Where To Put A Chunk Of Change: Pm Vs. Etf Vs. Stocks

I would put a small percentage, maybe 10 to 15 percent in PMs. Some of the rest I would put towards a forklift. The rest I would dump in junk transmissions at 50 cents on the dollar. Basically ALL of it would go to some sort of HARD ASSET - NONE would go in the bank.

Example. Today I went to two wrecking yards. Spent $450 in one and nothing in the other. Bought 11 junkers, one so trashed that it is debatable whether I can salvage ANY good part from it. Out of the rest, I should be able to sell 6 junkers tomorrow for somewhere between $650 and $800. The other 5 should gross me $150 in scrap plus anywhere from $50 to $450 in sellable parts. Worst case scenario is doubling of the money.

If I was not able to flip junkers like I do, I would be more inclined to put a much larger percentage in PMs. No matter what though, ALL of the money would go into hard assets of one kind or another. No way would I "invest" in paper, electronic, or other soft assets where I am at the mercy of someone else.

What happens in 3-6 months? Is this money that you are speculating with, investing, or is this money that you need in 3-6 months?

If it is money you need I would put it in the bank or under your mattress. You won't make any money but you won't lose it either. You will have that money for what you need it for.

If it is money you want to invest, your timeframe is way off. For investing I would put that $5000 in a Vanguard 500 Index Fund (VFINX). Very low expense ratios and the S&P 500 is trading at prices first seen in 1988.

If it is money you are speculating with, money that you can afford to lose 100%, I would go with a silver ETF. I personally think silver will go up in value and an ETF can be sold in minutes will very low fees. In comparison, physical silver is much harder to sell and I would expect you will pay a 5% over spot to buy and at least 5% under spot to sell.

Personally I have 17% land, 57% stocks, 11% bonds, 17% CD's, 1% physical silver, 1% cash in $20 bills.

The physical silver is just a hobby. I'm buying coins I like and if they go up in value I may sell them. If they go down I'll keep them.
The 1% cash is for a true emergency / disaster. During a natural disaster cash beats a debit card every time.

Good work if you can get it.



In numerous ways, we are all "at the mercy of someone else".



Indeed it is. Yes, there is some value in the scrap metal business but allow me to suggest that the real fortune there is the knowledge and experience gathered over many years of learning and doing.



Indeed so. But how about in an unnatural disaster? That is, a disaster of the Man-made variety? We can see such a disaster looming on the horizon via the storm clouds over Europe and the USA. Should any disaster come from that direction, credit cards will be useless. Cash money might be as well but we won't know that until it hits. I can see keeping some emergency cash on hand. It might still be good. If so, then it would be very handy to have it in hand rather than in a bank account that may or may not be accessible. I usually keep about $1000 on hand for such emergencies but nowhere near your 1% level. Perhaps I should increase that? Hmmm...



Yes, that IS a small chunk when one is investing. One of my investing companies is Vanguard and they require $3000 as a minimum buy-in amount for most of their funds. Other Vanguard funds have minimums of $10k, $25k, and even higher amounts. If you start buying physical gold or platinum, that's only about 1.5 to 1.8 ounces of metal.



As one fellow once put it, "I spent 90% of my money on wine, women, and song. The rest I wasted on food, water, and rent".

On a more serious note... as an investor, a time frame of only 3-6 months is not really enough time to let most investments work. Most of the investing pundits out there suggest that a 5 year time frame be used for invested money and that anything that can't be invested for 5 years probably should not be invested at all. In that case, they suggest that such money be put into a money market account or a short-term bond fund. An intermediate term bond fund would be better paying but you would need to watch for rising interest rates and sell bond funds if rates start rising to avoid losing principal.

One investment that I have been eying lately is the PPLT physical platinum ETF. Yes, I know about physical-in-your-hand PMs vs. paper PMs. In any case, the price of platinum is depressed right now. If you can hold this fund for 2-3 years, it has an excellent chance of making a 50-60% return on your money. That has been the historic gain on platinum for the past 100 or so years when its price dips below that of gold. This is not a guarantee but it is a historic trend. If the price of platinum dips below $1600 / oz. I will be buying.

Ed_B: We are 30 years apart in age and in very different stages of investing. 1% for me is a lot less than 1% for you!

poboxw: I think we need a little more information in order to give you a better answer. Specifically, what is your goal for this money.

With that time frame no place that carrys a high risk of speculation which includes gold & silver. Just way to risky if you are looking to have gains or at least the orginal amount.

Understood, JSH. Keep in mind, though, that, in terms of finances, I have been where you are now so do have a good grasp of your comments.

I remember how hard my wife and I worked and how long we saved to get our first $10k. It seemed, at the time, to take forever. Once we got past that hurdle, our investing seemed to take off and fly... our money was making money! I suppose that this hurdle has moved with the times and is probably quite a bit higher now than it was back then but the same financial theory still applies... work, save, invest, repeat.

@JSH:
I've got all of the bases covered save for a mortgage. For that I've got 4 month's worth of payments banked and am renting rooms out in the house to pay for it. It's working well enough to generate a bit of monthly income when I'm lucky so not in a hurry to pay off the debt. Plus we plan to move within the next 3 years too.

I suppose i'd wet me hands in the stocks market then. If my ebay listings increase dramatically in 3month's time, you'll all know how it went :P

Yes, this is one of the best bits of advice anyone can receive concerning their money and handling it. Everyone reading this would be well advised to pay close attention to creating their emergency fund stash. It is a critical component of any good financial plan.

I also am interested in the final result of this thread. Please do post your decision when it is made.