Ask HN: What would you do with $200K | Hacker News Reader

Ask HN: What would you do with $200K

Just finished a contract that left me with a little over $200K cash in the bank after taxes. Trying to be smart about what to do with it. Leaving it in the bank is not a good idea.

Ideas so far:

    - Buy real estate, maybe rental, maybe commercial
    - Dump it into an index fund and hope to get 7% + per annum
    - Launch a startup I've had my mind on (only need $10K to $20K)
    - Invest in other startups
    - Buy bonds of some sort
    - Day-trade individual stocks (I day traded successfully ten years ago)
    - Buy individual stocks as long-term investments

I'm sure there are other ideas out there or brilliant combinations of the above.

Any thoughts you'd care to share?

Thanks.

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I'm going to assume you are young, unmarried, good technically, but have not run your own business before.

I'd set aside four months of your current living expenses, and keep it in the bank for emergencies. Having something like this just takes a lot of the stress out of life.

Secondly, I'd set aside about $10,000 into a separate bank account and use small amounts (sub $100) to encourage other people towards their dreams, or help them over bumps in the road. (See https://news.ycombinator.com/item?id=14500784)

If you want to try your own startup with $20,000 go for it, but set a limit on how much of your own money you will spend before profitability. Sometimes during gold rushes, it's more profitable to sell picks and pants than mine for gold. Whatever you are currently doing sounds pretty lucrative, and might have a higher expected value.

Lastly I'd put the rest is long term Vanguard index funds. It only takes $1,000,000 to retire to an upper-middle class lifestyle in the nice-but-not-expensive parts of the US. This would put you well on your way there.

The best part about having money "in the bank" is that it allows you to leave bad employers and bad contracts without fear, which allows you to spend your life working with good people who pay well.

I guess I should have added I am married and have kids, one college bound. My wife earns enough to fully support the family. Which means, within limits, I have complete freedom to do as I wish.

I can earn a good salary under normal circumstances. This was a case of what I call a "lock-in-key" contract where my skill set matched the problem so well that I was able to negotiate triple normal rates to get things done (electrical, mechanical and software dev). This was one of those opportunities that rarely present themselves and I don't expect to see this happen again.

I've been looking at Vanguard as an idea. I need to do more research. It seems like a good option.

One of the things this highlighted was the need for more security. There was a recent thread on HN about hackers hijacking phone numbers to gain access to bank accounts, etc.

https://news.ycombinator.com/item?id=14533116

That's terrifying when you have money that could very well ensure a comfortable retirement.

I noticed you didn't mention real estate. Any thoughts on that?

Congrats!

I didn't mention real estate because I assumed you were young. But I personally don't invest there.

- You can buy houses, rent them to others, and make a living - I have neighbors who do this and friends and family who have done it, but it ends up taking a lot of your time and adding stress and aggravation to your life.

- You can pay off your mortgage, but interest rates are so crazy low now that this doesn't seem to make much sense.

- You can buy a bigger house than you need, and hope that it appreciates in value. I know a lot of people who are selling now in the Bay Area and making silly money from what they paid for their houses originally. But Bay Area housing seems quite overpriced currently. While I wouldn't expect it to crash soon, it doesn't seeem like it has room to double again. Other areas of the country have slower growth but more room to grow. I personally just have a small, comfortable house and don't spend much there.

I guess the sure things in real estate tend to be either a lot of work, or a long, slow return. Nothing wrong with those, they just don't fit what I'm looking for.

1. pay off all debts. 2. buy a 20' conex and turn it into a tiny home/office with solar panels, water catch/purification system, and composting toilet. 3. sell current house/land (+$400). 4. buy land in Baja Sur MX or Fiji (or New Zealand or Iceland). 4. move conex to land. 5. set up a chicken/vegetation/fish/vegetable permaculture thing (https://gardenpool.org/). and goats. 6. drop a lump sum into cryptocurrencies. wait to see what happens. 7. play guitar a lot.

Day trade? Hah nope. Pay down debt and debt especially credit cards. Max your retirement contributions. Put the rest in savings and find your next gig.

Buy some ether(cryptocurrency)

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