While this is by no means an unconventional suggestion, I would consider putting it in an index fund. The fees are very low and barring societal collapse, your money will grow in the long-term without you having to do much of anything about it.
At a more meta level, the boring, conventional choice is generally the best one unless you have a compelling reason to believe otherwise.
We had a session on this at the London meetup. Here is the single-sheet-of-A4 how-to, which includes a non-complete list of institutions in the UK that provide index funds, and a very rough guide to researching them.
Oh, excellent—thanks so much! Side note: I really look forward to making some of the London meet ups when work pressure subsides a little, seems like these meet ups are excellent.
I’ll add to this—I’m in the process of setting one up. I couldn’t find anything about Scottish Mutual online. I’m currently trying with M&G, but I anti-recommend them. I believe when I asked who people are currently using, the answers were Fidelity and Legal & General, so those are probably sensible places to try.
My experience so far is that first time I tried to sign up, I entered a form field wrong and couldn’t correct it without starting over. The second time, I got to the stage of entering my bank details and clicking confirm, and the website timed out. Then they took money from my account, and sent me physical mail asking for proof of identity. (I assume this is a legal requirement, but I don’t remember seeing anything about it before signing up.) I’ve sent it to them, and they said they needed a week to review the documents, and that letter was dated the 17th and I haven’t heard anything since.
I don’t have particular advise, but I would point out that UK and the rest of Europe differ. You want to invest in a fund in your own currency to avoid exchange rate risks. If the currency that you need in your life is Euro, invest in a Euro notated fund. If it’s Pound Sterling, invest in a fund in that currency.
Thank you, also useful advice. My pre-moving to UK savings are all in Euro, my post-moving to UK savings are in sterling, so I guess I’ll have to look at both. Damn UK refusing to join the single currency, makes my personal finances so much more complicated...
Give it to a trusted creative acquaintance and ask for a surprise gift every few months, no expectations or judgment, until the money runs out. If this is an imposition, tell her she can keep some of it.
We don’t really know enough about you to give direct recommendations, but a significant portion of lesswrong is dedicated to better decision making.
Make a quick 2-4 item list of your goals, what actually matters to you right now. Now use the six hat method goal by goal to find out if that lump sum will significantly help you achieve any of those goals. Should nothing past muster, offload some decision fatigue and drop it in a fire and forget savings account/RRSP.
Much more than 4 years and you’re getting dangerously close to the points when the production drops off and the supply of new coins dries up, which will trigger a partial or total burst of the Bitcoin bubble. That might not render the Bitcoin valueless (though I think it will), but will certainly make them bad investments.
I consider this a near-certainty within 8 years, and a significant risk starting around 5 years from now. It’s a minor risk even now, but I don’t expect it to blow up until at least the next reward-halving.
I disagree. The reward halvings cannot come soon enough for bitcoin. Right now bitcoin (the community of bitcoin holders) is spending hundreds of millions of dollars a year in order to secure the network (in the form of new coins being created and sold onto the market). This has been pressuring the bitcoin price all year. Hundreds of millions in would-be bitcoin investment, sucked into mining hardware and electricity costs.
That doesn’t make any economic sense. Right now bitcoin is being inflated, which means people are spending hundreds of millions of dollars a year to keep the price stable (or not, as it is dropping). Get rid of the subsidy and demand would drive the price up, not down.
There’s definitely some risk here, but if you invested $3000 in buying ASIC bitcoin miners and joined a mining pool right now, you’d make returns of at least $10/day. That’s about 10% return / month. You can even do this entirely on the cloud without having to set up or host any hardware yourself. The main risk is your hardware becoming obsolete and losing value before you can sell it. But if the value of your miner holds constant for 3 months, you’ll have picked up a cool thousand. (This option warrants active management of the bitcoin mining market).
Believe it or not, there’s actually a full-on market (order book and everything) for cloud mining hardware at cex.io that you can use to track the value of cloud mining hardware and buy/sell them. I’m not sure I’d recommend hosting with them, but you can use the market to track the value over time of active mining hardware. I have about $400 worth of cloud miners going on cex.io as a test and it earns about $2/day at the current (low) bitcoin price, but their maintenance fees eat up almost half of that (I’m not sure how that compares to the cost of running one yourself). It’s nice to know that I can sell at any time though.
The other option is, of course, just buying 3k worth of bitcoin and waiting for it to appreciate. (Price was down to ~$375 as of yesterday from its previous average of around $450, so could be a good time to buy. I bought $1k worth of BTC yesterday)
Don’t buy bitcoin miners. I know a lot about this industry. It is basically impossible at this point in time to buy off-the-shelf miners and outperform simply buying bitcoins right now. It is certainly impossible without sweet deals from the manufacturers that you only get by buying in bulk, much larger than $3k. Cloud hashing is an order of magnitude worse.
There’s definitely some risk here, but if you invested $3000 in buying ASIC bitcoin miners and joined a mining pool right now, you’d make returns of at least $10/day.
Is that before or after the cost of electricity, and if after, at what price?
That’s after the cost of power (estimated at $0.20 / kWh) has been deducted with current mining difficulty and price. Even at cex.io, with my current rate of return after their almost 50% fees, I’m still picking up about 6%/month. If I can sell my computing power on their market for the same price I bought it after a month, that’s a good return.
And again, I’m not necessarily recommending this. I’m sure Mark_Friedenbach knows way more about this stuff than I do (I certainly wouldn’t say I know “a lot*” about this industry) so you should probably listen to him. Solvelt asked for unconventional ideas and this is definitely one of them. I’ve just been playing around with it and it’s all money I can afford to lose.
Even at cex.io, with my current rate of return after their almost 50% fees, I’m still picking up about 6%/month. If I can sell my computing power on their market for the same price I bought it after a month, that’s a good return.
Thats the problem: you cannot sell your computing power in the market at the same price you bought it at, because the value of the miners is rapidly decreasing (as more and better miners are released onto the market, and the hash rate increases, causing your equipment to mine less bitcoins per unit of time).
So what actually happens right now when you buy mining equipment is that you spend that $3000, and the first month you get 6% back, and the next month you get 5.5% back, and the next month you get 5% back, and so on. At some point the electricity cost to run that miner becomes greater than the value of the bitcoins it produces, at which point you must shut it off or lose money. If the amount of bitcoins you generated during that time was equal to or greater than the amount of bitcoins you could have purchased for the cost of the miner, then you did well.
However, at present this is not the case. If you calculate out the expected returns for the current generation of available mining equipment, is has just gotten worse and worse over the past several months, as the mining difficulty has continued to increase rapidly and the bitcoin price has greatly declined.
It has gotten so bad at the present time, that even if you assume that the difficulty will not increase AT ALL anymore, it would still take you 6-12 months to recover the cost of the ASIC. (This is a very unrealistic assumption. The difficulty has not actually had a period where it declined in about two years. While we may see a few periods where the difficulty stayed at current levels, expecting this to occur for 6+ months is highly unrealistic).
The present time is looking a lot like late 2011/early 2012 in terms of the viability of investing in mining equipment. This is a signal of a bottom in the bitcoin market, imo, but at market bottoms the correct plan is to buy bitcoins, not miners. The correct time to buy miners is after the bitcoin price has increased very rapidly, but the hash rate has not yet had time to catch up.
Right now, because the bitcoin difficulty has increased by a factor of ~30 over the past 10 months, and the bitcoin price has decreased 65%, the result is that any miner you buy right now will result in a loss.
Absolutely do NOT buy mining equipment right now. Every miner that you could buy right now is operating at a loss. Buy bitcoin, or some altcoins, or put it in index funds in the stock market, but do NOT invest in mining. The only possible way you could make money doing this right now is if bitcoin increased significantly, but if that happened then you would have made much more money just buying bitcoins.
At the present time buying bitcoin mining equipment is strictly worse than buying bitcoins.
In the last three months, the mining ability of a piece of hardware went down by more than 60%. Why would you expect it hold constant for the next three months?
Exactly. And to put things in even more perspective, if you bought a piece of mining hardware twelve months ago, today it would produce 1⁄200 as much as it did when you bought it. That is, it’s mining ability would have decreased by 99.5% in one year!
Donate it to Make A Wish Foundation for warm fuzzies. Make it public or start a chain spam on your FB page for extra points. Optimized for local unorthodoxy. I don’t know your values.
Personally, I’d spend the money the same way as if I had earned it gradually.
I recently came by some cash. What would be a worthwhile way to spend/invest ~3000 USD? I’m especially interested in unorthodox advice.
I am capable of letting the money sit for an extended period of time (4+ years).
No EA suggestions please, I have a separate budget for that.
While this is by no means an unconventional suggestion, I would consider putting it in an index fund. The fees are very low and barring societal collapse, your money will grow in the long-term without you having to do much of anything about it.
At a more meta level, the boring, conventional choice is generally the best one unless you have a compelling reason to believe otherwise.
Would you (or anyone else) have good suggestions for index funds for those living and earning in the UK/Europe? Thanks!
We had a session on this at the London meetup. Here is the single-sheet-of-A4 how-to, which includes a non-complete list of institutions in the UK that provide index funds, and a very rough guide to researching them.
Oh, excellent—thanks so much! Side note: I really look forward to making some of the London meet ups when work pressure subsides a little, seems like these meet ups are excellent.
I’ll add to this—I’m in the process of setting one up. I couldn’t find anything about Scottish Mutual online. I’m currently trying with M&G, but I anti-recommend them. I believe when I asked who people are currently using, the answers were Fidelity and Legal & General, so those are probably sensible places to try.
I’d be very interested in hearing about your experience and advice further along in the process. Thanks!
My experience so far is that first time I tried to sign up, I entered a form field wrong and couldn’t correct it without starting over. The second time, I got to the stage of entering my bank details and clicking confirm, and the website timed out. Then they took money from my account, and sent me physical mail asking for proof of identity. (I assume this is a legal requirement, but I don’t remember seeing anything about it before signing up.) I’ve sent it to them, and they said they needed a week to review the documents, and that letter was dated the 17th and I haven’t heard anything since.
Does your experience refer to M&G? I can see why you anti-recommend them!
Yes, that’s with M&G. I haven’t tried signing up with anyone else.
I don’t have particular advise, but I would point out that UK and the rest of Europe differ. You want to invest in a fund in your own currency to avoid exchange rate risks. If the currency that you need in your life is Euro, invest in a Euro notated fund. If it’s Pound Sterling, invest in a fund in that currency.
Thank you, also useful advice. My pre-moving to UK savings are all in Euro, my post-moving to UK savings are in sterling, so I guess I’ll have to look at both. Damn UK refusing to join the single currency, makes my personal finances so much more complicated...
I would recommend Fidelity’s FTSE All-Share tracker (it had the lowest fees I could find when I started saving some money in there a few months ago).
Give it to a trusted creative acquaintance and ask for a surprise gift every few months, no expectations or judgment, until the money runs out. If this is an imposition, tell her she can keep some of it.
If 3000 dollars is significant portion of your net worth I’d personally just keep it in cash (ie in a bank account) for the liquidity.
Fund a kickstarter project you find interesting and promising.
“I spent some on liquor, some on women and the rest I spent foolishly.”—Unknown
Peer-to-peer lending?
We don’t really know enough about you to give direct recommendations, but a significant portion of lesswrong is dedicated to better decision making.
Make a quick 2-4 item list of your goals, what actually matters to you right now. Now use the six hat method goal by goal to find out if that lump sum will significantly help you achieve any of those goals. Should nothing past muster, offload some decision fatigue and drop it in a fire and forget savings account/RRSP.
4+ years? Bitcoin.
Much more than 4 years and you’re getting dangerously close to the points when the production drops off and the supply of new coins dries up, which will trigger a partial or total burst of the Bitcoin bubble. That might not render the Bitcoin valueless (though I think it will), but will certainly make them bad investments.
I consider this a near-certainty within 8 years, and a significant risk starting around 5 years from now. It’s a minor risk even now, but I don’t expect it to blow up until at least the next reward-halving.
I disagree. The reward halvings cannot come soon enough for bitcoin. Right now bitcoin (the community of bitcoin holders) is spending hundreds of millions of dollars a year in order to secure the network (in the form of new coins being created and sold onto the market). This has been pressuring the bitcoin price all year. Hundreds of millions in would-be bitcoin investment, sucked into mining hardware and electricity costs.
Here is a excellent video discussing this: https://www.youtube.com/watch?v=_-TLA3j-ic4
That doesn’t make any economic sense. Right now bitcoin is being inflated, which means people are spending hundreds of millions of dollars a year to keep the price stable (or not, as it is dropping). Get rid of the subsidy and demand would drive the price up, not down.
There’s definitely some risk here, but if you invested $3000 in buying ASIC bitcoin miners and joined a mining pool right now, you’d make returns of at least $10/day. That’s about 10% return / month. You can even do this entirely on the cloud without having to set up or host any hardware yourself. The main risk is your hardware becoming obsolete and losing value before you can sell it. But if the value of your miner holds constant for 3 months, you’ll have picked up a cool thousand. (This option warrants active management of the bitcoin mining market).
Believe it or not, there’s actually a full-on market (order book and everything) for cloud mining hardware at cex.io that you can use to track the value of cloud mining hardware and buy/sell them. I’m not sure I’d recommend hosting with them, but you can use the market to track the value over time of active mining hardware. I have about $400 worth of cloud miners going on cex.io as a test and it earns about $2/day at the current (low) bitcoin price, but their maintenance fees eat up almost half of that (I’m not sure how that compares to the cost of running one yourself). It’s nice to know that I can sell at any time though.
The other option is, of course, just buying 3k worth of bitcoin and waiting for it to appreciate. (Price was down to ~$375 as of yesterday from its previous average of around $450, so could be a good time to buy. I bought $1k worth of BTC yesterday)
Don’t buy bitcoin miners. I know a lot about this industry. It is basically impossible at this point in time to buy off-the-shelf miners and outperform simply buying bitcoins right now. It is certainly impossible without sweet deals from the manufacturers that you only get by buying in bulk, much larger than $3k. Cloud hashing is an order of magnitude worse.
Is that before or after the cost of electricity, and if after, at what price?
That’s after the cost of power (estimated at $0.20 / kWh) has been deducted with current mining difficulty and price. Even at cex.io, with my current rate of return after their almost 50% fees, I’m still picking up about 6%/month. If I can sell my computing power on their market for the same price I bought it after a month, that’s a good return.
And again, I’m not necessarily recommending this. I’m sure Mark_Friedenbach knows way more about this stuff than I do (I certainly wouldn’t say I know “a lot*” about this industry) so you should probably listen to him. Solvelt asked for unconventional ideas and this is definitely one of them. I’ve just been playing around with it and it’s all money I can afford to lose.
Thats the problem: you cannot sell your computing power in the market at the same price you bought it at, because the value of the miners is rapidly decreasing (as more and better miners are released onto the market, and the hash rate increases, causing your equipment to mine less bitcoins per unit of time).
So what actually happens right now when you buy mining equipment is that you spend that $3000, and the first month you get 6% back, and the next month you get 5.5% back, and the next month you get 5% back, and so on. At some point the electricity cost to run that miner becomes greater than the value of the bitcoins it produces, at which point you must shut it off or lose money. If the amount of bitcoins you generated during that time was equal to or greater than the amount of bitcoins you could have purchased for the cost of the miner, then you did well.
However, at present this is not the case. If you calculate out the expected returns for the current generation of available mining equipment, is has just gotten worse and worse over the past several months, as the mining difficulty has continued to increase rapidly and the bitcoin price has greatly declined.
It has gotten so bad at the present time, that even if you assume that the difficulty will not increase AT ALL anymore, it would still take you 6-12 months to recover the cost of the ASIC. (This is a very unrealistic assumption. The difficulty has not actually had a period where it declined in about two years. While we may see a few periods where the difficulty stayed at current levels, expecting this to occur for 6+ months is highly unrealistic).
The present time is looking a lot like late 2011/early 2012 in terms of the viability of investing in mining equipment. This is a signal of a bottom in the bitcoin market, imo, but at market bottoms the correct plan is to buy bitcoins, not miners. The correct time to buy miners is after the bitcoin price has increased very rapidly, but the hash rate has not yet had time to catch up. Right now, because the bitcoin difficulty has increased by a factor of ~30 over the past 10 months, and the bitcoin price has decreased 65%, the result is that any miner you buy right now will result in a loss.
Absolutely do NOT buy mining equipment right now. Every miner that you could buy right now is operating at a loss.
Buy bitcoin, or some altcoins, or put it in index funds in the stock market, but do NOT invest in mining. The only possible way you could make money doing this right now is if bitcoin increased significantly, but if that happened then you would have made much more money just buying bitcoins.
At the present time buying bitcoin mining equipment is strictly worse than buying bitcoins.
In the last three months, the mining ability of a piece of hardware went down by more than 60%. Why would you expect it hold constant for the next three months?
Exactly. And to put things in even more perspective, if you bought a piece of mining hardware twelve months ago, today it would produce 1⁄200 as much as it did when you bought it. That is, it’s mining ability would have decreased by 99.5% in one year!
Donate it to Make A Wish Foundation for warm fuzzies. Make it public or start a chain spam on your FB page for extra points. Optimized for local unorthodoxy. I don’t know your values.
Personally, I’d spend the money the same way as if I had earned it gradually.