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digitalmars.D - [OT] Brokerage for the D Language Foundation

reply Andrei Alexandrescu <SeeWebsiteForEmail erdani.org> writes:
The Foundation's cash os currently sitting in a checking account at Bank 
of America. I've googled for things like "brokerage accounts for 
non-profit" and figured that most or all deep discount brokers 
(Fidelity, Merrill, Etrade etc) allow opening accounts for non-profit 
organizations. Bank of America has a partnership with Merrill Edge, 
which I hadn't heard of before (likely a subsidiary of Merrill Lynch).
So, any suggestions on which brokerage would work best for the 
Foundation? TD Ameritrade would be the familiar choice for me. On the 
other hand, I'd be interested in trying something new. Thanks in advance 
for any insights! -- Andrei
Sep 17 2016
next sibling parent rikki cattermole <rikki cattermole.co.nz> writes:
On 18/09/2016 2:22 AM, Andrei Alexandrescu wrote:

 The Foundation's cash os currently sitting in a checking account at Bank
 of America. I've googled for things like "brokerage accounts for
 non-profit" and figured that most or all deep discount brokers
 (Fidelity, Merrill, Etrade etc) allow opening accounts for non-profit
 organizations. Bank of America has a partnership with Merrill Edge,
 which I hadn't heard of before (likely a subsidiary of Merrill Lynch).
 So, any suggestions on which brokerage would work best for the
 Foundation? TD Ameritrade would be the familiar choice for me. On the
 other hand, I'd be interested in trying something new. Thanks in advance
 for any insights! -- Andrei


 From what I have read online about banks + USA, I would not trust all 
funds to a single bank, but really this should be a question to an 
accountant.
Sep 17 2016
prev sibling next sibling parent reply John Colvin <john.loughran.colvin gmail.com> writes:
On Saturday, 17 September 2016 at 14:22:03 UTC, Andrei 
Alexandrescu wrote:

 The Foundation's cash os currently sitting in a checking 
 account at Bank of America. I've googled for things like 
 "brokerage accounts for non-profit" and figured that most or 
 all deep discount brokers (Fidelity, Merrill, Etrade etc) allow 
 opening accounts for non-profit organizations. Bank of America 
 has a partnership with Merrill Edge, which I hadn't heard of 
 before (likely a subsidiary of Merrill Lynch).
 So, any suggestions on which brokerage would work best for the 
 Foundation? TD Ameritrade would be the familiar choice for me. 
 On the other hand, I'd be interested in trying something new. 
 Thanks in advance for any insights! -- Andrei


Ignorant here: Why would the foundation need a brokerage account?
Sep 17 2016
parent reply Andrei Alexandrescu <SeeWebsiteForEmail erdani.org> writes:
On 9/17/16 11:31 AM, John Colvin wrote:

 Ignorant here: Why would the foundation need a brokerage account?


Companies (non-profits included) usually have some cash lying around. 
Some of that cash is needed for operational expenses (salaries, rents, 
utilities, bills etc) and for more rare expenses (such as DConf). (Our 
operational expenses are low, but we expect them to grow.) If there's 
more cash than necessary for the company to run for a few months, it 
makes sense to invest that cash in order to make more money from it, 
which returns back to the coffers of the company. -- Andrei
Sep 17 2016
parent reply Nick Sabalausky <SeeWebsiteToContactMe semitwist.com> writes:
On 09/17/2016 12:41 PM, Andrei Alexandrescu wrote:

 On 9/17/16 11:31 AM, John Colvin wrote:

 Ignorant here: Why would the foundation need a brokerage account?


 Companies (non-profits included) usually have some cash lying around.
 Some of that cash is needed for operational expenses (salaries, rents,
 utilities, bills etc) and for more rare expenses (such as DConf). (Our
 operational expenses are low, but we expect them to grow.) If there's
 more cash than necessary for the company to run for a few months, it
 makes sense to invest that cash in order to make more money from it,
 which returns back to the coffers of the company. -- Andrei


That's how I hear it worked in the 50's, but does anyone but the brokers 
ever gain any real interest from such accounts anymore? From everything 
I've ever seen and heard, they pretty much all now work such that 
basically all the earnings get scooped off the top by the banks/brokers 
themselves (who don't assume any of the risk themselves anymore) leaving 
the original investor with nothing more than their original invested 
amount. Brokers and managed accounts are turning into the new "savings" 
account anymore, you'd (literally) earn more annually just picking up 
the loose change you see in a parking lot.
Sep 17 2016
parent reply Andrei Alexandrescu <SeeWebsiteForEmail erdani.org> writes:
On 09/17/2016 12:53 PM, Nick Sabalausky wrote:

 That's how I hear it worked in the 50's, but does anyone but the brokers
 ever gain any real interest from such accounts anymore? From everything
 I've ever seen and heard, they pretty much all now work such that
 basically all the earnings get scooped off the top by the banks/brokers
 themselves (who don't assume any of the risk themselves anymore) leaving
 the original investor with nothing more than their original invested
 amount. Brokers and managed accounts are turning into the new "savings"
 account anymore, you'd (literally) earn more annually just picking up
 the loose change you see in a parking lot.


Are you referring to full service brokers, money managers, investment 
advisors, and the such? We're not looking for such, only an online 
brokerage that allow us to do our own stocks/funds investments. -- Andrei
Sep 17 2016
next sibling parent Nick Sabalausky <SeeWebsiteToContactMe semitwist.com> writes:
On 09/17/2016 12:58 PM, Andrei Alexandrescu wrote:

 On 09/17/2016 12:53 PM, Nick Sabalausky wrote:

 That's how I hear it worked in the 50's, but does anyone but the brokers
 ever gain any real interest from such accounts anymore? From everything
 I've ever seen and heard, they pretty much all now work such that
 basically all the earnings get scooped off the top by the banks/brokers
 themselves (who don't assume any of the risk themselves anymore) leaving
 the original investor with nothing more than their original invested
 amount. Brokers and managed accounts are turning into the new "savings"
 account anymore, you'd (literally) earn more annually just picking up
 the loose change you see in a parking lot.


 Are you referring to full service brokers, money managers, investment
 advisors, and the such? We're not looking for such, only an online
 brokerage that allow us to do our own stocks/funds investments. -- Andrei


Ah, yes I was. Guess I misunderstood.
Sep 17 2016
prev sibling parent reply dewitt <dkdewitt gmail.com> writes:
On Saturday, 17 September 2016 at 16:58:31 UTC, Andrei 
Alexandrescu wrote:

 On 09/17/2016 12:53 PM, Nick Sabalausky wrote:

 That's how I hear it worked in the 50's, but does anyone but 
 the brokers
 ever gain any real interest from such accounts anymore? From 
 everything
 I've ever seen and heard, they pretty much all now work such 
 that
 basically all the earnings get scooped off the top by the 
 banks/brokers
 themselves (who don't assume any of the risk themselves 
 anymore) leaving
 the original investor with nothing more than their original 
 invested
 amount. Brokers and managed accounts are turning into the new 
 "savings"
 account anymore, you'd (literally) earn more annually just 
 picking up
 the loose change you see in a parking lot.


 Are you referring to full service brokers, money managers, 
 investment advisors, and the such? We're not looking for such, 
 only an online brokerage that allow us to do our own 
 stocks/funds investments. -- Andrei


If you are actively trading I like Interactive Brokers.  I know u 
mentioned before about doing some day trading so they are also 
good for that.  If you looking for a more buy and hold strategy 
for the Foundation then I would just choose which one has lower 
cost ETFs and trade commissions.
https://www.interactivebrokers.com
Sep 17 2016
parent jmh530 <john.michael.hall gmail.com> writes:
On Sunday, 18 September 2016 at 01:04:16 UTC, dewitt wrote:

 If you are actively trading I like Interactive Brokers.  I know 
 u mentioned before about doing some day trading so they are 
 also good for that.  If you looking for a more buy and hold 
 strategy for the Foundation then I would just choose which one 
 has lower cost ETFs and trade commissions.
 https://www.interactivebrokers.com


I would have my accounts with them if my company allowed it, but 
really just for trading purposes. I'm not sure it would be the 
best thing for a non-profit that does not plan on trading much.

I would recommend they think first about their goals and what 
kind of portfolio they will have and then think about the 
brokerage that fits with their goals best. For instance, I have 
some accounts with Fidelity because they offer free ETF trading 
on a number of iShares accounts.

A commenter made a point about the amount of interest earned in 
banks. Indeed, bank deposits in the U.S. earn basically nothing. 
Of course, in other countries, short-term rates are below zero, 
potentially offering you even less. The key point I would 
emphasize is that you cannot earn a greater return without taking 
more risks. Online banks offering you a nice interest rate are 
investing in riskier debt.

I would again advise you to think about your investment 
objectives seriously. The reason why an organization like the 
Harvard endowment invests the way it does is because it basically 
has an infinite horizon. I don't think the D foundation is in 
that sort of place. If you have a shorter time horizon, then that 
has implications on how much risk you should be willing to take. 
That implies little to no exposure to equities/high yield 
bonds/etc.

Another commenter questioned putting all the money in a single US 
bank. Of course, there is a difference between having money in 
deposits vs. invested in mutual funds. Anyway, even if you keep 
the cash in deposits, the limit is $250,000 for FDIC insurance, 
so I wouldn't think about splitting things up between several 
banks until then. It might make sense to split up the money to a 
foreign bank if you could possibly have liabilities there.
Sep 17 2016
prev sibling parent reply Mark <smarksc gmail.com> writes:
On Saturday, 17 September 2016 at 14:22:03 UTC, Andrei 
Alexandrescu wrote:

 The Foundation's cash os currently sitting in a checking 
 account at Bank of America. I've googled for things like 
 "brokerage accounts for non-profit" and figured that most or 
 all deep discount brokers (Fidelity, Merrill, Etrade etc) allow 
 opening accounts for non-profit organizations. Bank of America 
 has a partnership with Merrill Edge, which I hadn't heard of 
 before (likely a subsidiary of Merrill Lynch).
 So, any suggestions on which brokerage would work best for the 
 Foundation? TD Ameritrade would be the familiar choice for me. 
 On the other hand, I'd be interested in trying something new. 
 Thanks in advance for any insights! -- Andrei


As jmh530 pointed out, the time horizon is probably the most 
important parameter in an investment. If you can put the money 
aside for at least one year, I think you can make 1-2% a year 
without taking a lot of risk, e.g. by investing in 
investment-grade corporate bonds with short maturity.
Sep 18 2016
next sibling parent reply Andrei Alexandrescu <SeeWebsiteForEmail erdani.org> writes:
On 9/18/16 7:16 AM, Mark wrote:

 On Saturday, 17 September 2016 at 14:22:03 UTC, Andrei Alexandrescu wrote:

 The Foundation's cash os currently sitting in a checking account at
 Bank of America. I've googled for things like "brokerage accounts for
 non-profit" and figured that most or all deep discount brokers
 (Fidelity, Merrill, Etrade etc) allow opening accounts for non-profit
 organizations. Bank of America has a partnership with Merrill Edge,
 which I hadn't heard of before (likely a subsidiary of Merrill Lynch).
 So, any suggestions on which brokerage would work best for the
 Foundation? TD Ameritrade would be the familiar choice for me. On the
 other hand, I'd be interested in trying something new. Thanks in
 advance for any insights! -- Andrei


 As jmh530 pointed out, the time horizon is probably the most important
 parameter in an investment. If you can put the money aside for at least
 one year, I think you can make 1-2% a year without taking a lot of risk,
 e.g. by investing in investment-grade corporate bonds with short maturity.


Thanks all for answering! Well there is a relatively low-risk option to 
make some 5%-7% annually by investing in marketplace lending, see 
https://lendingclub.com/. (Individuals may do the same, too, btw - look 
into it!) I've been using them since 2013 with moderate amounts. Right 
now the portfolio's return rate is 5.06% - not to sneeze at. The issue 
is liquidity, i.e. your principal and interest are returned on a monthly 
basis over 3-5 years. The monthly schedule is actually nice for the 
Foundation because it matches the way operations are paid for.

One remaining issue is large rare expenses, e.g. DConf. For that case we 
need some buffer, or count on sponsorship.

Regarding the stock market, IB is quite attractive, and has an 
incredibly low margin rate. It does seem to be aimed at frenetic traders 
though :o). The lowest-resistance option is to just go with Merrill Edge 
(good reviews including on this forum, and works with our bank from the 
get go).

One differentiating factor may be special offers for non-profits - if 
you catch wind of anything like that, please let me know. Thanks!


Andrei
Sep 18 2016
next sibling parent reply jmh530 <john.michael.hall gmail.com> writes:
On Sunday, 18 September 2016 at 12:39:25 UTC, Andrei Alexandrescu 
wrote:

 Thanks all for answering! Well there is a relatively low-risk 
 option to make some 5%-7% annually by investing in marketplace 
 lending, see https://lendingclub.com/. (Individuals may do the 
 same, too, btw - look into it!) I've been using them since 2013 
 with moderate amounts. Right now the portfolio's return rate is 
 5.06% - not to sneeze at. The issue is liquidity, i.e. your 
 principal and interest are returned on a monthly basis over 3-5 
 years. The monthly schedule is actually nice for the Foundation 
 because it matches the way operations are paid for.


I would advise against investing the whole sum with the Lending 
Club (some smaller amount, say 5-25%, I have less of an issue 
with). 5-7% is what people earn investing in dollar-denominated 
sovereign bonds from Emerging Markets. That's the kind of risk 
your taking on. You think it's low risk because you don't see the 
risk: unemployment is low and has been falling since 2013, so 
there are few defaults. What happens when there is a recession? 
There will be higher defaults, slower repayments. And you can't 
exit the position because you've locked up the investment for 3-5 
years.


 Regarding the stock market, IB is quite attractive, and has an 
 incredibly low margin rate.


Frankly, this comment makes me cringe. Margin rates should not 
influence your decision in the slightest.
Sep 18 2016
parent reply Andrei Alexandrescu <SeeWebsiteForEmail erdani.org> writes:
On 9/18/16 11:44 AM, jmh530 wrote:

 On Sunday, 18 September 2016 at 12:39:25 UTC, Andrei Alexandrescu wrote:

 Thanks all for answering! Well there is a relatively low-risk option
 to make some 5%-7% annually by investing in marketplace lending, see
 https://lendingclub.com/. (Individuals may do the same, too, btw -
 look into it!) I've been using them since 2013 with moderate amounts.
 Right now the portfolio's return rate is 5.06% - not to sneeze at. The
 issue is liquidity, i.e. your principal and interest are returned on a
 monthly basis over 3-5 years. The monthly schedule is actually nice
 for the Foundation because it matches the way operations are paid for.


 I would advise against investing the whole sum with the Lending Club
 (some smaller amount, say 5-25%, I have less of an issue with). 5-7% is
 what people earn investing in dollar-denominated sovereign bonds from
 Emerging Markets. That's the kind of risk your taking on.


Wouldn't that be risk from the unsecured personal lending business, 
which although numerically similar has a different dynamics?


 You think it's
 low risk because you don't see the risk: unemployment is low and has
 been falling since 2013, so there are few defaults. What happens when
 there is a recession? There will be higher defaults, slower repayments.
 And you can't exit the position because you've locked up the investment
 for 3-5 years.


I've been looking at their historical numbers. Their accounts didn't 
lose money even during the trough of the recession. At that time they 
were one of the best places to invest out there. There are challenges in 
the world of marketplace lending, but as far as I understand it sure is 
a solid choice.


 Regarding the stock market, IB is quite attractive, and has an
 incredibly low margin rate.


 Frankly, this comment makes me cringe.


s/cringe/curious to know more/

The basic idea here is to have a buffer for short-term borrowing. For 
example, for DConf we'd need to plop down some money for renting a 
conference hall until proceeds from registration roll in. The notion of 
being able to take a 1.60% APY for that is quite attractive. Sadly, I've 
looked at IB since and they don't offer any checking or general banking. 
I'm not 100% sure, but I assume they'd lend money only for investing; 
they wouldn't allow you to transfer cash on margin into your bank. Does 
anyone know exactly what the case is?


Thanks,

Andrei
Sep 18 2016
next sibling parent Mark <smarksc gmail.com> writes:
  I think it would be best to speak to people from other 
non-profit organizations (preferably ones that are very similar, 
at least in spirit, to the D Language Foundation) about their 
experience with such matters.

  Even if the Foundation currently has no more cash than a typical 
(or not so typical) individual, that doesn't mean that what is 
good advice for the individual is also good advice for the 
Foundation.
Sep 18 2016
prev sibling next sibling parent jmh530 <john.michael.hall gmail.com> writes:
On Sunday, 18 September 2016 at 16:13:55 UTC, Andrei Alexandrescu 
wrote:

 Wouldn't that be risk from the unsecured personal lending 
 business, which although numerically similar has a different 
 dynamics?


In my head, I was imagining an efficient frontier and where a 
5-7% return would get you.


 I've been looking at their historical numbers. Their accounts 
 didn't lose money even during the trough of the recession. At 
 that time they were one of the best places to invest out there. 
 There are challenges in the world of marketplace lending, but 
 as far as I understand it sure is a solid choice.


They have different ratings for loans. The favorably rated 
investments did well, but the lower rated stuff lost money. So at 
least that provides some guidance.

Anyway, I'm pretty sure longer-term Treasuries had even better 
returns during the financial crisis (b/c of the price change as 
yields fall) and you could sell a fund containing them at any 
time.


 Regarding the stock market, IB is quite attractive, and has an
 incredibly low margin rate.


 Frankly, this comment makes me cringe.


 s/cringe/curious to know more/

 The basic idea here is to have a buffer for short-term 
 borrowing. For example, for DConf we'd need to plop down some 
 money for renting a conference hall until proceeds from 
 registration roll in. The notion of being able to take a 1.60% 
 APY for that is quite attractive. Sadly, I've looked at IB 
 since and they don't offer any checking or general banking. I'm 
 not 100% sure, but I assume they'd lend money only for 
 investing; they wouldn't allow you to transfer cash on margin 
 into your bank. Does anyone know exactly what the case is?


I suppose this makes sense if they let you do it. I was thinking 
you were going to use margin for investing, which did not seem to 
fit with your goals.
Sep 18 2016
prev sibling next sibling parent reply Laeeth Isharc <laeethnospam laeethnospam.com> writes:
On Sunday, 18 September 2016 at 16:13:55 UTC, Andrei Alexandrescu 
wrote:

 On 9/18/16 11:44 AM, jmh530 wrote:

 On Sunday, 18 September 2016 at 12:39:25 UTC, Andrei 
 Alexandrescu wrote:

 Thanks all for answering! Well there is a relatively low-risk 
 option
 to make some 5%-7% annually by investing in marketplace 
 lending, see
 https://lendingclub.com/. (Individuals may do the same, too, 
 btw -
 look into it!) I've been using them since 2013 with moderate 
 amounts.
 Right now the portfolio's return rate is 5.06% - not to 
 sneeze at. The
 issue is liquidity, i.e. your principal and interest are 
 returned on a
 monthly basis over 3-5 years. The monthly schedule is 
 actually nice
 for the Foundation because it matches the way operations are 
 paid for.


 I would advise against investing the whole sum with the 
 Lending Club
 (some smaller amount, say 5-25%, I have less of an issue 
 with). 5-7% is
 what people earn investing in dollar-denominated sovereign 
 bonds from
 Emerging Markets. That's the kind of risk your taking on.


 Wouldn't that be risk from the unsecured personal lending 
 business, which although numerically similar has a different 
 dynamics?


 You think it's
 low risk because you don't see the risk: unemployment is low 
 and has
 been falling since 2013, so there are few defaults. What 
 happens when
 there is a recession? There will be higher defaults, slower 
 repayments.
 And you can't exit the position because you've locked up the 
 investment
 for 3-5 years.


 I've been looking at their historical numbers. Their accounts 
 didn't lose money even during the trough of the recession. At 
 that time they were one of the best places to invest out there. 
 There are challenges in the world of marketplace lending, but 
 as far as I understand it sure is a solid choice.


 Regarding the stock market, IB is quite attractive, and has an
 incredibly low margin rate.


 Frankly, this comment makes me cringe.


 s/cringe/curious to know more/

 The basic idea here is to have a buffer for short-term 
 borrowing. For example, for DConf we'd need to plop down some 
 money for renting a conference hall until proceeds from 
 registration roll in. The notion of being able to take a 1.60% 
 APY for that is quite attractive. Sadly, I've looked at IB 
 since and they don't offer any checking or general banking. I'm 
 not 100% sure, but I assume they'd lend money only for 
 investing; they wouldn't allow you to transfer cash on margin 
 into your bank. Does anyone know exactly what the case is?


 Thanks,

 Andrei


IB offer a trading account only.   You can wire money to your 
organisation's bank account,  and that's it.

I think the suggestion from others to be cautious about asset 
allocation is a sensible one.  Keynes did quite well in the end 
for King's College,  and more recently Dave Mittelman and Maurice 
Samuels did rather well for Harvard.  But those were established 
bodies that had plenty of cushion financially and prestige to 
carry them through the downs that come with the ups.   Nobody was 
going to refuse to donate to Harvard because they disagreed with 
its investment policy.

If tech and the corporate sector keep doing well,  that should be 
pretty good for being able to raise funds in coming months and 
years.   If things are more difficult,  then it's going to be 
harder to raise money,  and at the same time there will be more 
opportunities to spend money to further the aims of the 
foundation (since you can actually hire good people to help you 
in a downturn). So at least the needs of the foundation are more 
pro than counter cyclical.

I don't think there is a good case for having a margin account at 
all.   First there may be increased credit risk because of 
different custody treatment (I forget,and the rules have changed 
in any case).  Secondly to be a hundred percent fully invested is 
already taking an awful lot of risk, and cash needs ahead of a 
conference are something you can plan for when setting maturity 
of your investments.   Yes,  you can borrow against stocks and 
wire money to the organisation account,  but should you?

Re lending club,  if you invest a little,  then it's not enough 
to matter,  and if you invest a lot,  then you do have credit 
risk on the whole notional.   The nature of credit risk is that 
you're short convexity - you can only gain the coupon,  but 
defaults can often surprise.  And short term historical data 
doesn't tell you what you need to know,  because the really major 
events aren't ergodic.   (you obviously don't have long term data 
for lending club,  but you can look at data for past two 
centuries for a much better idea).   It's not the probability,  
but the magnitude and  consequences of loss.

Theres a whole set of expectations and lore regarding what one 
should do as a fiduciary.   Not my area,  and others will know 
better.

It's a very strange time - when rates are low people tend to pile 
into anything to get a return.   Understandable,  to be sure,  
but not always prudent.  That's how the credit bubble began post 
2001, and episodes like the present don't necessarily end well.

Cash isn't without risk either,  particularly if inflation should 
start to pick up in coming years.   (something that's not 
necessarily good for all asset prices). But on shorter horizons 
capital gains and losses dominate inflation surprises,  and my 
guess is that for the time being you will spend capital raised in 
the course of a few years.

So there's no easy option,  and I am also not able to give 
investment advice.   But definitely worry about the return of 
your capital first,  and the return on it next rather than the 
other way around.
Sep 18 2016
parent reply Andrei Alexandrescu <SeeWebsiteForEmail erdani.org> writes:
On 09/18/2016 07:46 PM, Laeeth Isharc wrote:

 So there's no easy option,  and I am also not able to give investment
 advice.   But definitely worry about the return of your capital first,
 and the return on it next rather than the other way around.


Thanks. Well this kinda boils down to a tautology. I remember my wife 
asked me once "what kind of insurance could protect us against 
anything"? There isn't one (which is kinda terrifying first time you 
realize it). In the US, as an aside, I don't think there is even a 
medical insurance that could protect you from financial ruin in all cases.

There is no easy option, and there is no risk-free option - so obviously 
we aren't looking for such.


Andrei
Sep 18 2016
parent reply Walter Bright <newshound2 digitalmars.com> writes:
On 9/18/2016 5:20 PM, Andrei Alexandrescu wrote:

 Thanks. Well this kinda boils down to a tautology. I remember my wife asked me
 once "what kind of insurance could protect us against anything"? There isn't
one
 (which is kinda terrifying first time you realize it). In the US, as an aside,
I
 don't think there is even a medical insurance that could protect you from
 financial ruin in all cases.

 There is no easy option, and there is no risk-free option - so obviously we
 aren't looking for such.



My fatalistic view is if the market tanks that badly, it'll bring down 
everything else with it.
Sep 18 2016
parent reply Laeeth Isharc <laeethnospam nospamlaeeth.com> writes:
On Monday, 19 September 2016 at 02:39:33 UTC, Walter Bright wrote:

 On 9/18/2016 5:20 PM, Andrei Alexandrescu wrote:

 Thanks. Well this kinda boils down to a tautology. I remember 
 my wife asked me
 once "what kind of insurance could protect us against 
 anything"? There isn't one
 (which is kinda terrifying first time you realize it). In the 
 US, as an aside, I
 don't think there is even a medical insurance that could 
 protect you from
 financial ruin in all cases.

 There is no easy option, and there is no risk-free option - so 
 obviously we
 aren't looking for such.



 My fatalistic view is if the market tanks that badly, it'll 
 bring down everything else with it.


What I mean is that if you have a margin account and never use 
margin,  I believe - unless things have changed - that you expose 
yourself to custody risk that you wouldn't have without a margin 
account.  If you're going to have a margin account,  you might 
even make sure you have an unlevered account as well,  since this 
custody risk is reward free.

And as regards equities,  a fifty percent retracement in equities 
would be unexceptional given the move since 2009,and your asset 
allocation should be prepared for that possibility. Being levered 
might not be consistent with that.   That kind of move certainly 
wouldn't mean it brings down everything with it, just that it's a 
hairy period of the kind that happens from time to time.  It's 
entirely possible to have such a move with a surprisingly strong 
economy because stronger wage growth and higher rates might be 
difficult for some sectors and that's not what people expect  
now,  and not what is priced in.

I emailed Andrei directly on lending club.

In investing,  think about risk first,  and consequences over 
probability.   Taleb is mostly right on this. The distribution of 
returns isn't Gaussian.
Sep 19 2016
parent Walter Bright <newshound2 digitalmars.com> writes:
On 9/19/2016 10:44 AM, Laeeth Isharc wrote:

 [...]


Thanks for taking the time to post this stuff - it's good reading. Stuff I 
didn't know.
Sep 19 2016
prev sibling next sibling parent Laeeth Isharc <laeethnospam laeethnospam.com> writes:
See here on the rehypothecation risk of margin accounts.   A 
margin account allows your broker to lend your securities to the 
street.   If your broker should get into trouble,  you are 
potentially in a significantly worse position than if you held a 
non margin account.


https://blog.wealthfront.com/false-comfort-of-sipc-insurance/

It's worth also considering the SIPC ceiling.
Sep 18 2016
prev sibling parent jmh530 <john.michael.hall gmail.com> writes:
On Sunday, 18 September 2016 at 16:13:55 UTC, Andrei Alexandrescu 
wrote:

 The basic idea here is to have a buffer for short-term 
 borrowing. For example, for DConf we'd need to plop down some 
 money for renting a conference hall until proceeds from 
 registration roll in. The notion of being able to take a 1.60% 
 APY for that is quite attractive. Sadly, I've looked at IB 
 since and they don't offer any checking or general banking. I'm 
 not 100% sure, but I assume they'd lend money only for 
 investing; they wouldn't allow you to transfer cash on margin 
 into your bank. Does anyone know exactly what the case is?


I had some other thoughts on this.

There is a concept in investing called asset liability 
management. They use it at insurance companies. The idea is that 
if you have a liability in x years, then you should have an asset 
whose value you're sure about in x years to match it.

So from the perspective of Dconf, you can estimate what your 
expenses will be: downpayment for the room and expenses closer to 
the date. You could represent this as a series of estimated 
future cash flows at certain dates. Then, you need to think about 
what kind of investments you would make where you would be sure 
you can meet those liabilities. So if you need $x to rent a room 
in Y months, then you might invest in a bond with a Y months 
remaining such that you will have at least $x at maturity.

You could also plan a few years in advance for the next two or 
three Dconfs, probably also incorporating some inflation in costs.

Then, you can think about the remainder of the portfolio, knowing 
that you most significant liabilities are already covered.
Sep 21 2016
prev sibling parent jmh530 <john.michael.hall gmail.com> writes:
On Sunday, 18 September 2016 at 12:39:25 UTC, Andrei Alexandrescu 
wrote:

 Thanks all for answering! Well there is a relatively low-risk 
 option to make some 5%-7% annually by investing in marketplace 
 lending, see https://lendingclub.com/. (Individuals may do the 
 same, too, btw - look into it!) I've been using them since 2013 
 with moderate amounts. Right now the portfolio's return rate is 
 5.06% - not to sneeze at. The issue is liquidity, i.e. your 
 principal and interest are returned on a monthly basis over 3-5 
 years. The monthly schedule is actually nice for the Foundation 
 because it matches the way operations are paid for.
 [snip]



Was reading [1] on p2p lending and reminded me of our earlier 
discussion.

[1] 
http://conversableeconomist.blogspot.com/2017/11/the-darker-side-of-peer-to-peer-lending.html
Nov 10 2017
prev sibling parent reply Andrea Fontana <nospam example.com> writes:
On Sunday, 18 September 2016 at 11:16:47 UTC, Mark wrote:

 [...]
 I think you can make 1-2% a year without taking a lot of risk, 
 e.g. by investing in investment-grade corporate bonds with 
 short maturity.
 [...]


Or buying some coca-cola shares.
Sep 21 2016
parent Mark <smarksc gmail.com> writes:
On Wednesday, 21 September 2016 at 13:47:38 UTC, Andrea Fontana 
wrote:

 On Sunday, 18 September 2016 at 11:16:47 UTC, Mark wrote:

 [...]
 I think you can make 1-2% a year without taking a lot of risk, 
 e.g. by investing in investment-grade corporate bonds with 
 short maturity.
 [...]


 Or buying some coca-cola shares.


That's riskier. :)
Sep 25 2016