Index funds to build capital for REI?

11 Replies

My capital is being killed by inflation while it sits in my savings account. Should I put most of it into index funds while I continue to build savings, learn, analyze deals, network, etc?

Thank you!

Mike

Inflation is currently 1.4%. Not exactly disastrous. If you feel that is a problem, you can certainly put your money into an index fund. But ask yourself how you'll feel if the market declines while you are preparing for an investment. The cash for my next investment is just that, cash. 

 I just sold 3 Bank of America puts expire in 30 days, strike price $31.50 @ 53 cents.

Collateral put up about $9,000.

Say puts expire worthless. I make $159 one month on $9,000. Thats a whooping 21% annualized.

Say i get put the stock.  My $9,000 is used to purchase 300 stonks of BAC.

I own shares. Monday i sell covered calls on my position.  More premium.

Market Crash .  I get hit but so does everyone else.  My way can be managed.   Bank of America is not going Bankrupt.

My goal is just churn to collect Premium.  Over n over again.


WARREN does step one to ease himself into stock positions.

Depends on your risk tolerance and time horizon, so I can't say yes or no. If inflation of sub 2% is crushing you capital in savings, I'd ask can you afford potential downward market movement and still have enough $ left to sell the index funds to buy your next deal? Would an index fund decrease of over 2% then be really killing your capital when compared to inflation? Conversely, any gains are gravy. Keep in mind if you sell prior to holding for a year you get hit with short term capital gains vs long term

Index funds are generally regarded as fitting for longer term investment timeframes to ride out the ups and downs. If you're buying an index fund to hold for a month, 3 month, 6 months etc, You'd just hope to land in an upswing versus a downswing

Bond index ETF, they don't move more than maybe 2-4% up or down and return 2-3% in dividends

Not risk free but allot less risky than an index fund and better return than the maybe 1% you could get for a high yield savings.

Also if the economy were to crash they would likely increase in value by the 2-4%

Originally posted by @Zander Kempf :

@Felicia Feliciano Selling naked options is incredibly risky and is not recommended to anyone

Did i  say sell em NUDE?

I think i said cash secured puts n covered calls.

Whats risky is Bonds when 10 year treasury was @ .70%.   Those guys must be getting Hammered right now.

50% rise in Rates is HUGE.