- August 4, 2023
- Posted by: legaleseblogger
- Category: Related News
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Title: Investment Considerations for a 100k Portfolio in 2023: AI Legalese Decoder to Navigate Financial Options
Introduction
As a novice in the investment game, I find myself pondering various options for my hard-earned savings of nearly 100k. Seeking to expand my financial knowledge, I engaged in extensive research and discussions with colleagues, ultimately navigating three potential investment avenues.
1. Exchange-Traded Funds (ETFs) and Index Funds
ETFs and index funds, such as VSTAX and other Vanguard options, offer potential returns ranging from 5% to 9% per year. However, it’s essential to bear in mind that these investment vehicles inherently carry certain risks, which should be carefully evaluated.
AI Legalese Decoder: To make an informed decision regarding ETFs and index funds, an AI Legalese Decoder can assist in comprehending complex financial jargon and analyzing the associated risk factors. It can provide insights into historical performance, fund attributes, and underlying assets, allowing for a more educated investment choice.
2. Stock Market Investments
The stock market, notorious for its inherent risk, boasts an average annual return of 7% for those adept at navigating its complexities. This option offers the potential for higher returns but necessitates proficiency and solid knowledge in stock selection.
AI Legalese Decoder: An AI Legalese Decoder can assist in interpreting the nuances of stock market investments, including analyzing companies, understanding financial statements, and evaluating risk factors. By employing such a tool, individuals can make more informed investment decisions aligned with their risk appetite and financial goals.
3. High-Yield Savings Account (HYSA) or Money Market Account
Surprisingly, my bank, Huntington, provides a HYSA that offers a 4.9% Annual Percentage Yield (APY) with minimal risk. This option guarantees a stable return, presenting an intriguing alternative to the potentially higher returns in the market.
AI Legalese Decoder: To comprehend the terms and conditions associated with different HYSA options and evaluate their suitability, an AI Legalese Decoder can break down complex legal and financial language. It can assist in comparing the nuances of various HYSA offerings, such as withdrawal restrictions, account fees, and minimum balance requirements.
Considering the Options: AI Legalese Decoder as a Supporting Tool
Understanding the allure of a guaranteed 5% return, I contemplate whether the additional 2% return offered by riskier investments justifies the associated concerns and uncertainties. While guaranteed returns provide a sense of security, it’s crucial to assess long-term financial goals and risk tolerance before making a decision.
AI Legalese Decoder: Leveraging an AI Legalese Decoder, individuals can weigh the potential outcomes and risks associated with each investment option. Accurate interpretation and analysis of legal and financial documents can facilitate confident decision-making, aligning investment choices with individual preferences and objectives.
Conclusion
With my burgeoning 100k portfolio, I grapple with the choices between ETFs/index funds, stock market investments, and the seemingly secure high-yield savings account. By utilizing the assistance provided by an AI Legalese Decoder, I can unravel the complex world of investment and make an informed choice that aligns with my financial goals and risk tolerance level. Remember, seeking professional advice and continuously educating oneself is essential in navigating the ever-changing investment landscape.
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AI Legalese Decoder: Simplifying Legal Jargon and Enhancing Understanding
Introduction:
Legal documents are notorious for their complex and convoluted language, often referred to as “legalese.” The use of dense terminology, unfamiliar phrases, and lengthy sentences can make comprehending legal documents a challenging task for both legal professionals and the general public. However, with the advent of AI Legalese Decoder, this problem can be effectively addressed. This technology assists in decoding legalese by simplifying the language used in legal documents, facilitating better comprehension, and enabling more efficient decision-making.
The challenge of understanding legalese:
Legalese, characterized by its archaic expressions, Latin terms, and intricate sentence structure, poses a significant barrier to effective communication. Legal documents, such as contracts, leases, and legal opinions, are filled with complex jargon that can confuse and intimidate readers. The excessive use of technical language often leads to misunderstandings, delays in legal processes, and even costly legal disputes. Consequently, individuals representing themselves in legal matters may find themselves in a disadvantaged position due to their limited understanding of legalese.
Facilitating comprehension:
AI Legalese Decoder is a cutting-edge technology that employs machine learning algorithms to simplify and translate legalese into plain and comprehensible language. Its sophisticated algorithms analyze the structure, syntax, and vocabulary of legal texts, identifying complex phrases and sentences that require simplification. By replacing archaic expressions and Latin phrases with their modern equivalents, the AI Legalese Decoder enhances readability and improves overall understanding. This technology also breaks down lengthy and convoluted sentences, presenting information in a clear and concise manner. Consequently, legal professionals and non-experts alike can navigate legal documents more easily, ensuring that important details are not overlooked.
Accelerating decision-making:
Understanding the precise terms and clauses of legal documents is crucial for making informed decisions. However, the burden of navigating legalese slows down the decision-making process, affecting both individuals and businesses. AI Legalese Decoder streamlines this process by providing quick and accurate translations of legal jargon. With its ability to break down complex sentences and identify critical points, this technology enables users to grasp the content of legal documents more rapidly. By accelerating the understanding of legal terms, the AI Legalese Decoder empowers legal professionals to make quicker and more informed decisions, saving time and improving efficiency.
Enhancing accessibility:
One significant advantage of AI Legalese Decoder is its potential to enhance accessibility to the legal system. Legal language barriers can create obstacles for individuals seeking justice and equality before the law. By simplifying legal jargon, this technology bridges the gap between legal professionals and those who lack their expertise. With a user-friendly interface, the AI Legalese Decoder is accessible to both legal practitioners and everyday individuals, allowing more people to understand their legal rights and obligations. This democratization of legal information has the potential to empower individuals, leveling the playing field in legal matters and promoting a fairer and more inclusive justice system.
Conclusion:
AI Legalese Decoder represents a valuable tool in simplifying legal jargon and enhancing comprehension of legal documents. By utilizing machine learning algorithms, this technology decodes complex sentences, replaces archaic expressions, and simplifies legalese, resulting in improved understanding and faster decision-making. Additionally, AI Legalese Decoder enhances accessibility, empowering individuals to navigate legal documents and assert their rights effectively. With its potential to revolutionize the legal profession, this technology represents a significant step towards a more transparent, efficient, and inclusive legal system.
****** just grabbed a
1. 7% is a very conservative number for nominal stock market returns. 7% is closer to the rate for real (inflation adjusted returns). Nominal compound annual growth rate is around 9% for stocks.
2. Money market accounts were getting less than 1% until a year ago.
3. Since interest compounds logarithmically, 5% compared to 10% growth after 30 years of compound growth is way less than half the growth even though the growth rate was half.
VOO year to date is up over 17%
You are comparing long term averages against a short term rate. Apples to apples says Market is 2-3x performance of HYSA. Sure, there is more risk, but there is more reward
People have different goals and preferences
Why would you want them to not-buy a 2 month treasury bill ?
What would I do with 100K – – – I’d follow my plan already in place and just be 100k further along the way
First determine what are your goals?
Then you can decide whether a proposed action or decisions brings you closer to those goals
r/personalFinance has a how-to step-by-step wiki in about Worth reading to get ideas as you develop your goals
r/YNAB free trial month and good comments in the subreddit to help organize and execute your plan
r/FiRe
r/LeanFire
r/retirement
When you factor in inflation, you gotta make more than the 5% return on your money in the long run. Money Market is great for short term savings, but anything 5 years out and further should be invested.
Stock market returns 7% a year? According to what? Maybe when you factor in inflation but in that case the MM is only returning 1.5-2% with inflation… Money markets are where you park short term money or cash savings. Do you have any investments or is all your money in cash?
Also what is this money for? Assuming it’s for retirement and you’re 10-20 years away, putting it in a MM is shooting yourself in the foot. Rates aren’t guarenteed to stay at 5%. For example Spaxx has a 7 day average annualized yield of 4.97%. However the 1 year average is 3.76%, 3 year average 1.31%, 10 year 0.8%. Money markets are great to get a return off your money while it’s sitting their but they are by no means a way to invest long term for your retirement.
$100,000 over 30 years at 5% is $432,000
$100,000 over 30 years at 10% (avg market return before factoring inflation) is $1,744,000
Also VSTAX returning 5-9% a year? Where? Is this factoring in high inflation? If so why didn’t you factor it into your money market returns? VSTAX 1,3,5, and 10 year average returns are anywhere from 10-12%
I suggest looking into books like The Simple Path to Wealth by JL Collins or other books you see recommended on the sub. 10/10 financial advisors will tell you money markets are one of the worst long term investment vehicles
Do you want the possibility of real, inflation-adjusted returns?
Index funds, ETFs, or money market. That is what I do. Mutual funds cost too much with their fees. Index funds are for long term money I want to invest. ETFs are long term stuff 3-7 years where I am trying to invest in a specific slice of the market. Money market funds are used by me for things I know I am going to spend over the next year.
My percentages right now are:
Index Funds = 55%
ETFs = 30%
Money Market = 15%
I have 401k invested in 401k funds like large and mid cap.
Index funds S+P, Nasdaq, and Schwab 1000
ETFs = Semiconductors, Solar, Battery systems, etc
Money Market – Schwab at 5.01%
Park 6 months in a hi yield savings account and apportion the rest to hi performing (long and short term) ETFs like VOO, VONE, VONG, VGT, VTHR and if I was risk averse VTI so as to keep up with inflation. Dollar cost average is the way.
Do a search for rule of 72. There was a recent video on YouTube that had a great analysis of 3% vs 9%.
Because you want your investments to beat inflation over the medium to long term.
CDs are guaranteed 5.1% return right now. Those are actually zero risk. Higher return and less risk than money market. If the whole stock market tanked tomorrow that money market account would be screwed but you’re still getting your return on a CD
You’re comparing historical returns to current interest rates. That’s not an apples to apples comparison.
The long term return on stocks is more like 10 (depending on what indexes you’re using and what year you start and stop the simulation)
The 7% you read about is probably the inflation adjusted return. To be a fair comparison you’d have to adjust your money market rate for inflation also.
Everyone’s risk tolerance is different. Not all funds have the same return rate. The mutual fund (HNACX) I am invested in in my 401k saw a 40% return YTD.
It really depends on how long you have to let the money grow before you need it. Over 20 years, with a 9% growth rate you end up with 5.6 times your original investment. At 4.9%, you only get 2.6 times. So the difference really… compounds!
You may want an emergency fund in the HYSA so it’s easy to access, and for longer term money I’d recommend a stock index fund. Just don’t look at it and sell when the market goes down, because that ruins the whole thing.
Money market rates (like all interest rates) move up or down alongside the fed funds rate. If rates come down (not saying this year or whatever, but assuming they regress at least partially to their historical mean), then the market will still be pulling about 9% while the money market account might be closer to 2%.
Also, if you’re an above average active investor, you generate way, *way* more than 7% per year on average. There aren’t any published metrics for retail investor portfolio returns due to a lack of access to data, so I can’t really say how well retail investors do as a group, but I personally feel I had an awful year if I don’t hit at least 15%. Lots of work and sometimes more risk involved in that process, but not always on the latter point. Despite popular opinions to the contrary, risk and reward do not necessarily directly correlate.
Check how this same trade did in 2020 or really most years for the past 15.
They are less known. They’re not advertised as much. So a lot of people don’t know they even exist. You have to be a little bit educated on Financial stuff in order to even know about them. That’s even kind of part of the reason why you’re asking I bet.
Because, yeah, pretty much. Money market or high interest checking accounts are usually a really smart option to take.
There are some accounts with slightly higher than 5% as well. But I think those are online only.
I think Smarty Pig has one that goes up to 7%. But it might be only under certain conditions.
Oh, actually I just checked. And they are only a little bit over 4%. I’m guessing it was up to 7 during the pandemic or around that time period.
In my personal opinion you should only invest in stocks if you have taken the time to learn how they work. Rule number one investing by Phil town is a really good way to learn. He breaks it down and makes it simple to understand. If you fully understand the stocks and you watch them regularly, risk becomes almost zero. If you absolutely know how the markets are going. But there is always a chance to get blindsided. But if you really follow and study the market everyday, you can kind of see how it will go, especially if you learn how to properly analyze it.
Also, just to clarify. The ETFs are the stock market. They are index funds made up of multiple different companies in the stock market. And they’ve been designed by experts to mitigate risk and obtain growth.
To start, you should definitely put your money into a money market account. Or just any kind of regular bank account with a higher growth. Start there. You can shop around for different banks with different growth rates.
Once you got your account growing passively, then you can start learning about the stock market. Just take your time and learn things step by step. It can be overwhelming. There’s also a lot of hype. If you try and search the stock market on youtube, you get a bunch of dude Bros trying to Hype people up. But there are also some more educational accounts.
Graham Stefan is pretty interesting and educational. But they are his personal opinions. And I already suggested philtown. I randomly came across his book in the library. But it was really educational and simple and easy to understand. And he also has a YouTube channel.
I have $100K and quite frankly 7% in the market if you are good and lucky, putting it in a CD giving guarantee is what I would recommend. Money Market accounts can change in percentage. You can put it in a 6 month CD for 5.75% results will be better and re-evaluate after 6 months.
Here in Canada you pay tax on 100% of the interest on interest gained, versus tax on 50% of capital gains in other investments. Other investments also average better returns than the 5-5.5% money market funds are paying.
An additional 100k? Probably buy a house outright or put a sizable deposit on one.
Preferably something with an ADLz
For short term purchases (within a year or so), you’re right, it should be in an HYSA. But beyond that, some things to consider:
That 4.9% return has only recently been higher than inflation, and a couple months ago was less than it.. So you’ve just about been breaking even for the past 2 years.
What may happen soon? Inflation cools, so yields go down, then stocks go up. Now you’ve kept your money in the HYSA which can go down to 1-2%, you missed the big jump in stocks (which might be 4-5% increase in just a day or two, and could be on track to go up 20-25% or more. Sure, it averages out over the long-term, but if you miss those pivotal days, your average return could be very low or even negative. Also, broadly, the stock market returns 10% before inflation adjustment, so there’s a larger gap than what you listed.
Everyone has different risk levels. Never put your hard earned money into something that causes you sleepless nights. If, however, you believe you are losing gains, try putting a small amount into an alternate vehicle. You don’t need to put all your money into a single investment.
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First, you are neglecting yield on the index funds. Until last year, [VTSAX](https://seekingalpha.com/symbol/VTSAX/dividends/yield) had a higher yield than any savings account. And this was before any capital gains.
Second, dividend yields and capital gains have much better tax rates than interest income.
Third, compounding makes the difference between 5 and 7% huge. Already, the income is almost 50% more, before compounding. Throw in the tax incentives and it’s a no brainer.
High MM rates are temporary. 7-8% stock market growth is historical. If you’re in it for the long term MM represents a risk of loss compared to other options. If you cannot tolerate risk, MM is good option in this moment now, but will probably change as interest rates go down.
Because you can buy stocks that end up going up 100%… and have dividends aka free money. You need a mix of investments. I’m assuming you are young. Stock market does not have “a ton of risk”. Look at a stock chart over 5, 10, 15 years. It’s a no brainer not to be in it. Don’t be scared.
Because it makes you less money. Much less over a long period of time.
“Ton of risk” is not how I would describe the stock market. That’s just how you personally view it.
VUG is up 33% this year. Is there risk? Yes. Am I managing that risk by buying VUG instead of single stock. Absolutely.
“Ton of risk” is an emotional choice on how you view investments. You’re afraid of the opportunities to meet future goals based on your fear of losing the security you currently own. If your goal is worth solid $100k, then you’ve met your goal.
I love my money market account , but a good index fund does me better
7% AVERAGE is the AVERAGE. So usually when inflation is up companies charge more and make more… usually your stock goes up ABOVE average.
Too many people think the 7% is consistent every year.
Recently, VUSXX has better return rate than HYSA so I leave emergency fund $$$ in the money market. Enough $ in saving acc to pay off CCs. Always DCA into index fund because long term > short term.
Some people don’t have the minimum amount
Lots of big stocks – amzn and googl for example, are up 40-50%. Some tech stocks (like PLTR) are up 2-300% in a few months. Part of risk is reward. Stocks are still pricing in inflation; just like everything else, they should be more expensive…
Your numbers are off. The overall market returns significantly more than 7% in the long run (so far anyway….never know about the future).
I have my emergency in a money market fund, but that’s it. Other than that the rest is in ETFs/bonds (mostly ETFs). Why? Becase MMF goes with the interest rates. Also when it fell you were buying ETFs/stocks on the cheap. When it rose it was way outpacing my MMF. You’re looking at near peak returns for MMF and HYSA. When the feds eventually drop high interest it’ll go back to a low percentage.
But learn from everything and if you prefer the MMF then that’s fine because it’s your money in the end. So keep on researching.
Compounding works better even with small differences in return.
$10k for 10 years at 5% is $16,470 (+6470)
$10k for 10 years at 7% is $20,097 (+10097)
A 40% increase in rate (5->7%) leads to a 56% increase in return (6470->10097)
[https://www.nerdwallet.com/article/banking/savings-calculator](https://www.nerdwallet.com/article/banking/savings-calculator)
You said it yourself- it averages 7% (higher than that). If you need the money next year, sure don’t put it into the stock market. If you need the money in 20 years, then it doesn’t really matter how it performs each individual year, only how well it does at the end of the 20 years
Because I have earned 9% in 6 months elsewhere.
>Is the extra 2% you could get from the other options really worth the risk and worrying?
I think what you need to keep in mind is the idea of compounding growth.
Assuming you’re referring to you 100k then the difference between 5% ROI and 7% ROI:
* Let’s ignore the prospect of making $2k extra in 12-months, as this is too short-term
* In 10 years, there’s a $30k difference in your investment
* In 20 years the difference is over 6-figures. In other words, the accumulation difference in 20 years between 5% and 7% is big enough to engulf the original 100k principle.
Its funny, 2 years ago everyone was asking “why doesn’t everyone put all their money into stocks, your returns are 30%!”
Mmkts have opportunity risk. And the greatest risk you have is being in the same or worse financial position 10 years from now.