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Don't leave it in low interest account? It's likely millions of $$$, so index fund would be a likely storage for a lot of it

by edoceo 7y ago

refurb 7y ago
Doesn't seem like a good idea to keep your rainy day fund in an index. When things go to crap, you're going to take a huge hit before you can turn it into cash.
Armisael16 7y ago
If trillions of dollars come out of index funds their value is going to crash, even if nothing else is happening. Large corporations aren’t like people - they can easily move markets on accident.
imtringued 7y ago
You're probably missing a lot of financial basics if you have to ask this. The reason why we have stock buybacks and dividends is so that the investors can allocate the money any way they'd like. Instead of letting Apple sit on $100 billion and hoping they are smart enough to invest the money wisely you instead pay that excess money out and then you are free to invest this money into more apple shares, an index fund, bonds or even use it yourself. If you want to invest into a holding company that does nothing but own other companies then you can choose a company that specializes into that and that company is definitively not Apple. Why is it better for the investor to allocate the money than Apple? Well, it is pretty obvious. Apple has a different risk profile. If it keeps money for a rainy day like covid-19 then the value of the assets it owns must not be correlated with the "disaster" that it is supposed to help you against. An index fund under performs during covid-19 so it's an awful choice for a rainy day fund. Meanwhile investors probably don't care about rainy day funds for day to day phone manufacturing. They might be interested in high risk VC investments that lead to a lot of dead companies but a few unicorns. They might be interested in low risk bonds because they are reaching retirement age. That's information that Apple doesn't have and therefore it will never make a good decision on your behalf.

Don't leave it in low interest account? It's likely millions of $$$, so index fund would be a likely storage for a lot of it

by edoceo 7y ago

Don't leave it in low interest account? It's likely millions of $$$, so index fund would be a likely storage for a lot of it

refurb 7y ago

Doesn't seem like a good idea to keep your rainy day fund in an index. When things go to crap, you're going to take a huge hit before you can turn it into cash.

Armisael16 7y ago

If trillions of dollars come out of index funds their value is going to crash, even if nothing else is happening. Large corporations aren’t like people - they can easily move markets on accident.

imtringued 7y ago

You're probably missing a lot of financial basics if you have to ask this. The reason why we have stock buybacks and dividends is so that the investors can allocate the money any way they'd like. Instead of letting Apple sit on $100 billion and hoping they are smart enough to invest the money wisely you instead pay that excess money out and then you are free to invest this money into more apple shares, an index fund, bonds or even use it yourself. If you want to invest into a holding company that does nothing but own other companies then you can choose a company that specializes into that and that company is definitively not Apple. Why is it better for the investor to allocate the money than Apple? Well, it is pretty obvious. Apple has a different risk profile. If it keeps money for a rainy day like covid-19 then the value of the assets it owns must not be correlated with the "disaster" that it is supposed to help you against. An index fund under performs during covid-19 so it's an awful choice for a rainy day fund. Meanwhile investors probably don't care about rainy day funds for day to day phone manufacturing. They might be interested in high risk VC investments that lead to a lot of dead companies but a few unicorns. They might be interested in low risk bonds because they are reaching retirement age. That's information that Apple doesn't have and therefore it will never make a good decision on your behalf.