What does a 22yo do with $150,000?
I’m about to get my inheritance and I am almost clueless. I’ve looked into realestate, buying up rental properties and renting them. I’ve looked into stock and all that, confusing! I would love to invest it in a way that i could get money every month for rent. I will of course still work but I’m a student and a server so my income doesn’t amount to much. Suggestions?
1/3, 1/3, and 1/3.
Take 1/3 and put it as a downpayment on realestate where you will live, and also rent out rooms to roomates. This gives you tax advantages, income, and if you care for the home, will increase the value of your investment.
Take 1/3 and put it into T-Bills. These are Federal Bonds that have a guaranteed income. These give you stable assets, and a predictable credit income.
Because you are young, take 1/3 and invest it with a CFA – and make sure of the Certified Financial Planner before you agree to his/her direction. Invest that 1/3 also in thirds. Put 1/3 in the stock market straight out. Take 1/3 and put it into a mutual fund. Take the final 1/3 and put it into a high-yeild market fund, like the S&P or NYSE. As the market is at a near-historic low vs. the economy, it is a good time to invest in the market itself, then walk away for five years more of turmoil.
Once you speak to a CFA – who can prove his/her certification and has at least 3 nonrelative clients that can provide a recommendation of good service for over ten years, the CFA will tell you the same thing. You are basically building a financial foundation that will grow.
Good luck!
February 24th, 2010 at 12:49 pm
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February 24th, 2010 at 1:24 pm
1/3, 1/3, and 1/3.
Take 1/3 and put it as a downpayment on realestate where you will live, and also rent out rooms to roomates. This gives you tax advantages, income, and if you care for the home, will increase the value of your investment.
Take 1/3 and put it into T-Bills. These are Federal Bonds that have a guaranteed income. These give you stable assets, and a predictable credit income.
Because you are young, take 1/3 and invest it with a CFA – and make sure of the Certified Financial Planner before you agree to his/her direction. Invest that 1/3 also in thirds. Put 1/3 in the stock market straight out. Take 1/3 and put it into a mutual fund. Take the final 1/3 and put it into a high-yeild market fund, like the S&P or NYSE. As the market is at a near-historic low vs. the economy, it is a good time to invest in the market itself, then walk away for five years more of turmoil.
Once you speak to a CFA – who can prove his/her certification and has at least 3 nonrelative clients that can provide a recommendation of good service for over ten years, the CFA will tell you the same thing. You are basically building a financial foundation that will grow.
Good luck!
References :
February 24th, 2010 at 1:42 pm
If you are looking into real estate, you could buy an apartment complex/ house with two or three apartments close to where you already live, and then live in one of the apartments and collect rent from the others. A duplex would also be an option. You may be able to pay for a portion of the house with the inheritance and then make mortgage payments with the rent you are collecting. My parents did this after college, and owned the apartment house for a few decades after they bought a larger house to live in, and found it to be a relatively stable source of income.
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February 24th, 2010 at 1:52 pm
Real estate isnt bad, however, you may want to pay to find out exactly how you should go about doing that (if you want to buy houses and rent them to people). You will want to keep a couple of that for emergency funds, but also make sure you have enough by the time you are out of school to pay off any school loans/debt. This is why you should really pay the $100 or $200 to speak to a professional, because they can nail each dollar to a specific purpose. But i’d also suggest buying some shares in the market right now because it is a good time to buy. The stocks you want to look at is your decision, and its different for every person, but buying up real estate is not a bad idea. Buying a couple actually. Good luck.
P.S. Moonsong is on the right track, but i dont suggest T-Bills, those give little return, you might as well put them into VERY stable stocks like WMT and MCD…or keep it in an Money Market Account as emergency funds.
References :
http://alpha-investing.com/
February 24th, 2010 at 2:16 pm
I advise against hiring a financial advisor at this time. Somebody with only $50k and retiring in 10 years needs a financial advisor, but you don’t. Many people are forced to invest in the stock market to try an keep up with inflation. You are lucky because you have a big head-start. You should concentrate on keeping you wealth, rather than growing it at a 10% pace. The market is very volatile now, short term (1 year), you should invest in bank CDs. Make sure to invest in two SEPARATE banks.
CDs are where you should be now, but that will likely change in the future. You should use this time to educate yourself about finance, credit, and various investments so that you can make decisions for yoursellf (there’s nothing wrong with asking other, but you need knowledge to evaluate their opinions). You could try taking some finance or economic course since you are still in school. Also, there are many books that give you a basic understanding of financial topics. You should start with these, and also read some financial blogs.
You can also consider buying a house. Don’t buy one if you will be moving in less than 3 years.
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February 24th, 2010 at 2:55 pm
As a student, I don’t think you can buy a nice rental property with $150,000. You definitely need a decent job to pay for mortgages.
If you think you can handle the mortgage payment…then buying a property is a good idea for LONG TERM…
If you are looking for short term, then stock market. If you are risk averse, then maybe invest money but 80% stock and 20% bond or 60/40.
For me, I am in college. I just started trading a few months ago. I managed to make 2k from the 3k I invested. It has been fun and interesting.
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