I left the US and moved to Europe last year. I’ve got $70k sitting in my basic savings account doing nothing and I have 6k€ in my account here. I have no debt. The money in my american account is definitely a safetynet and I’m nervous to invest it seeing as everything can just fall apart soon, but I also feel like i’m missing an oportunity. WWYD? TC: 65k€ #investments #personalfinance
Wait for a stock market fall and then invest in stocks
I mean, in general investment is not safe. It is risky. That is the point. You don't make any money from safe investments (beyond inflation). But Vanguard is just a fund provider, they have all the normal stock, bond and money market funds. The main point of Vanguard is that it has very low fees and won't try to rip you off. A reasonable allocation for someone conservative might be 60% stocks, 40% bonds. I personally am young and risk-seeking, so I just do 100% stocks. You really can't know what returns will be in advance. For example, the S&P 500 (US stocks) lost 35% this year before recovering, and now it's about 5% off the highs. It made 30% last year and lost 4% the year before. I think a reasonable assumption is that it will make 6% a year.
Does the 6% include dividends or just capital gains?
Good point. I meant just the cap gains, without inflation adjusting. But dividends are about 2% per year and inflation is also 2%, so it roughly evens out. But all of this is blown away by the variance. (Stddev is 15% a year, and it's fat tailed on top of that). If you want to argue that 4% or 8% are better estimates, go ahead. My 95% confidence interval for the next 20 years is between 0.5% and 15% annualized, including dividends, adjusted for inflation.
A lot of brokerages won't allow you to open an account if you live outside the US, even if you're a citizen. And many European brokerages will not allow US citizens to open accounts at all. Your options might be more limited and expensive.
Good point. I assumed that because OP had a US bank account, he'd be able to open a US brokerage account, but that might not be true.
That’s strange, why would it matter where I live?
Where you did move to?
Buy some gold
1. Keep six months expenses (between both accounts). 2. Pay off debt 3. Invest the remainder in Vanguard index funds. Consider doing it in a retirement account in the country you plan to retire in.
Thanks for your response. I have no debt or dependents and live in a LCOL city, so I guess having 10k extra for emergencies would be sufficient. Where I live now pensions are already taken from taxes. With the remaining 60k, you’re suggesting Vanguard indexed funds. Is it safe? What kind of returns do they offer?