What to do with £200k in the bank?

[The Byre]

We are heading past recession and into a depression. Central banks everywhere are printing money and using that to buy assets such as company bonds simply because they need to do something with all the QE money. Stimulus packages and furlough and payment protection and forbearance schemes are feeding the more foolish retail day-trading share buyers into inflating the stock markets everywhere, whilst at the same time 30% of US mortgages are not fully up-to-date and 20% have not paid anything since February.

200 oil companies are struggling. Thousands of companies are already bankrupt. No major economy has provided any meaningful economic data since Q1. US unemployment is either at 20% or 12% - depending on whether you believe the states who have to pay unemployment relief or the BLS who only measure it and think it is just 12%. 20% is where it was at the height of the 1930s depression.

Time to rethink and hunker-down. The first to lose their underpants will probably be all those foolish people gambling on the stock market with their stimulus cheques!

 

[SillyBill]

We are heading past recession and into a depression. Central banks everywhere are printing money and using that to buy assets such as company bonds simply because they need to do something with all the QE money. Stimulus packages and furlough and payment protection and forbearance schemes are feeding the more foolish retail day-trading share buyers into inflating the stock markets everywhere, whilst at the same time 30% of US mortgages are not fully up-to-date and 20% have not paid anything since February.

200 oil companies are struggling. Thousands of companies are already bankrupt. No major economy has provided any meaningful economic data since Q1. US unemployment is either at 20% or 12% - depending on whether you believe the states who have to pay unemployment relief or the BLS who only measure it and think it is just 12%. 20% is where it was at the height of the 1930s depression.

Time to rethink and hunker-down. The first to lose their underpants will probably be all those foolish people gambling on the stock market with their stimulus cheques!

I would agree. The only thing that grapples me is how more easily price can be imputed into assets in a digital currency and economy than it could be in the Great Depression. Whether future crashes are more likely to represent losses of value as opposed to nominal price drops is a question I ask. And intrigued as to how this goes, particularly with the stock market; clearly what the governments do today to pump liquidity into the markets and economy can be almost intravenous (i.e at source) whereas almost exactly a 100 years ago (Weimar Repulic as a good example) the same stimulus would be wheelbarrows full of cash and/or silly bank note denominations. And a physical transaction to buy. Much easier to see loss of value materially than in loss of value of digits and that obviously can be exploited in a crisis. You can get much poorer in effect without even knowing it. Unfortunately the rules have been re-written where prudence doesn't pay off if the government decides to prop assets up whatever the cost. Decisions which may have been reckless in other depressions or recessions could be the most lucrative now. And that is absolutely nothing to do with skill I may add, rather simply correctly guessing the side the government and Central Bank chooses as the winner. That is my biggest gripe, if the market isn't free anymore from CB intervention (it isn't), you can't give good or bad advice, or make good or bad decisions, you have only odds.

 

[samuel5]

Well done on your success!

Not sure if your have mentioned your tax position already but have you looked into investing into a VCT?
You can claim upfront income tax relief of 30 per cent for putting money into higher risk smaller companies, providing you hold the shares for at least five years. You also gain from tax-free capital growth and dividends, with no capital gains tax to pay if the shares are sold after five years.

You can invest up to 200K max per year and can split it into different VCTs for diversity.

 

[The Byre]

The only thing that grapples me is how more easily price can be imputed into assets in a digital currency and economy than it could be in the Great Depression.

That thought should be keeping you awake at night!

In that video, I talk about the launch of a new digital currency, glorified digital food stamps - and until today, I assumed that it was just some stupid (but dangerous) idea being put out there by the liars and cheats that seem to be running banks and governments today.

And then I got an email from a guy on the West Coast in Washington State. "Holy Moley! They're giving us 10% for bringing in coins at the local bank! Someone brought in a big jar of quarters and made $50. Who's paying for this generosity?"

The Treasury and The Fed keep telling us that the US Mint is making 1.5 billion coins per month. That's about 100 coins per year for every economically active US citizen. As coins last an average of 30 years, a national coin shortage is illogical. In the lifetime of any single coin, it has been joined by thousands of buddies who also last 30 years. Number-crunch that lot and the US ought to be drowning in coins - yet many shops are asking for exact change or plastic.

If over 30 years, each coin was joined by 3,000 other coins, then anyone with a jar of quarters in 1990 would now be hoarding 3,000 jars - the numbers just do not make sense! If anything, a straw poll of friends dotted across the US tells me that people are using fewer coins than 30 years ago and they do not have jars and jars of joins buried out in the back yard. So where are they all going - and more to the point, who the hell is paying the 10%?

When I go to Wickes, I get a 10% tradesman's rebate. They can do this because the mark-up on ancillary building materials is relatively high and we buy enough stuff to make it worthwhile. Banks work on slivers of percentage points - they sure as hell do not make 10% on anything - and charities they am not! So who's paying for this largess? How come banks can give any Joe Blo who walks in off the street a 10% tradesman's discount on money?

Is the US economy slowly being de-cashed and are the banks being reimbursed by the Fed? Is the Fed trying to squeeze cash out completely and is the US consumer being softened-up for them digital food stamps in a crazy last-ditch attempt to restart the economy?

 

[Bob Morgan]

That thought should be keeping you awake at night!

In that video, I talk about the launch of a new digital currency, glorified digital food stamps - and until today, I assumed that it was just some stupid (but dangerous) idea being put out there by the liars and cheats that seem to be running banks and governments today.

And then I got an email from a guy on the West Coast in Washington State. "Holy Moley! They're giving us 10% for bringing in coins at the local bank! Someone brought in a big jar of quarters and made $50. Who's paying for this generosity?"

The Treasury and The Fed keep telling us that the US Mint is making 1.5 billion coins per month. That's about 100 coins per year for every economically active US citizen. As coins last an average of 30 years, a national coin shortage is illogical. In the lifetime of any single coin, it has been joined by thousands of buddies who also last 30 years. Number-crunch that lot and the US ought to be drowning in coins - yet many shops are asking for exact change or plastic.

If over 30 years, each coin was joined by 3,000 other coins, then anyone with a jar of quarters in 1990 would now be hoarding 3,000 jars - the numbers just do not make sense! If anything, a straw poll of friends dotted across the US tells me that people are using fewer coins than 30 years ago and they do not have jars and jars of joins buried out in the back yard. So where are they all going - and more to the point, who the hell is paying the 10%?

When I go to Wickes, I get a 10% tradesman's rebate. They can do this because the mark-up on ancillary building materials is relatively high and we buy enough stuff to make it worthwhile. Banks work on slivers of percentage points - they sure as hell do not make 10% on anything - and charities they am not! So who's paying for this largess? How come banks can give any Joe Blo who walks in off the street a 10% tradesman's discount on money?

Is the US economy slowly being de-cashed and are the banks being reimbursed by the Fed? Is the Fed trying to squeeze cash out completely and is the US consumer being softened-up for them digital food stamps in a crazy last-ditch attempt to restart the economy?

I went to my Local Wickes! - Cleared them out of 'Wheelbarrows' and PAID CASH! - With a Discount! In the future, you will not need a Wallet, you will need a Wheelbarrow! AND, the Wheelbarrow will be worth more than money than it contains! Cards? - FORGET THEM!

 

[The Byre]

After writing that last lot, we held a company online meeting and I got to hear that the Deutsche Bank in Germany and our Luxembourg banks are now charging us extra because € interest rates are at zero.

De-cashing the system is probably the overture to negative interest rates. Remember - you can't have negative interest rates if people can cash-out their accounts. The central banks have to suck the cash out of the system and make an already fiat currency (i.e. a currency based totally and only on trust and nothing else) totally virtual - numbers on a screen and nothing else!

Also, remember that coins are pretty close to being a commodity currency. Inflation has eaten into the value of the $ and the £ to such an extent that nickles, dimes, pennies, etc. are not that far off being worth more as metal than the number stamped on them!

We're looking at the beginning of the end-game here folks!

 

[Bob Morgan]

After writing that last lot, we held a company online meeting and I got to hear that the Deutsche Bank in Germany and our Luxembourg banks are now charging us extra because € interest rates are at zero.

De-cashing the system is probably the overture to negative interest rates. Remember - you can't have negative interest rates if people can cash-out their accounts. The central banks have to suck the cash out of the system and make an already fiat currency (i.e. a currency based totally and only on trust and nothing else) totally virtual - numbers on a screen and nothing else!

Also, remember that coins are pretty close to being a commodity currency. Inflation has eaten into the value of the $ and the £ to such an extent that nickles, dimes, pennies, etc. are not that far off being worth more as metal than the number stamped on them!

We're looking at the beginning of the end-game here folks!

As I have been saying for a while - Wheelbarrow Futures! The Wheelbarrows will be worth far more than the cash they contain! - Didn't that happen in Germany about 85 years ago?

 

[Opinion87]

"Two Chick-fil-A locations have gotten creative to combat coin shortages at the restaurants as they offered free food in exchange for $10 in change."

https://www.cnbc.com/2020/07/28/chi...ee-food-for-coins-amid-national-shortage.html

 

[mattk]

As I have been saying for a while - Wheelbarrow Futures! The Wheelbarrows will be worth far more than the cash they contain! - Didn't that happen in Germany about 85 years ago?

Is there an example of hyperinflation happening to a major economy (say top 20 by GDP) in the last 50 years?

 

[Bob Morgan]

Is there an example of hyperinflation happening to a major economy (say top 20 by GDP) in the last 50 years?

Just as aside mttk . . . How can you be a UKBF 'Newcomer' with 2,208 Posts and 823 Thanks? - Just asking

 

[Bob Morgan]

Is there an example of hyperinflation happening to a major economy (say top 20 by GDP) in the last 50 years?

The UK reached 25% during the 1970s

 

[mattk]

Just as aside mttk . . . How can you be a UKBF 'Newcomer' with 2,208 Posts and 823 Thanks? - Just asking

I type really fast!

 

[mattk]

The UK reached 25% during the 1970s

I think most people would love a bit of 25% inflation given the level of debt right now.

 

[Where do we go from here?]

Update: Things went well.

Company is worth ~£2M

 

[Where do we go from here?]

Clarification: £2m of cash and assets in the business. Not sure what the business itself is worth.

 

[DazRave]

I feel like you've now got a bigger problem... What you going to do with 2 million if you don't like Ferraris???

 

[Where do we go from here?]

I feel like you've now got a bigger problem... What you going to do with 2 million if you don't like Ferraris???

No, I don't have that problem now.
75% is invested/converted into assets, and I'm pretty happy with that.

I'm just a miser.

 

[DazRave]

No, I don't have that problem now.
75% is invested/converted into assets, and I'm pretty happy with that.

I'm just a miser.

I don't know if it was ever asked, but what does the company actually do to have grown so we'll over the last 4 or so years?

I ask purely because if you've made so much you must be really good at it!

 

[Where do we go from here?]

I don't know if it was ever asked, but what does the company actually do to have grown so we'll over the last 4 or so years?

I ask purely because if you've made so much you must be really good at it!

I've been purposefully vague. It's online retail related.

I don't think I'm very good at anything, to be honest. Knowing what kind of thing could scale, determination, and a bit of luck are the answer, IMO.

Although, after reading a few threads here, maybe slightly above-average intelligence and cynicism helped me too.

 

[MBE2017]

We're looking at the beginning of the end-game here folks!

Am I the only one to now picture The Byre dressed as Doctor Strange with one finger pointed in the air?

 

[Where do we go from here?]

Am I the only one to now picture The Byre dressed as Doctor Strange with one finger pointed in the air?

Who knows how long they can keep this charade up? In the long run, fiat currency will become more and more worthless though, whatever medium it takes. Buy hard assets and sit on them.

 

[JEREMY HAWKE]

I'm very proud of my business its not worth 2 Mill we got some rusty transits and a good set of spanners .

I tell the world about my business so we would expect some credibility and would love to go to your website and learn all about it

 

[Where do we go from here?]

I'm very proud of my business its not worth 2 Mill we got some rusty transits and a good set of spanners .

I tell the world about my business so we would expect some credibility and would love to go to your website and learn all about it

I don't agree. This is a retail business. It's not an appealing idea for my customers to know the ins and outs of my financial ambitions and how much money we make. Personal preference.

I think my comments here so far add a little credibility. I made my first post in 2019 and this thread is a bit of a long con if I'm still BSing you all.

EDIT: Not only that, but I wont be able to share my (not leftie) politics, amongst other things. Nope, I'll stay anonymous thanks!

 

[JEREMY HAWKE]

I don't agree. This is a retail business. It's not an appealing idea for my customers to know the ins and outs of my financial ambitions and how much money we make. Personal preference.

I think my comments here so far add a little credibility. I made my first post in 2019 and this thread is a bit of a long con if I'm still BSing you all.

EDIT: Not only that, but I wont be able to share my (not leftie) politics, amongst other things. Nope, I'll stay anonymous thanks!

That's the problem you see

 

[Financial-Modeller]

Update: Things went well.

Company is worth ~£2M

Excellent - an admirable achievement, esp through Covid. ?

You said three years ago that you needed £20k to live on and had £200k in cash and wondered what to do with it.

Whilst I assume that inflation has increased the former, you now have £2m, so while many of us experience increased needs/wants with increased wealth, you seem to have moved from having enough cash to live for 10 years to c.100 years.

Genuinely curious; Why?

 

[antropy]

Genuinely curious; Why?

Should you be on a business forum if you're asking what's the point in making money? ?

Paul.

 

[macScot]

We have started investing the business cash by investing in the stock market.

Investing in property probably has greater returns but requires more of a hands-on approach in my opinion as compared to the stock market.

We have selected approximately 80 different companies to invest in so we have hopefully spread our risk, and the majority of the stocks chosen pay regular dividends at better rates than what the banks offer, however those that do not pay dividends were chosen because they have long term growth prospects as well.

 

[pentel]

We have started investing the business cash by investing in the stock market.

Be wary of changing the nature of your company from a trading company to and investment company. This can make a huge difference to tax should you ever sell / close the company.

 

[The Byre]

We have started investing the business cash by investing in the stock market.

Quite apart from the tax implications - we are in a bubble right now and PE radios are still far too high. I would be waiting for single figures before wading in!

We have selected approximately 80 different companies to invest in so we have hopefully spread our risk,

Er, no you have not spread the risk! You are 100% in one asset class - stocks. When the bubble bursts (that could take a while!) the good stocks will get sold off to cover bad (margin) positions in bad stocks.

and the majority of the stocks chosen pay regular dividends at better rates than what the banks offer, however those that do not pay dividends were chosen because they have long term growth prospects as well.

Just remember two things please -

1. When you gamble with stocks, you have a counter-party. If you buy shares, you are betting that the price goes up and the counterparty is betting that the price will fall. To win that deal, you must know something they do not know.

2. That counterparty is a giant wealth fund with at least $1bn (usually a hell of a lot more) in assets. They have AI tools, specialists in price analysis, Bloomberg full accounts, a room full of economics PhDs and financial analysts. Above all, the fund manager will have decades of experience and because he/she is moving millions, can and does talk to the CFO and the CEO of any company they buy. They do this over a generous lunch with much wine. They have read all the covenants on their debts. They have had all the IP studied by experts in that field. They talk to experts in that market and commission reports on the market. Simply put - they have access to information you do not have.

 

[antropy]

Er, no you have not spread the risk! You are 100% in one asset class - stocks. When the bubble bursts (that could take a while!) the good stocks will get sold off to cover bad (margin) positions in bad stocks.

Have you not been paying attention?

The bubble burst at the end of 2021 and the markets crashed most of 2022.

In my opinion we're likely to see a recovery in 2023 partly fuelled by ChatGPT and its derivatives.

Paul.

 

[macScot]

Trading may be a gamble, however, investing is not gambling.

Yes, you can make bad investing decisions if you do not take time to analyse the risks of investing carefully irrespective of the asset class. As such also leaving your money in the bank account is a risk. If the bank does not go down, inflation will certainly eat at the money so earning dividends makes financial sense to us, but maybe not for everyone.

The markets will go up and down regularly, however, in the long run, it appears to go up, based on the last 10 or more years when you look at the major indexes. If you are invested in a spread e.g. an FTSE 100 or S&P 500 vanguard index, then it is in my opinion, a better option than leaving the money in the bank. This is not financial advice so you should do your own research and seek advice from expert financial advisors.

We intend not to sell any of the stocks/shares at a loss unless we absolutely have to, and as such we will ride through any dips/crashes and gains triggered by short-term market forces as we are in it for the long term. We have chosen reputable and financially stable companies that have been in the stock markets for many decades mostly.

 

[antropy]

We intend not to sell any of the stocks/shares at a loss unless we absolutely have to, and as such we will ride through any dips/crashes and gains triggered by short-term market forces as we are in it for the long term. We have chosen reputable and financially stable companies that have been in the stock markets for many decades mostly.

Indeed, we invest spare cash that we can't use in the business and over the last ~8 years it's made us 6 figures. You do have to know what you're doing though, and not many people do.

Paul.

 

[The Byre]

The markets will go up and down regularly, however, in the long run, it appears to go up, based on the last 10 or more years when you look at the major indexes. If you are invested in a spread e.g. an FTSE 100 or S&P 500 vanguard index, then it is in my opinion, a better option than leaving the money in the bank.

Ten years is a very short time. The bubble has been growing since 1999. The next ten years will not be in any way like the last ten years.

Not that I care - gold and real estate is all I have. long term.

2026 - S&P may be at double present prices - but in gold terms, about level with today.

Followed by a cleaning-out of debt-based equities. i.e. a market crash.
After that -m a golden future - or WW3 - one or the other! My money is on the golden future, but I'll be dead by then!

 

[japancool]

After that -m a golden future - or WW3 - one or the other! My money is on the golden future, but I'll be dead by then!

WW3 will lead to much the same result.

 

[macScot]

One thing to note is that the UK implementing and mandating Auto Enrolment in recent years results in 5% of employee wages (including tax rebate) and 3% employer contributions being invested into pension schemes which mainly goes into index funds and stocks of all sorts, and this is likely to continue happening for many years, so the bubble is expected to keep growing for a while if you overlook the crashes along the way... at least until the robots take over.

 

[antropy]

Ten years is a very short time. The bubble has been growing since 1999.

That's not a bubble then, that's the underlying trend.

Paul.

 

[The Byre]

The underlying trends I can see are an enormous debt bubble and an even bigger mountain of off-book liabilities such as pensions and healthcare. Add to that lot, PE ratios that are far too high and need to fall to single figures just to cover inflation and you begin to see more clearly.

Another underlying trend is ever-increasing government spending on things we don't need and cannot afford, combined with the government cutting back on things we cannot afford to cut such as investment in crumbling infrastructure - education, and roads in particular.

Another underlying trend is the government spending billions on green energy, so thanks to all that massive spending, fossil fuel accounted for 77% of total energy use in 2020 and 78% in 2021. A true success story - for fossil fuels!

We are in a bear market and bear markets have rallies. And a bear market rally is there to take as much money from as many people as possible.

 

[antropy]

The underlying trends I can see are an enormous debt bubble and an even bigger mountain of off-book liabilities such as pensions and healthcare. Add to that lot, PE ratios that are far too high and need to fall to single figures just to cover inflation and you begin to see more clearly.

And what might justify high PE ratios?

Perhaps some technological breakthrough?

Perhaps if we'd finally cracked artificial intelligence?

Imagine the boost being able to do a Google Search has been to humanity? All the people working, scientists researching etc. etc. that have been able to find exactly the information they needed in seconds. The boost to the global economy must have been multiple trillions.

Now imagine the boost that would be given by an artificial intelligence that can truly understand what the user is trying to do, apply vast amounts of computation to it, all of the information available to humanity, all in milliseconds, sometimes without any human input ... the boost given to the economy is going to make trillions look like peanuts.

If you think this is a bubble you wait, just it won't be a bubble, it will be based on real value.

Paul.

 

[DazRave]

And what might justify high PE ratios?

Perhaps some technological breakthrough?

Perhaps if we'd finally cracked artificial intelligence?

Imagine the boost being able to do a Google Search has been to humanity? All the people working, scientists researching etc. etc. that have been able to find exactly the information they needed in seconds. The boost to the global economy must have been multiple trillions.

Now imagine the boost that would be given by an artificial intelligence that can truly understand what the user is trying to do, apply vast amounts of computation to it, all of the information available to humanity, all in milliseconds, sometimes without any human input ... the boost given to the economy is going to make trillions look like peanuts.

If you think this is a bubble you wait, just it won't be a bubble, it will be based on real value.

Paul.

Considering I think I've seen a few posts from @The Byre suggesting AI could be big/good, this has made me get the popcorn out to watch this thread with quite a lot of interest!

 

[antropy]

Considering I think I've seen a few posts from @The Byre suggesting AI could be big/good, this has made me get the popcorn out to watch this thread with quite a lot of interest!

I've met many many stock market doomsayers over the years, all of them predicting a massive crash and not investing.

Meanwhile I invest during booms and busts and my portfolio grows and grows ?‍

I suspect they use it as an excuse to themselves to make them feel better about not investing

Paul.