200k in good quality under-or-moderately valued commercial real estate with moderate leveraging (say, 60% LTV)
100k in a hedge/growth fund with a consistent record. I know of one that has delivered 20% returns average for 12 years in a row. It's a computer algorithm based trading system with no direct trading control by humans.
100k in a contrarian play, like long japanese + korean small caps and short US govt securities, or maybe short USD.
50k in gold and silver (physical, not bits of paper promising it)
50k spread across a number of speculative investment ideas, including junior miners, maybe a promising biotech, some chinese automotive companies.
Things I would stay away from : long 'ordinary' stocks, single family home residential real estate in most places (except somewhere to live), cash or near-cash like bonds/cds, growth based companies, anything that is relying on government policies/subsidies to create a profit. Stick to modest leverage.
My belief is that we're going into a short period of deflation (<5 years) followed by 10-20 years of solid inflation as governments inflate their currencies to get rid of debt. You want to own something real that earns money (commercial RE), something that works off volatility (automated hedge fund), something that has low probably/high payoff across a number of bets, and something as a protection against inflation (precious metals). Debt is OK as long as leverage isn't too high (to weather the deflation problems)
I am generally a risk-taker, but having 5-10 years of nest egg is also a compelling idea. If it were my only 500K, it'd put 200K in CDs or something with limited downside (assuming such exists). I'd put 200K in something more liquid but not crazy risky (eg a spread of stocks), again assuming such exists.
The other 100K I'd use as runway to do my own startup, or the project (not startup!) of someone else I trust. From there, who knows?
I'm not convinced it's a good idea to jump into startup angel investing with such a small (!) amount of net worth. If you can't participate in follow-on rounds your 10% of the company gets diluted to 3%, then 0.5%, then nothing much at all.
Use knowledge you have that I don't which you might have used to bring in the $500K in the first place. I can tell you about things in my industry that are great investments, but you don't know my industry like I do unless you are at the same place I am. Listening to others would be too big a leap of faith for investments which are considered high risk.
If you received the money from the lottery or from inheritance, you are looking for a way to quit your job flipping burgers and you insist on high risk, then put all your money on red or black on a European Roulette table. If you win, then quit while you are ahead and move your risk outlook to low. If you lose, then at least you lost it quick rather than painfully watch it dwindle over the course of months / years on bad investment advice from total strangers.
[+] [-] brc|15 years ago|reply
Things I would stay away from : long 'ordinary' stocks, single family home residential real estate in most places (except somewhere to live), cash or near-cash like bonds/cds, growth based companies, anything that is relying on government policies/subsidies to create a profit. Stick to modest leverage.
My belief is that we're going into a short period of deflation (<5 years) followed by 10-20 years of solid inflation as governments inflate their currencies to get rid of debt. You want to own something real that earns money (commercial RE), something that works off volatility (automated hedge fund), something that has low probably/high payoff across a number of bets, and something as a protection against inflation (precious metals). Debt is OK as long as leverage isn't too high (to weather the deflation problems)
[+] [-] aristus|15 years ago|reply
The other 100K I'd use as runway to do my own startup, or the project (not startup!) of someone else I trust. From there, who knows?
I'm not convinced it's a good idea to jump into startup angel investing with such a small (!) amount of net worth. If you can't participate in follow-on rounds your 10% of the company gets diluted to 3%, then 0.5%, then nothing much at all.
[+] [-] tocomment|15 years ago|reply
[+] [-] imns|15 years ago|reply
[+] [-] gexla|15 years ago|reply
If you received the money from the lottery or from inheritance, you are looking for a way to quit your job flipping burgers and you insist on high risk, then put all your money on red or black on a European Roulette table. If you win, then quit while you are ahead and move your risk outlook to low. If you lose, then at least you lost it quick rather than painfully watch it dwindle over the course of months / years on bad investment advice from total strangers.
[+] [-] heromaeda|15 years ago|reply
[+] [-] evanwolf|15 years ago|reply
[+] [-] cj|15 years ago|reply
[+] [-] Samuel_Michon|15 years ago|reply
[+] [-] GrandMasterBirt|15 years ago|reply
"In an unstable economic environment, the only safe investment is... PORN" -- Avenue Q