What's the best thing to do with $10K?

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What's the best thing to do with $10K?

Post by Ghost on Tue Jul 28, 2015 2:58 pm

After another year teaching English abroad, I will likely have approximately $10K in savings. I've always been good at saving money, but I know nothing about investing. What is the best thing to do with this amount of money besides letting it sit in the bank?

Aside from using a portion of it to travel, start my own website, and perhaps fund some other small projects, I'm not sure what to do with it.

I'm not a risk taker, not worried about gaining big returns...just some return at all. Can't get that from a bank anymore since interest rates are so low it doesn't make any difference.

I've read some about buying penny stocks, but this just seems to be a good way to throw away some play money. It also seems like buying high priced stocks would be a bad idea too, since a high stock pretty much has one direction to go in.

Any ideas?

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Re: What's the best thing to do with $10K?

Post by fschmidt2 on Wed Jul 29, 2015 5:35 am

I think keeping $10K in cash is reasonable.  It isn't enough to generate much return and investing is stressful and will distract your from focusing on making money.

That said, I bought silver at around $20 and it is now at around $14.  I have no regrets because I calculated that it costs over $20 to produce silver and this is still true.  Keynes said that "The market can stay irrational longer than you can stay solvent."  But in my case, I doubt that this is true since I can hold out for years.  If you can wait at least 5 years for the market to correct, then I think silver is a good investment.

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Re: What's the best thing to do with $10K?

Post by Admin on Thu Jul 30, 2015 12:00 am

I think the best thing to do with your 10K is to let me look after it for you. Or, you can check out nomadcapitalst and flagtheory in the Resources forum.

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Re: What's the best thing to do with $10K?

Post by Ghost on Thu Jul 30, 2015 1:07 pm

fschmidt2 wrote:I think keeping $10K in cash is reasonable.  It isn't enough to generate much return and investing is stressful and will distract your from focusing on making money.

That said, I bought silver at around $20 and it is now at around $14.  I have no regrets because I calculated that it costs over $20 to produce silver and this is still true.  Keynes said that "The market can stay irrational longer than you can stay solvent."  But in my case, I doubt that this is true since I can hold out for years.  If you can wait at least 5 years for the market to correct, then I think silver is a good investment.

I suppose it couldn't hurt to invest in some silver then once I return to the U.S. What do you think about gold or other precious metals? Or is silver the best option?

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Re: What's the best thing to do with $10K?

Post by fschmidt2 on Thu Jul 30, 2015 9:07 pm

Ghost wrote:I suppose it couldn't hurt to invest in some silver then once I return to the U.S. What do you think about gold or other precious metals? Or is silver the best option?
People tend to think of gold and silver is being similar, but this is very wrong.  Most silver that is produced is consumed by industrial applications.  Since the price of silver is below the cost of production, silver production is declining.  This means that a shortage in silver is absolutely inevitable.  There is nothing that the central banks can do about it.  (Though they try, both America and Canada stopped issuing silver coins recently to conserve supply.)  This is in contrast to gold which is not consumed and therefore can be manipulated as long as investors are dumb enough to believe central bankers.

Here is a good overview of the silver market:

http://www.silverinstitute.org/site/wp-content/uploads/2011/06/WSS2015Summary.pdf

It goes up to 2014, so you just see increasing silver production, but this has turned around and is declining now.

http://blogs.wsj.com/moneybeat/2015/05/06/silver-mine-supply-is-running-out-of-steam/

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Re: What's the best thing to do with $10K?

Post by Ghost on Fri Jul 31, 2015 1:40 pm

fschmidt2 wrote:
Ghost wrote:I suppose it couldn't hurt to invest in some silver then once I return to the U.S. What do you think about gold or other precious metals? Or is silver the best option?
People tend to think of gold and silver is being similar, but this is very wrong.  Most silver that is produced is consumed by industrial applications.  Since the price of silver is below the cost of production, silver production is declining.  This means that a shortage in silver is absolutely inevitable.  There is nothing that the central banks can do about it.  (Though they try, both America and Canada stopped issuing silver coins recently to conserve supply.)  This is in contrast to gold which is not consumed and therefore can be manipulated as long as investors are dumb enough to believe central bankers.

Here is a good overview of the silver market:

http://www.silverinstitute.org/site/wp-content/uploads/2011/06/WSS2015Summary.pdf

It goes up to 2014, so you just see increasing silver production, but this has turned around and is declining now.

http://blogs.wsj.com/moneybeat/2015/05/06/silver-mine-supply-is-running-out-of-steam/

I see. You always have such good analyses that a lot of people don't see or bring up. In this case, I knew that silver had more practical uses than gold, but I didn't know about declining silver production and the implication. Well, looks like I will be buying some silver when I get back to the U.S.

As for gold, I know a lot of people buy paper gold, without ever getting their hands on it, basically a promise from a seller. Those people are obviously stupid, so I would never do something like that.

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