Lets say you got somewhere around 425K, give or take a bit. Assume no need for the money apart from investing for future profit.
Some of the options might include:
investment properties (single family homes, multi-family homes or small apartment buildings, or commercial property -if you pick this option, what kind do you focus on and why?)
Buying or starting a business (what kind of business?)
Investing in various funds, stocks etc. (what types of investments? And do you manage it yourself or just hand it over and sit back?)
Or something else altogether? if so, what?
The only goal with this money is to make money. Moderate risk is fine, but nothing crazy.
Ha ditto kari - I'd give to needy nesties like myself ;-)
But seriously I would hire someone who actually knew what they were doing for that kind of money. I would invest it for sure and I dont' think in real estate although maybe, but I would definitely want someone with experience and knowledge to handle it.
Post by thatgirl2478 on Nov 14, 2012 8:55:51 GMT -5
hmmm ... probably invest it some how (stocks etc) but I would need someone to manage it b/c I have very little interest in actively managing investments.
I'd want to invest it in funds/stocks/etc. I have no interest in investment properties -- too much work. Nor do I have any interest in starting a business. I'm doing fine working for others.
So by hiring a professional, do you mean sitting down with someone at an investment firm and choosing a portfolio?
Because while that's one way to invest, there are other options out there and it seems like most people avoid some of the more hands-on investments. But then you pay a premium to have others look after your money long-term, when you might have made more with a different strategy.
So by hiring a professional, do you mean sitting down with someone at an investment firm and choosing a portfolio?
Because while that's one way to invest, there are other options out there and it seems like most people avoid some of the more hands-on investments. But then you pay a premium to have others look after your money long-term, when you might have made more with a different strategy.
First of all I probably wouldn't sit down with someone at an investment firm. I would ask around and see if your friends or parents have an advisor they recommend. If they don't I would check out this website to find someone www.napfa.org.
Forgive me if I am wrong, but your post makes it sound like you are relatively new to investing. If that is the case it can't help to get some advice from a professional. If you don't know what you are doing there is a far greater downside if you try and do everything on your own.
I think you might be able to make more money via an investment property, but that is a lot of work and I know I can barely keep my own house functioning. I have zero interest in dealing with a rental at this point in your life. (Maybe that is your thing.)
I would pay off all of our debt and buy our own house. Then I would take what was left and start house-flipping. I think I would really enjoy that. I wouldn't want to be a landlord though.
So by hiring a professional, do you mean sitting down with someone at an investment firm and choosing a portfolio?
Because while that's one way to invest, there are other options out there and it seems like most people avoid some of the more hands-on investments. But then you pay a premium to have others look after your money long-term, when you might have made more with a different strategy.
First of all I probably wouldn't sit down with someone at an investment firm. I would ask around and see if your friends or parents have an advisor they recommend. If they don't I would check out this website to find someone www.napfa.org.
Forgive me if I am wrong, but your post makes it sound like you are relatively new to investing. If that is the case it can't help to get some advice from a professional. If you don't know what you are doing there is a far greater downside if you try and do everything on your own.
I think you might be able to make more money via an investment property, but that is a lot of work and I know I can barely keep my own house functioning. I have zero interest in dealing with a rental at this point in your life. (Maybe that is your thing.)
I wish I had a cool half million tucked away!
No, I'm just curious about how MM would handle bigger sums for investment, without the usual 'pay off debt, fund retirement, maybe buy a home and splurge on a vacation' response.
That, and I'm wondering what other possibilities are out there, other than stocks/funds etc, real estate and small business.
Sounds like the vast majority of people prefer managed financial instruments.
Sounds like the vast majority of people prefer managed financial instruments.
that probably is the most efficient use of the money for most people. I know I would really enjoy working with properties which is why I would pursue that.
If things were going well I would probably also open up a little breakfast & coffee place in my town. I know it would be a ton of work, but I think it could be fun and we don't have anything like that.
But then you pay a premium to have others look after your money long-term, when you might have made more with a different strategy.
While you do pay a premium for active management, a reputable firm should charge around 1% per year. All of our returns are shown net of fees & expenses and over the long-term the actively managed accounts blow the indices out of the water. This is AFTER accounting for the fees.
It is very important to make sure the firm you choose is registered with the SEC, that you fully understand how they make money and what fees you will be charged, and that you speak to other current clients to serve as references. It is tricky, but I believe it is worth it when you find the right firm.
Actively managing investments is a full-time job, and I would never recommend it for someone with a day job in another industry.
First of all I probably wouldn't sit down with someone at an investment firm. I would ask around and see if your friends or parents have an advisor they recommend. If they don't I would check out this website to find someone www.napfa.org.
Forgive me if I am wrong, but your post makes it sound like you are relatively new to investing. If that is the case it can't help to get some advice from a professional. If you don't know what you are doing there is a far greater downside if you try and do everything on your own.
I think you might be able to make more money via an investment property, but that is a lot of work and I know I can barely keep my own house functioning. I have zero interest in dealing with a rental at this point in your life. (Maybe that is your thing.)
I wish I had a cool half million tucked away!
No, I'm just curious about how MM would handle bigger sums for investment, without the usual 'pay off debt, fund retirement, maybe buy a home and splurge on a vacation' response.
That, and I'm wondering what other possibilities are out there, other than stocks/funds etc, real estate and small business.
Sounds like the vast majority of people prefer managed financial instruments.
There are tons of other investing options like private equity, hedge funds, art, wine, etc., but at least in the former cases you probably aren't getting into them until you are talking about a lot more money than we're talking about here.
I didn't answer your question. If we are assuming that retirement is maxed out, debt is under control, etc. then I would invest most of the money in the market.
We already own one investment property and I would consider picking up one more. We make pretty good money on ours and it was VERY cheap.
There are tons of other investing options like private equity, hedge funds, art, wine, etc., but at least in the former cases you probably aren't getting into them until you are talking about a lot more money than we're talking about here.
Exactly. I would NEVER recommend someone go to a hedge fund with 350-500K. Never.
pay off our house, put some towards the buisness DH wants to start, rest in savings, college funds, and investments.
will never do rentals...after having rented my house and currently trying to evict a renter, being a landlord sucks and it's not worth the hassle and stress.
First of all I probably wouldn't sit down with someone at an investment firm. I would ask around and see if your friends or parents have an advisor they recommend. If they don't I would check out this website to find someone www.napfa.org.
Forgive me if I am wrong, but your post makes it sound like you are relatively new to investing. If that is the case it can't help to get some advice from a professional. If you don't know what you are doing there is a far greater downside if you try and do everything on your own.
I think you might be able to make more money via an investment property, but that is a lot of work and I know I can barely keep my own house functioning. I have zero interest in dealing with a rental at this point in your life. (Maybe that is your thing.)
I wish I had a cool half million tucked away!
No, I'm just curious about how MM would handle bigger sums for investment, without the usual 'pay off debt, fund retirement, maybe buy a home and splurge on a vacation' response.
That, and I'm wondering what other possibilities are out there, other than stocks/funds etc, real estate and small business.
Sounds like the vast majority of people prefer managed financial instruments.
I thought this hypothetical wasn't really so hypothetical
My DH wants a rental property, so I told him he can get one when all the stuff in my house is fixed. This was four years ago, we still don't have a rental property.
I wouldnt buy real estate as an investment right now. If you are not buying to live in, you need to find a tenant and you never know who you will get- if commercial, who is to say the business would do well enough to pay rent. if residential, the person could lose their job and be unable to pay. Take if from me, it is a b*tch to get out a non paying tenant!
I wouldnt start a business especially since you have no idea what kind! Thats crazy!!! Even people with experience cant make it now, who is to say you would - in a business you dont even know what it woudl be yet!!!
I would sit down with a commercial real estate broker; with a CCIM or similar designation and see what the market is like in your area.
You would need the right space. I am not sure how much of a down payment you would need, it depends on your banking relationships. Let's say you could put 10% down. You would have a $4,000,000 commercial building. I would want the tenant to be some sort of medical office or similar industry that is stable and growing. I would have them pay CAM expenses to offset property taxes and the like. And sign a 10 year lease.
Cap rates are usually 8 or 9, but we are starting to see cap rates of 10 in our area.
If you get lucky, cap rate of 10, on a $4 million building is $33,333/month in income. Debt service at 6% is 21,583. So you've got 11,750 month to cover expenses that are not offset by the tenant, I would probably hire a management service. Hope to net about $6K a month and hope that the building appreciates in value.
That would be the absolute best case scenario and obviously has moderate risk involved, but I've seen commercial real estate work out well for too many clients not to investigate it. I'm certainly not a professional but I would look into it. I'm personally more interested in the real estate market than investment market, and I think the long term cash flow would be very enticing. It really depends on the tenants and spaces that are out there.
Jwright, you and I think alike! Investment real estate really depends on the local market and economy, but the possible returns are very tempting.
I'm pretty sure you have to put down 20-33% for investment properties, though... Still, ROI on 400k in a 1.5mil building can be pretty great.
One of my family members is in an LLC that purchased a $4million medical-use building. They have a 15 year lease and are walking with $110K in cash every year. And because of favorable depreciation rules they were at a tax loss for the first five years or so - no taxable income! Why can't I do something like that?
Jwright, you and I think alike! Investment real estate really depends on the local market and economy, but the possible returns are very tempting.
I'm pretty sure you have to put down 20-33% for investment properties, though... Still, ROI on 400k in a 1.5mil building can be pretty great.
One of my family members is in an LLC that purchased a $4million medical-use building. They have a 15 year lease and are walking with $110K in cash every year. And because of favorable depreciation rules they were at a tax loss for the first five years or so - no taxable income! Why can't I do something like that?
You do realize they have a whole lot of luck on their side, right? It's not as easy as purchasing a building and simply leasing it out to an outstanding company who pays their bills.
One of my family members is in an LLC that purchased a $4million medical-use building. They have a 15 year lease and are walking with $110K in cash every year. And because of favorable depreciation rules they were at a tax loss for the first five years or so - no taxable income! Why can't I do something like that?
You do realize they have a whole lot of luck on their side, right? It's not as easy as purchasing a building and simply leasing it out to an outstanding company who pays their bills.
Sure it is some luck, but also diligent research, business acumen, and the right pieces in place. They didn't go out and purchase a building and then hope for the best. If the pieces weren't in place and the tenant on the line, they wouldn't have sunk the money into it.
Sure, I've worked with clients in foreclosure, that own empty shopping centers with no money coming in, but still have to pay tax on the cancellation of debt.
But I don't think I would ever count on a retail establishment as a tenant, except for a few of the big box stores. I'm involved in some investments as well and we look at the financial statements of anchor tenants and try to make smart decisions on who to lease to.
Of course there is risk, and some luck involved, but the same can be said for the stock market or any potentially lucrative investment.