100k into s&p 500

[the_family_monastery]

Have recently sold our house and are looking at putting 100k onto an s&p 500 fund until we buy again, maybe in a years time.

After advice on what platform to use to do this. Have been doing my own research but it all got a bit overwhelming frankly.

Currently leaning towards going with the smartshares us 500 through sharsies.

I like the sharsies app and am familiar with it having my own and kids shares purchased through there previously/currently. The set fee of $25 for a one off is as cheap as I have found... Am I missing something here? I haven't really looked at going offshore as it looks more complicated tax wise but could be talked into it.

Anyway please let me know your thoughts and experiences with such things. Not really after advice relating to other things I could invest in, just what platform is best for some s&p 500 action.

edits for clarity

the majority of our money we are keeping in savings, this is the amount we have decided to invest with higher risk

the timeframe - 12 months is more like a minimum timeframe than a definite timeframe

 

[ellygrace7]

@the_family_monastery Your investment timeframe is wrong for shares - if you're expecting to use the money in a years time, then something cash based is most appropriate.

For most funds, that are based on an index like this, they expect a minimum investment timeline of 5-7 years - I'd use your investment timeline to guide what will be right for you

 

[the_family_monastery]

@ellygrace7 Exactly the advice I wasn't looking for. Which I thought I had stated pretty clearly...

However to elaborate this is only a portion of our available cash assets which we have decided to put in a higher risk investment.

 

[abraham1972]

@the_family_monastery Even with the elaboration, I also echo samlaw's advice. Basically if your investment drops even 15% in a year’s time, and you want to buy, you’ll have to cut bait, or forego your buy. I appreciate it sounds really obvious, but 12 months as a “maybe” to purchase a new home would have me put funds into a PIE cash fund or similar, which currently is returning around 5%.

So it depends on your risk tolerance.

That said, I am investing in S&P500 via Kernel. I found their pricing to be very competitive. Also suffers from the same buy/sell delays that you get through Super. But overall, the platform is good and it also simplifies your tax situation in the sense it’s taxed at PIE rates rather than having to deal with FIF

 

[the_family_monastery]

@abraham1972 Risk wise I'm happy enough and optimistic about the market.

Thanks for the advise about kernel, just about to do the maths and double check that sharsies fees are one off and not annual but they are the leading contenders

 

[nolanj]

@the_family_monastery Don’t know why you’re downvoted OP. So many people default to “short term - definitely not shares” without looking at context of the situation. It’s a bandwagon thing where people don’t think critically and just copy others.

In your situation yeah it can make sense to chuck a bit in s&p500 for 1 year and take that risk.

 

[pauline56]

@nolanj whats the rationale for taking that higher risk for that much of a short term? make it make sense please because i havent seen anything that explains that

 

[nolanj]

@pauline56 We don’t know how much OP already has on TD. Could be 1-1.5M. If so then 100K in S&P is hardly a risk. Worse that could happen is what it drops to $30K? Don’t think that’s life changing for OP.

Best that could happen, it gains more than the TD rate?

We also don’t know if OP will be using every cent for the new house. Here’s a possible outcome. 1 year time share market crashes 50%. OP buys a 1.2M home instead of a 1.3M home. And keeps the s&p500 investment invested while the shares are discounted.

And if stock market doesn’t crash, well then they can just withdraw it if they want and put it toward house.

 

[pauline56]

@nolanj op replied so i replied there instead. all i see here is justification of how it might not be the worst decision of all time but I don't see any justification of how it's a good decision lol

 

[nolanj]

@pauline56 OP roughly has a 70-75% chance (I.e more likely than not) that the money allocated to s&p500 will return better than TD. It’s just a risk/reward OP is willing to take at the chance that the stock market may not flop. And if it does he doesn’t care.

 

[pauline56]

@nolanj that's been made abundantly clear that he doesn't care yes. still doesn't change the fact that it's a stupid decision

 

[nolanj]

@pauline56 Again it’s all about context. $100K might be a lot to you, but if someone already also has 900k in cash, then it’s only 10% of the portfolio. $5M in cash would mean it’s 2% of their portfolio.

Furthermore flexibility needs to be taken into account. You may 100% need that $100K in 12 months time, whereas someone else may be able to say “meh” and push it out further if they don’t want to withdraw it.

It’s not a black and white view because we don’t know all the variables including finances and life circumstances.

 

[pauline56]

@nolanj it is fairly black and white in this case.

I'm guessing if he was investing that 100k in some shitcoin, you would also brush it off saying "it's only 2% of portfolio, we don't know the variables in his life".

 

[the_family_monastery]

@pauline56 Happy to explain my rationale.

The simple answer is that I'm happy to take a risk to get a bigger gain with my investment.

I believe that the s&p 500 is likely to gain more value than a term deposit or Savings account.

I'm also aware that there is a risk it will not gain, and that's why I'm not putting all my money into shares.

I'm taking a risk having the rest of my money with a bank as well, they can fail and maybe not get a government bail out. Very unlikely I know but a risk none the less.

At the end of the day we could lose the 100k, move the family to Invercargill and buy a nice 4 bedroom while my wife and I both work part time and live happily ever after.

 

[pauline56]

@the_family_monastery that's fine, at the end of the day it's your money and you'll do what you need or want to do. You asked for the best platform, hopefully you got your answer.

I'm just explaining the downvotes. This is the nature of the sub. This is not a 'lets act on a hunch and see what happens sub'. If you decided that you wanted to invest that 100k into a meme crypto instead, you'll be downvoted to oblivion because objectively that's a stupid decision, yet in 1 years time that 100k in that meme crypto might be 1 million and you'll be perfectly happy.

This is a much milder example of it. Investing 100k into s&p with a 1 year view is objectively a stupid decision, on a much smaller scale to my example. But it is still stupid. But if you want to do it, there's a decent chance you will be perfectly fine after 1 year

 

[the_family_monastery]

@pauline56 Yeh I'm guessing most of the people saying I shouldn't do it aren't going to short the fund.

I've made a couple of conservative decisions in the last few years that I've lived to regret. So time to take some risk. I think it's a calculated risk but obviously plenty of people disagree.

I never wanted to get into that discussion though, and I stated that right from the start. I know it's a risk. I just don't want to end up getting my pants pulled down over fees.

 

[mikeclaudio39]

@the_family_monastery Yeah that's the go, just be aware that 1 yr is a very short time frame even for the S&p500. There's probably around a 30% chance you'll lose money over that time. It gets much safer at 3yrs and onward.

 

[the_family_monastery]

@mikeclaudio39 Thanks for that. I should clarify that 12 months is probably the minimum time frame vs a definitive timeframe

 

[gamebai886]

@the_family_monastery Not worried about FIF tax? Could split in names and minus a few dollars to be just under incase it moons

 

[frank2345]

@gamebai886 Op, This is good advice and could save you a bunch of tax. If you have an accountant I would discuss with them the best way to structure it. The tax savings could be much greater than any fees you are worried about paying.

Ps I would suggest IBKR as a low-cost platform.