who made it working as a software developer in someone else's startup, but he is tired of being an employee and wants to start his own business. He doesn't feel like the 1 million is enough money to leave his job to work on his biz full-time, so he is working on the biz part-time to get traction. The job + his family is taking up the majority of his time though, and he's also not interested in raising money and giving up equity in his business.

I'm not sure how to advise him. I think he should invest most of the money in stocks, stay at his job until he proves that he can get paying customers and validate his business idea, then leave his job and use ~$100k to work on his business full-time for a year. If it doesn't work out he has the skills to find a great programming job.

Thoughts?

I think this demonstrates that investing in your skills may be one of the best investments you can make. This guy made about $1 million on stock options using his programming skills in someone else's startup. He's a self-taught programmer! Before that, he was working a non-technical job for $40k.

So, he invested some time into building his skills and walked away with a tremendous ROI and is being paid to learn and build his skills instead of paying for a college education. Other than his mortgage, he has zero debt.

Now, he wants to start a business and he has capital, knowledge of what a successful startup company is like, and valuable skills to help him build product. Also, he has great skills to fallback on if things don't work out with his business. When he's ready to leave the company, he even has a plan to talk with the company about getting his old job back if his business venture doesn't work out! He's basically eliminated almost all of the risk!!

I also think he's being pretty smart to keep his job while he's validating his idea and trying to get early customers/revenue. It may not be a sexy entrepreneurial story that's magazine worthy, but he's protecting his downside and not burning through his cash.

I don't understand why a lot of you guys would tie up all of your cash investing in real estate if your goal is to start a Fastlane business. And then you'd have a shitload of debt and tenants to worry about!

I think the smart thing to do is probably to just keep a lot in cash to draw out as needed for his business.

If you're starting a business, cash is king.

 

[allen0879]

BTW I tried to get him to invest some cash into MY new business, but he told me I need to show more traction before he thinks it's a wise investment.

 

[WJK]

BTW I tried to get him to invest some cash into MY new business, but he told me I need to show more traction before he thinks it's a wise investment.

Smart man. Unproven ideas and business plans are a dime a dozen.

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[alexkuzmov]

I'm curious about how Fastlane entrepreneurs would invest one million dollars. Would you put it in stocks? Invest in real estate? Bootstrap a business from scratch? Buy an existing business?

Depends on your goals for sure.

Right now I want to unscript so if I earn 1 million I`ll probobly invest half of it in real estate, that`ll be enough for me to quit my day job.
With about 25% I`ll be able to buy my own house + alot of land (thats a personal choice, I WANT land) which will kill most of my current expenses.
The rest I`ll put into my business. Its a SaaS platform and we broke even about 2 months ago.
When december started we had a couple of hundred dolars in profit, so thats good for now, but we dont have money for office and people yet.

 

[WJK]

Depends on your goals for sure.

Right now I want to unscript so if I earn 1 million I`ll probobly invest half of it in real estate, that`ll be enough for me to quit my day job.
With about 25% I`ll be able to buy my own house + alot of land (thats a personal choice, I WANT land) which will kill most of my current expenses.
The rest I`ll put into my business. Its a SaaS platform and we broke even about 2 months ago.
When december started we had a couple of hundred dolars in profit, so thats good for now, but we dont have money for office and people yet.

Having an office and people are both overrated. The PC has made the idea of having office space yesterday's plan -- unless you just happen to own the building... Most activities that an employee can do, can be outsourced.

 

[biophase]

BTW I tried to get him to invest some cash into MY new business, but he told me I need to show more traction before he thinks it's a wise investment.

how is your new business doing? How old is it?

 

Dislike ads? Remove them and support the forum: Subscribe to Fastlane Insiders.

[allen0879]

how is your new business doing? How old is it?

I make ~ $1k per month doing software consulting on the side. I've been working on a SaaS idea for small/mid-size construction companies for a couple of years off and on. I built an MVP that a couple of companies are using internally right now. I'm going to buckle down on marketing/sales this year and see what happens...

 

[allen0879]

If this is where he's at, he should not be investing any of it. Imagine he invests $1m in stocks and the market hits a small downturn and now it's worth $800k. No way he's ever quitting his job now. He's too risk adverse.

Basically he should keep it all in cash, use some of it to fund his start up and keep working until his business is making some money. He will never take that leap without alternative cashflow if he can't do it with a $1m cushion.

I agree! This makes the most sense to me.