{"id":93048,"date":"2016-07-18T07:07:43","date_gmt":"2016-07-18T11:07:43","guid":{"rendered":"http:\/\/countingpips.com\/?p=93048"},"modified":"2016-07-18T07:07:43","modified_gmt":"2016-07-18T11:07:43","slug":"how-to-invest-a-10000-windfall","status":"publish","type":"post","link":"https:\/\/www.investmacro.com\/forex\/2016\/07\/how-to-invest-a-10000-windfall\/","title":{"rendered":"How to Invest a $10,000 Windfall"},"content":{"rendered":"
July 18, 2016<\/div>
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By WallStreetDaily.com<\/u><\/a> \"How<\/p>\n

Today is your lucky day!<\/p>\n

You\u2019ve suddenly come into a $10,000 tax-free windfall.<\/p>\n

Now, what do you do with the money?<\/p>\n

I know most would splurge on a vacation or the down payment on a new car or some other extravagance. But when unexpected extra funds find their way into our lives \u2013 whether from a winning lotto ticket, or left to us in a distant relative\u2019s will \u2013 it\u2019s crucial that we are able to thoughtfully and purposefully allocate its spending.<\/p>\n

The only way to not only save but to potentially grow a $10,000 sum into something even more substantial, is to invest.<\/p>

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But not just invest at random \u2013 it\u2019s crucial to know how to properly divide and distribute that sum to obtain a diversified portfolio and widespread market exposure.<\/p>\n

Allocating that $10,000 will vary according to one\u2019s age and risk tolerance. Millennials, for example, should put a lot more into stocks than someone nearing or in retirement.<\/p>\n

What follows is a rough approximation of where to put this $10,000 windfall.<\/p>\n

Step #1: Stocks<\/h2>\n

For starters, I would place $5,000 into stocks \u2013 totaling 50% of the sum.<\/p>\n

Take half of that amount, or $2,500, and put it into emerging and frontier markets. After underperforming the S&P 500 Index since 2010 \u2013 down 6% on average annually, versus a 10% annual gain \u2013 these markets have just begun their rebound.<\/p>\n

A look at this year\u2019s winners shows regions like Indonesia, Thailand, and the Philippines leading the way. Since I\u2019m not a fan of index funds for stock investments, I would look to actively managed mutual funds such as those found at the Matthews funds.<\/p>\n

Many of these types of funds can be purchased through Schwab\u2019s Mutual Fund Marketplace for a mere $100. The account minimum is $1,000 but this is waived if you deposit $100 a month.<\/p>\n

Of the remaining $2,500, I\u2019d put $1,500 into Europe and only $1,000 into the U.S.<\/p>\n

European markets have been trashed lately. But following the words of famed investor Sir John Templeton, one should invest where conditions are \u201cmiserable\u201d \u2013 and Europe is certainly miserable at the moment. Again, I would opt for active management through, for instance, the Henderson Funds \u2013 which are also in Schwab\u2019s Marketplace.<\/p>\n

However, an ETF focused on the beaten-down U.K. market might be a good idea. With the British pound at levels not seen since 1985, assets there are relatively cheap.<\/p>\n

While you may wonder why I\u2019m only giving the U.S. a small allocation, the answer is simple \u2013 valuations are close to all-time historic highs. And as someone who has been in the investment business since the 1980s, the TINA trade scares the hell out of me.<\/p>\n

TINA is Wall Street\u2019s current mantra, and stands for \u2013 There Is No Alternative (TINA) to U.S. stocks.<\/p>\n

For me, this sounds too much like \u201cthis time it\u2019s different,\u201d and, as John Templeton once explained \u2013 those are the four most expensive words in the English language.<\/p>\n

These phrases are usually heard near a \u201ctop\u201d and represent potential problems in the future.<\/p>\n

Step #2: Bonds<\/h2>\n

Next, I would allocate 30%, a total of $3,000, into bonds.<\/p>\n

My favorite bond fund manager is Jeff Gundlach at DoubleLine Capital. Funds from DoubleLine can also be found at Schwab with a range of choices from the U.S. bond markets, as well as a global fund.<\/p>\n

An ETF like the iShares 20+ Year Treasury Bond ETF <\/strong>(TLT<\/a>) is also a good choice.<\/p>\n

And, it will remain so as long as the \u201cmad scientists\u201d who call themselves central bankers, continue with their zero and negative interest rate policies.<\/p>\n

These guys will eventually have all the world\u2019s sovereign bonds \u2013 including the U.S. \u2013 yielding a negative rate.<\/p>\n

Hopefully, this changes soon, and central bankers begin to normalize rates.<\/p>\n

For investors that want to know when to expect this, keep an eye on Sweden\u2019s Riksbank.<\/p>\n

Sweden was one of the first countries to go negative and I believe it will be the first to reverse course. Its Central Bank Chief Stefan Ingves is under growing pressure to stop negative rates, especially since Sweden\u2019s economy is doing fine, with expected growth at about four percent in 2016.<\/p>\n

Step #3: Alternatives<\/h2>\n

The remaining 20% should then be divided evenly into alternative asset classes.<\/p>\n

The two areas I suggest are real estate and precious metals.<\/p>\n

In precious metals, both gold and silver are currently great options. And they will remain as such, as long as central bankers keep doing what they\u2019re doing \u2013 as currency flounders, precious metals become more valuable.<\/p>\n

A solid ETF for gold is the VanEck Merk Gold Trust <\/strong>(OUNZ<\/a>). It allows investors to actually convert their holdings into gold bullion or gold coin, if they so wish.<\/p>\n

Then, for a real estate investment option, the FlexShares Global Quality Real Estate Index Fund <\/strong>(GQRE<\/a>) is a decent choice.<\/p>\n

There is also the option of purchasing an eREIT through Fundrise. Their minimum is $1,000, and they actually go out in the real world and invest in properties around the U.S. with the money they get from clients. One caveat, however \u2013 their two funds are illiquid investments, and so this must be long-term money.<\/p>\n

With stocks, bonds, and alternatives in your portfolio, that $10,000 is sure to grow and become a truly sizable nest egg. Now what\u2019s more luxurious than ensuring that, down the line, you\u2019ll be able to maintain a high quality of life and enjoy those standards for years to come?<\/p>\n

Good investing,<\/p>\n

Tim Maverick<\/p>\n

The post How to Invest a $10,000 Windfall<\/a> appeared first on Wall Street Daily<\/a>.<\/p>\n

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 <\/p>\n","protected":false},"excerpt":{"rendered":"

By WallStreetDaily.com Today is your lucky day! You\u2019ve suddenly come into a $10,000 tax-free windfall. Now, what do you do with the money? I know most would splurge on a vacation or the down payment on a new car or some other extravagance. But when unexpected extra funds find their way into our lives \u2013 […]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[],"tags":[],"class_list":["post-93048","post","type-post","status-publish","format-standard","hentry","no-post-thumbnail"],"_links":{"self":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/93048","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/comments?post=93048"}],"version-history":[{"count":3,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/93048\/revisions"}],"predecessor-version":[{"id":93068,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/posts\/93048\/revisions\/93068"}],"wp:attachment":[{"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/media?parent=93048"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/categories?post=93048"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.investmacro.com\/forex\/wp-json\/wp\/v2\/tags?post=93048"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}