Do You Consider $200,000 A Lot of Money?

[Jeff619]

200k is a TON of money. In high school my friends would always be like, "I'm not rich, my parents just make like 80k a year each."

I was always like, "What the hell would my family do if even 1 member made 50k a year?"

party yall. party.

and to the person who said you have to live in the ghetto to be in san diego for less than 2000 a month. lol.

Oh, you live in SD?  Please tell me, what nice neighborhoods could someone find something decent for 2k a month?  I won't hold my breath waiting.

[Rusty Shackleford]

Personally, I've saved over $100k in 4 years here in Korea - by saving around 1m a month. I was quite lucky with my stock market timing. (Starting investing properly in May 2008, got punished by the crash, and then rode it all the way back up). I've spent alot of time researching and learning how the market works, and found some pretty good investments (deskwarming ftw).

I want to start investing. I just have a few grand in a poorly performing ETF. I want to save up an additional 5-10K to play with. People waste that much on far less productive hobbies. Even if I lose the lot, it will be educational.

Any tips? I've read a few books especially on value investing, but I'm fairly ignorant in this area.

[#basedcowboyshirt]

In my first year here, I saved maybe $4000 because I literally didn't try to save at all. I balled out every weekend and had no qualms about paying for tons of drinks for everyone, getting the bill at dinner, or whatever. It was my first time having expendable income, and it was totally rad. I went on two trips to Thailand, and just generally threw around fat stacks.

This year, I've been saving 1.2 million per month and really curtailing my spending. It's good. I still go out every weekend, but at least now I'm saving about $1000 per month. Which is p. cool.

[Daelim]

I must speak out against all those advocating people invest their money instead of parking it in a savings account. DO NOT TAKE FINANCIAL ADVICE FROM AN ESL TEACHER ON WAYGOOK.ORG.

Investing is a SERIOUS risk where your capital can go down just as well as it can go up. Long term, over 20+ years, you SHOULD see returns. Short term, talking saving up for something like a house in 5 years, would be absolutely crazy mental to even consider putting your savings into equities!

Some people on here baffle the brains out of me with their lackluster advice.

[Jrong]

Daelim you crack me up. Don't worry, we don't take each other that seriously.

With enough research, though, we can do some pretty amazing stuff with only 100k. Scout out a piece of land in an area that you project to become a hot tourist spot (after heavily researching including projections of future govt stability, ease of travel in/out, quality of land for building, etc. list goes on and on), we could make some serious $$ off of rich people. Rich people will always be here, sadly, so isn't it a moral obligation to find out how to get rich off of rich people? Rich people love their vacays in "new" spots. The "nouveau-riche" get bored of doing the same thing every year.

Investing in potential tourist-areas for rich folks can pay off big time. Your 100k investment could turn into 1mil in little time. But then, I'm no expert, I just have good observation skills and plenty of time spent in foreign countries at nice resorts.

[Daelim]

Personally, I've saved over $100k in 4 years here in Korea - by saving around 1m a month. I was quite lucky with my stock market timing. (Starting investing properly in May 2008, got punished by the crash, and then rode it all the way back up). I've spent alot of time researching and learning how the market works, and found some pretty good investments (deskwarming ftw).

I want to start investing. I just have a few grand in a poorly performing ETF. I want to save up an additional 5-10K to play with. People waste that much on far less productive hobbies. Even if I lose the lot, it will be educational.

Any tips? I've read a few books especially on value investing, but I'm fairly ignorant in this area.

ETF's are a good long term investment since the costs of ownership are low. I would even suggest looking at Index Tracker Funds which aim to give you the returns of the index it tracks... which in the long term is usually upwards. The benefit of this method is it's hands off and extremely cheap, with Total Expense Ratios averaging around 0.5% per annum. You can get index trackers to match your risk profile in places such as emerging markets and the like.

If you are looking to get into hands on equities investment with a thrill and higher potential returns, I enjoyed my time flirting in the oil and gas juniors market... with companies like Range Resources, Gulf Keystone Petroleum and Xcite Energy. The good thing with the juniors is that they all start with relatively low share prices... meaning even a small jump in the price equals a large return on your investment.

Again, I would not advocate doing this with SAVINGS. Do it with your LONG TERM INVESTMENTS for security in your older years. People often think of savings and investments as two and the same. They are not.

Investments = Long Term (Retirement, Family Security etc)
Savings = Short/Medium Term (House deposit or purchase/Car purchase/Vacation)

Do not fire savings into equities is my best advice. Set aside a portion of your income for long term INVESTMENT of course, but don't play around with your savings.

[Daelim]

Daelim you crack me up. Don't worry, we don't take each other that seriously.

With enough research, though, we can do some pretty amazing stuff with only 100k. Scout out a piece of land in an area that you project to become a hot tourist spot (after heavily researching including projections of future govt stability, ease of travel in/out, quality of land for building, etc. list goes on and on), we could make some serious $$ off of rich people. Rich people will always be here, sadly, so isn't it a moral obligation to find out how to get rich off of rich people? Rich people love their vacays in "new" spots. The "nouveau-riche" get bored of doing the same thing every year.

Investing in potential tourist-areas for rich folks can pay off big time. Your 100k investment could turn into 1mil in little time. But then, I'm no expert, I just have good observation skills and plenty of time spent in foreign countries at nice resorts.

Honestly, you'd be surprised at the number of people who would go ahead and put their house deposit savings into risky equities, then come back here in a year asking why they lost it all!  :o

[Rusty Shackleford]

Personally, I've saved over $100k in 4 years here in Korea - by saving around 1m a month. I was quite lucky with my stock market timing. (Starting investing properly in May 2008, got punished by the crash, and then rode it all the way back up). I've spent alot of time researching and learning how the market works, and found some pretty good investments (deskwarming ftw).

I want to start investing. I just have a few grand in a poorly performing ETF. I want to save up an additional 5-10K to play with. People waste that much on far less productive hobbies. Even if I lose the lot, it will be educational.

Any tips? I've read a few books especially on value investing, but I'm fairly ignorant in this area.

ETF's are a good long term investment since the costs of ownership are low. I would even suggest looking at Index Tracker Funds which aim to give you the returns of the index it tracks... which in the long term is usually upwards. The benefit of this method is it's hands off and extremely cheap, with Total Expense Ratios averaging around 0.5% per annum. You can get index trackers to match your risk profile in places such as emerging markets and the like.

Mine is the fund that tracks the NZX50, the top fifty traded companies in NZ. I've been chipping in $50 a month (no fees) for about 8 years. The performance has been very middling, but as far as I'm concerned, that's fine. I'm getting a product I trust at a low price.

If you are looking to get into hands on equities investment with a thrill and higher potential returns, I enjoyed my time flirting in the oil and gas juniors market... with companies like Range Resources, Gulf Keystone Petroleum and Xcite Energy. The good thing with the juniors is that they all start with relatively low share prices... meaning even a small jump in the price equals a large return on your investment.

Yea, small cap companies interest me.

Again, I would not advocate doing this with SAVINGS. Do it with your LONG TERM INVESTMENTS for security in your older years. People often think of savings and investments as two and the same. They are not.

A bucket for each thing. I'm chipping into the NZ savings scheme anyway. If worst comes to worst, I will have that to fall back on in my grey years.

Do not fire savings into equities is my best advice. Set aside a portion of your income for long term INVESTMENT of course, but don't play around with your savings.

I have 10K (well NZD) set aside for emergencies. That is enough at my age. I will just increase that 10% a year. And a good wedge for my house which is in the works.

[Menlyn]

I must speak out against all those advocating people invest their money instead of parking it in a savings account. DO NOT TAKE FINANCIAL ADVICE FROM AN ESL TEACHER ON WAYGOOK.ORG.

Investing is a SERIOUS risk where your capital can go down just as well as it can go up. Long term, over 20+ years, you SHOULD see returns. Short term, talking saving up for something like a house in 5 years, would be absolutely crazy mental to even consider putting your savings into equities!

Some people on here baffle the brains out of me with their lackluster advice.

Yet, you seem to be giving a good share of advice yourself :D
I'm giving my personal opinion, and I hope that anybody listening does their own research.

That being said, I agree with your point about not putting your "savings" into equities. However, when we're talking about the "fictional" 200k, which as an ESL teacher in Korea, you're looking at 10-15 years to accumulate that sum, that is no longer short term.  You can save for 10-15 years in a savings account, and you WILL lose a few % every year to inflation. For me that is a pretty bad bet.

However, you seem to muddle the difference between investments and speculation. An investment is not necessarily ONLY for retirement. That money can be used for anything, from buying a house, to starting a business, and with the element of risk. By investing, rather than saving that money, those goals can be reached sooner.

I'm young, I have no debt nor financial obligations, and I have a long investment horizon, and I'm happy with my choice.

[jaysoon17]

Personally, I've saved over $100k in 4 years here in Korea - by saving around 1m a month. I was quite lucky with my stock market timing. (Starting investing properly in May 2008, got punished by the crash, and then rode it all the way back up). I've spent alot of time researching and learning how the market works, and found some pretty good investments (deskwarming ftw).

Did you cash out or are you re-investing to increase your net worth? I'm a small business guy with most of my investments in small businesses and commodities. Also as a small business person, I tend to favor cash flow rather than net worth, but I do see the appeal in net worth when small business dividends aren't good for the year. I had money in the stock market in the mid 2000s that increased 100% of my original investment only for it to crash massively hard and never recover. I'd like to learn more about investing in the markets to make sure I don't make the same mistakes I did before with stocks.

[Daelim]

I must speak out against all those advocating people invest their money instead of parking it in a savings account. DO NOT TAKE FINANCIAL ADVICE FROM AN ESL TEACHER ON WAYGOOK.ORG.

Investing is a SERIOUS risk where your capital can go down just as well as it can go up. Long term, over 20+ years, you SHOULD see returns. Short term, talking saving up for something like a house in 5 years, would be absolutely crazy mental to even consider putting your savings into equities!

Some people on here baffle the brains out of me with their lackluster advice.

Yet, you seem to be giving a good share of advice yourself :D
I'm giving my personal opinion, and I hope that anybody listening does their own research.

That being said, I agree with your point about not putting your "savings" into equities. However, when we're talking about the "fictional" 200k, which as an ESL teacher in Korea, you're looking at 10-15 years to accumulate that sum, that is no longer short term.  You can save for 10-15 years in a savings account, and you WILL lose a few % every year to inflation. For me that is a pretty bad bet.

However, you seem to muddle the difference between investments and speculation. An investment is not necessarily ONLY for retirement. That money can be used for anything, from buying a house, to starting a business, and with the element of risk. By investing, rather than saving that money, those goals can be reached sooner.

I'm young, I have no debt nor financial obligations, and I have a long investment horizon, and I'm happy with my choice.

I'm not giving advice, just warning people about the risks of playing with their money when they are being advised to shirk away from safety and start to gamble it in the hope it increases quicker.  All I'm saying is that over the short term, I would never put my money into "investments" or "speculations" because the risk/reward ratio is not worth it.

You could save for 15 years in a savings account or you could seek something like inflation linked government bonds ( as one example) as a relatively safe hedge against inflation. Of course, you could punt it on equities and hope to hell they not only beat inflation but then also give you substantial returns for the risk.

I never said an investment is only for retirement either... although the most important investment anyone will ever make will be in their future. Ask any financial "guru" and they'll tell you that they should be long term... 30 years long term. If you are somehow blessed as a hot stock picker and can pick the next big thing then all credit to you. However, I've yet to hear anyone advise someone to invest their house or car deposit savings in the stock market. Madness.

[artofwill80]

Oh, you live in SD?  Please tell me, what nice neighborhoods could someone find something decent for 2k a month?  I won't hold my breath waiting.

Paradise Hills, National City, and Chula Vista aren't too bad.

[chao127]

hmm.. it's surely not enough to live a fancy lifestyle, but it'll be good enough to pay off your student loans!

[tesoljon]

I'm actually a little frightened of house ownership. One broken pipe can cause so. much. damage! Or replacing a central A/C unit. Termites. Fire ants. Black mold.

Personally, I've saved over $100k in 4 years here in Korea - by saving around 1m a month. I was quite lucky with my stock market timing. (Starting investing properly in May 2008, got punished by the crash, and then rode it all the way back up). I've spent alot of time researching and learning how the market works, and found some pretty good investments (deskwarming ftw).

Did you cash out or are you re-investing to increase your net worth? I'm a small business guy with most of my investments in small businesses and commodities. Also as a small business person, I tend to favor cash flow rather than net worth, but I do see the appeal in net worth when small business dividends aren't good for the year. I had money in the stock market in the mid 2000s that increased 100% of my original investment only for it to crash massively hard and never recover. I'd like to learn more about investing in the markets to make sure I don't make the same mistakes I did before with stocks.

I'd like to know as well.

I'm fortunate to be practically debt-free at the moment (barring a $150 student loan payment at 2.3%). From what I'm not spending here, I should be able to pay that loan off in just a few more months. I could have payed it off, but I'd rather have the cash in hand.

Jaysoon, are you doing small business here in Korea or back home?

[Menlyn]

I'm actually a little frightened of house ownership. One broken pipe can cause so. much. damage! Or replacing a central A/C unit. Termites. Fire ants. Black mold.

Personally, I've saved over $100k in 4 years here in Korea - by saving around 1m a month. I was quite lucky with my stock market timing. (Starting investing properly in May 2008, got punished by the crash, and then rode it all the way back up). I've spent alot of time researching and learning how the market works, and found some pretty good investments (deskwarming ftw).

Did you cash out or are you re-investing to increase your net worth? I'm a small business guy with most of my investments in small businesses and commodities. Also as a small business person, I tend to favor cash flow rather than net worth, but I do see the appeal in net worth when small business dividends aren't good for the year. I had money in the stock market in the mid 2000s that increased 100% of my original investment only for it to crash massively hard and never recover. I'd like to learn more about investing in the markets to make sure I don't make the same mistakes I did before with stocks.

I'd like to know as well.

I'm fortunate to be practically debt-free at the moment (barring a $150 student loan payment at 2.3%). From what I'm not spending here, I should be able to pay that loan off in just a few more months. I could have payed it off, but I'd rather have the cash in hand.

Jaysoon, are you doing small business here in Korea or back home?

I'm still invested. As a youngish guy ( 29) with no debts, I don't see the need to cash out now. As long as I can keep saving and adding to my nest egg, I'm hoping that the next $100k comes easier than the first. That being said, all the assets are liquid assets, and I could sell out at a moments notice. I want to shy away from giving advice, as I'm no financial adviser, and I'd hate to make suggestions to someone and they don't pan out, especially if they have a very different risk profile to myself.

A few things I've learnt though. Firstly, learn your markets. Each market is different, and the rules / tax regulations are very different from place to place. I currently invest in South Africa (my home country) and in Hong Kong. Hong Kong is a great place to invest. It has excellent exposure to the Chinese market, yet with very stringent corporate governance rules. Additionally, all information can be found in English. There is also no dividend tax nor Capital Gains Tax.

My investments comprise of a handful of Unit Trusts (similar to mutual funds, for you American folk), 2 or 3 ETF's and the rest in individual stocks (for the most part, blue chips). I did a lot of research on different fund managers prior to investing and chose fund managers with good track records, and reasonable TER's (Total expense Ratios). Performance has been VERY good for the Unit Trusts. With individual stocks, I've had mixed performance. I seem to be pretty good at picking sectors, yet not so good with individual stocks. I made a few pretty bad picks with some small cap stocks. Fortunately, my portfolio is pretty diverse, (over 20 different holdings, between UTs, etf's and individual stocks) so I was still able to deliver strong performance even with a handful of bad picks.

I generally read 5 or 6 different websites for financial information daily, and quite enjoy it. I'm a very patient investor, and can go months without making a single transaction. Yet, when I feel the time is right, I can do multiple transactions a day for days at a time.

[CunningLinguist]

A few things I've learnt though. Firstly, learn your markets. Each market is different, and the rules / tax regulations are very different from place to place. I currently invest in South Africa (my home country) and in Hong Kong. Hong Kong is a great place to invest. It has excellent exposure to the Chinese market, yet with very stringent corporate governance rules. Additionally, all information can be found in English. There is also no dividend tax nor Capital Gains Tax.

Menlyn, how did you go about setting things up in Hong Kong?

[Menlyn]

A few things I've learnt though. Firstly, learn your markets. Each market is different, and the rules / tax regulations are very different from place to place. I currently invest in South Africa (my home country) and in Hong Kong. Hong Kong is a great place to invest. It has excellent exposure to the Chinese market, yet with very stringent corporate governance rules. Additionally, all information can be found in English. There is also no dividend tax nor Capital Gains Tax.

Menlyn, how did you go about setting things up in Hong Kong?

Pretty easy actually. You have to open an account in person though. When I went to HK in 2009, I brought my passport (of course!) and a proof of address (needs to be in English, or translated into English). With those 2 documents, it's pretty easy to walk into any bank branch and open up an account. I went with HSBC.
I don't think they have the best brokerage fees, however, they offer a full package (bank account with full online access, stock trading, Unit trust subscriptions, forex, bonds, etc) - and I can do everything online. You may want to shop around. Also, I'd suggest emailing/phoning them prior to making the trip as things may have changed since 2009.

[deweybeach]

It's not really a lot of money but it ain't bad either. It's a pretty good amount if you are single. It is very middle class amount to have saved up by the time you are in your forties for a family. Hopefully by the time you retire you have approached 600,000 usd (in today's market value) in assets.

[deweybeach]

I see the value of holding property, and it does have a nice "fall-back" quality to it, but I feel that the mediocre return doesn't justify the hassle (i.e. managing a tenant from abroad) and the risk.

I agree about holding property being a hassle. Tenants in the states are horrible, property taxes are extremely high, and you have maintenance costs.  In Canada though if I could find a deal on a property I would buy it and rent it out. In BC the property taxes are so cheap and the rental pool is great. I guess those are few of the reasons properties are so expensive in BC.

[Gilligan]

200K is not that much money.  It's hardly the value of a house where I'm from. 
In my 20s I would have thought it was a lot of money. Now that I'm in my thirties and am in saving mode I think 200K is a good start.  I'm fortunate to be married to a hard working spouse who's also a saver like me.
We enjoy our lives in Korea and still are able to save 30+K a year and still travel. 
Personally, I think 800,000 would be my magic number to slow down and start to enjoy the hard work and savings some more. 
-Gilligan.