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Where to put your BIG money?

zaiteku

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I have a question that has always interested me, but may seem stupid to some.

For all the Multi-Millionaires out there, where do most of you put all that money when its not working? What bank or asset allows you to store cash safely in those large amounts? What do most MMs use?
 

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MJ DeMarco

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I have a question that has always interested me, but may seem stupid to some.

For all the Multi-Millionaires out there, where do most of you put all that money when its not working? What bank or asset allows you to store cash safely in those large amounts? What do most MMs use?
I'm spread out among several brokerage firms ... I'm parked in institutional money market funds, euro funds, and municipal bonds ... this will change upon several scenarios 1) My tax bracket recedes or 2) A new business venture starts to offspring profit. If one (or both) of these happen, I move into more aggressive investments which is prudent since inflation and currency devaluation is eroding the real value of the dollar, hence eating away at my real rate-of-return.
 
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zaiteku

zaiteku

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thanks MJ.

Would you mind listing some of the brokerages and funds that you keep cash in? (not recommend per say but maybe list some ? :)

I have a large sum of cash Im sitting on as I move it in and out of asset classes and its painful seeing the dollar bomb...
 

JScott

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Would you mind listing some of the brokerages and funds that you keep cash in? (not recommend per say but maybe list some ? :)
Most financial institutions carry FDIC insurance, and will insure up to $100,000 across all your accounts at that institution. So, just allocate your cash across FDIC-insured institutions, in $100K bundles. That's what I do...

Personally, I use the following institutions, which all offer high-interest savings accounts and essentially no fees: E*Trade, ING Direct, Fidelity, and two credit unions that I use.

Also, consider Grade A municipal bonds from the state you live in (especially if it's a high-tax state). You're exempt from Federal and State (if it's your state) taxes, and if you live in a high-tax state (like California), you can see returns of around 7-8% these days, including your tax benefits.

Lastly, if you have a *lot* of money that you need to park (over $5M), consider T-Bills...they're safe and easy to move large sums of money into and out of...
 

JScott

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I put mine in a shoe box on top of my fridge. Stacks so fat rubberbands can't hold'em! :icon_super:
Actually, when I used to play poker semi-professionally, I'd regularly keep $100K in various hiding spots around the house...

Once, a friend of mine (the only one who knew my hiding places), came over one day when I wasn't there, snuck into my house, turned over a couple pieces of furniture, and "stole" all my cash...it was a great practical joke, and I practically got sick when I walked into the house and realized that I had been "robbed"... :)
 

irace7

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Actually, when I used to play poker semi-professionally, I'd regularly keep $100K in various hiding spots around the house...

Once, a friend of mine (the only one who knew my hiding places), came over one day when I wasn't there, snuck into my house, turned over a couple pieces of furniture, and "stole" all my cash...it was a great practical joke, and I practically got sick when I walked into the house and realized that I had been "robbed"... :)

Im kinda dense today...........this is a joke right.......your friend didnt rob you.......or did he?
 

JScott

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Im kinda dense today...........this is a joke right.......your friend didnt rob you.......or did he?
No, he didn't actually rob me. It was a practical joke to scare the s***t out of me (it worked), and then he gave the money back...

Sorry, I guess I could have been clearer about that... :)
 

Bilgefisher

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No, he didn't actually rob me. It was a practical joke to scare the s***t out of me (it worked), and then he gave the money back...

Sorry, I guess I could have been clearer about that... :)

Yeah I imagine this was a cold shower to you. Change anything after that???
 

JScott

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Yeah I imagine this was a cold shower to you. Change anything after that???
Actually, no... I figured he wouldn't pull the same joke twice (he hasn't), and I really needed at least one person I really trusted to know where I kept my cash, just in case something happened to me...
 

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I have heard different stories, both good and bad, about offshore accounts.
Anybody want to elaborate?
I always avoided fancy, creative tax schemes because I value freedom so highly. Offshore accounts, claiming "sovereignty" to avoid taxes ... all tax strategies (if you call them that) that aim to avoid your tax obligations ... the threat of jail keeps me paying taxes by the book. Offshore shell companies is too "creative" for my taste, although I know a lot of affluent families do it without incident.
 

AroundTheWorld

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bump. any other input? USD based assets are not too appealing to me these days.
 

DeletedUser394

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I have a question that has always interested me, but may seem stupid to some.

For all the Multi-Millionaires out there, where do most of you put all that money when its not working? What bank or asset allows you to store cash safely in those large amounts? What do most MMs use?
I searched around and found this article for you that might be of some incite. Titled "
Wealth Management: Where the really rich put their money",

You can view it here http://www.iht.com/articles/2005/05/24/business/RWEM1.php

While, I might not be a millionaire as of yet, I put most of my money in stocks, because

1. I don't have enough capital for Real Estate (although I have 2% of my portfolio in a REIT)

2. I've come across a few 2 and 3 baggers (in less than one year), investing in emerging stock markets like India and China.

3. Most of my money is in stocks (80%). I own no individual bonds, but one bond fund.

I hope some of this could be of some help. :smx19:
 

MJ DeMarco

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Anything but the USD... it will appreciate against the dollar (probably at least another 10% in the next 6 months) as well as pay an interest rate better than the US.

Euro ... 3.57%
GPB ... 4.79%
AU ... 6.7%.
 

PEERless

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Yeah, asset allocation is probably a headache once you really get up there. I've looked that those FDIC plaques on my bankers' desks and thought about what I'd do if I wanted to keep more than $100K liquid! I mean every time my interest drove an account balance above the ceiling, I'd have to move it to stay insured? What a hassle! :) Good problems to have, I guess.
 

JScott

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Yeah, asset allocation is probably a headache once you really get up there. I've looked that those FDIC plaques on my bankers' desks and thought about what I'd do if I wanted to keep more than $100K liquid! I mean every time my interest drove an account balance above the ceiling, I'd have to move it to stay insured? What a hassle! :) Good problems to have, I guess.
These days, the interest on $100K is about $250/month (for the highest interest rate savings accounts).

With the probability that a major US banking institution will go out of business and forfeit people's savings being very low (certainly not zero, but very low), I don't think there is too much risk letting the $100K earn interest for many months without redistributing it. At most, you lose a couple thousand dollars...not a great outcome, but again, the chances are low...
 

PEERless

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True, true. I'm way into insurance, though. If I'm covered, I want to be covered!

And, HELL, if Bear Stearns can go, can't they all!?
 

Russ H

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JScott said:
they didn't let Bear Sterns go (though they should have . . .)
Because of the way BS was structured and tied in to the markets, their downfall (insolvency) would have had a cascading effect in the trillions (yes, trillions) of dollars.

Nobody wanted that (at least nobody at the Fed, or on Wall St).

So the Fed changed the rules to try and prevent this from occurring to any other firms.

(but you knew all that, right? ;) )

-Russ H.
 

Russ H

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Oops-- to answer the question:

Our plan is to have the big money in 30 year Treasuries.

We'll keep making money, too, in our free time (can't help it-- it's how we're wired).

-Russ H
 

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JScott

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(but you knew all that, right? ;) )
That's certainly what the Fed is saying, but I can't imagine that BS was any less entangled with the rest of the financial system than any of a couple dozen other institutions...which begs the question about whether the Fed would do this 10 more times if necessary...

(I know Bernanke has said he'd do it again, but it's scary to think that the Fed would repeatedly step in on things like this)
 

JScott

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Aren't there some good municipal bonds that yield more than treasuries?
Muni bonds are a good buy these days, especially if you live in high-tax municipalities. I've heard of certain CA bonds returning 8%+ (after tax benefits).

Of course, not all muni's are created equally...some are actually used to raise private equity (like the building of stadiums, etc), so don't assume "muni = can't lose money".
 

randallg99

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But notice, they didn't let Bear Sterns go (though they should have)... :)
downside of letting an investment bank go down is the domino effect it would have created... the carlyle group had requests for large redemptions that summed a vast majority of the funds value in a matter of only hours that bear sterns was subjected to make good on via payment (but didn't have the $$$)

anyway, I love to hate investment banks....


but, more appropriately for this thread, hedge funds make most sense for excess wealth. Payouts are extremely high but the risk associated with it can be terribly correlated with big news events due to the high exposure ie currency trades as of late...

if you are parking <1mil, then the online savings accounts (ING, Emigrant, Ford, Citi) make sense along with trading accounts.

everyone's strategy is different. I hoarded a lot of cash in CD's for a few years while rates were above 7% for 90-180 day products. Today, I keep the cash mostly in investment accounts because my plans are focused on family instead of biz and RE unlike a few years ago I kept my cash mostly in the online savings accounts.
 

randallg99

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Because of the way BS was structured and tied in to the markets, their downfall (insolvency) would have had a cascading effect in the trillions (yes, trillions) of dollars.

Nobody wanted that (at least nobody at the Fed, or on Wall St).

So the Fed changed the rules to try and prevent this from occurring to any other firms.

(but you knew all that, right? ;) )

-Russ H.
I've called this all along, but I never thought the fed had the cajones to do what it did... Gentle Ben really saved the day.

Interesting you mentioned 30yr T's... do tell.... whynot 5yr or 10?
 

slim_jim

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if you are parking <1mil, then the online savings accounts (ING, Emigrant, Ford, Citi) make sense along with trading accounts.
Very interesting......

I had my credit card company call and offer up to the credit limit of the card at 1% until the end of the year, Dec. 31, 2008 or 2% for 1 year, until March 31, 2009?

A nice arbitrage opportunity......
 

snowbank

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Anything but the USD... it will appreciate against the dollar (probably at least another 10% in the next 6 months) as well as pay an interest rate better than the US.

Euro ... 3.57%
GPB ... 4.79%
AU ... 6.7%.
MJ,

Are you saying you keep some money with something like an Austrailian bank to get a higher interest rate/not have money in US $? Any hoops to setting this up?
 

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