Hi friends, I am new here and this is my 1st post. I just found this forum yesterday and spend almost whole afternoon to read all the topics. I felt so happy to find this forum where people shares their real problems and experiences in life. I hope I could receive some good guidance from you guys who may have more wisdom than me. Here is my situation, I and my parent came to us as immigrant in 2011, they are 58 years old, still working (entry level) due to their age and language barrier. Their in come is about 40k. I m 29, my wife is 29 and we are going to get married in Sep 2016. we have planed out wedding since 2013 so we are good on wedding budget. I just graduated in oil & gas field and still could not find the job yet. My wife is working full time ( we have no kid ) and I m still stich with my part time job where I have been working during school time ( almost 5 years ). My wife income is about 50k and mine is about 25k. I'm still have 15k on the car loan, my wife also about 15k on her car. Our saving abt 15k, 0 credit card deb. Our house is paid off (the house is worth $320 at the moment), my parent has an investment house for rent ( $1,200/m ) and the rental house is also paid off ( this house is worth $150). They currently have about 18k on auto loan and I believe may be 3k on credit card deb.
This is the issue, my parent is getting old and they are tired at the job, mom said she is stress and upset at work because her leader is bullying her every day. Hence, my parent is thinking of selling their house in Vietnam (worth around $350k) and use that to invest here. They plan to open a restaurant with my help but I am also thinking of switching my major to Supply chain management or Logistic technology next year after married. I and my wife currently still live with my parent ( they don't want us to move out and I also cant leave my parent alone ). Please help me with a smart investment for my parent, this is their last dollar and they have been working very hard to have it. I have 0 knowledge of stock, fund investment before
I really appreciate your helps
Fri May 13, 2016 5:44 pm
oldguy Senior Member
Cash: $ 716.00
Joined: 21 May 2006
The family has about $820,000 in real estate. And the family income is about $115k. The value of the cars and the car loans probably cancel each other - ie, they neither add or subtract from your NW.
If your parents have a background in business/restaurant you have plenty of Net Worth to do that. Eg, you could sell two houses, put a 30yr, 4%, $250,000 loan on the $320k house - that would provide up to $750,000 to start the business. (You would be drawing the $750k from the $820k real estate equity.
One great feature in the US is the home mortgage - you can get a 30 year loan, fixed rate guaranteed, for 30 years.for up to 80% of the value of your home. (Almost all other nations require a refinance or reset the rate at 10 years or sooner).
Sat May 14, 2016 3:17 pm
Dragon1701 New Poster
Cash: $ 0.45
Joined: 13 May 2016
Thank you Oldguy for your advice, beside opening their own business is there any better way to invest. Honestly I don't think opening a restaurant is a good idea for them, couple more years they will be 60, language barrier ....it is really hard for them to run a restaurant. And in order to open a restaurant, we have to put down a lot of money, like you said its almost the whole money that they have. So I don't know if you can point out a different way to do with that money. I have read a lot of topics that you gave out advices, mostly mentioned about SP500, will that be a good way sir ?
Sat May 14, 2016 3:31 pm
oldguy Senior Member
Cash: $ 716.00
Joined: 21 May 2006
quote: mostly mentioned about SP500, will that be a good way sir ?
For you and your wife (age 29) that would be a very good way, historically the SP500 average return over a 30-yr block is 11%/yr. That's a factor of 23, ie $750,000 would grow to $17M in 30 yrs.
But for your parents, the outcome cannot be predicted - the SP500 index over the shortterm (say 10 yrs) could be negative - or it could be 4X. Of course it's possible that they could live another 30 yrs, but less likely than for you & wife.
Maybe the family could split the $750,000 - invest half in the SP500 for the longterm, and half in 5% bonds for the shortterm?
Sat May 14, 2016 6:26 pm
Cash: $ 3.90
Joined: 28 Jan 2016
Location: South Carolina
oldguy is right to exercise caution. The rule that has been touted for retirement funds is the 4% rule. At age 60 your parents should be about 60% in US Treasuries and Corporate Bonds (current yield might get you 2% return on investment) and 40% in stocks (typically a low cost index fund like a S&P500 fund). They will then withdraw 4% of the initial investment every year trying to keep this balance. If the index fund drops in value, pull from the bonds, if it goes up pull from the stock. Historically this has worked for the last 100 years with the worst showing as retirement right before the 1920s crash. This also allows for an increase in retirement income to match CPI every year.
So if we're looking at a $750k initial investment, that puts $450k in bonds and $300k in stocks and an annual withdrawl starting around $30k/year. CPI is floating around 1.5%/year right now and thats not much of a raise, but it is theoretically the cost of living increase required.
There are no promises and past performance does not mean yada yada, but it's the best feel good anyone has right now.
I know a few guys that have done the restraunt thing. I wouldn't recommend that unless your parents have experience and have been successful in the past. It's a lot of time to get it up and running and almost as much time to keep it running smooth. It's not uncommon to work 100+ hours per week as an owner in that industry.
Sun May 15, 2016 12:41 am
selina9 Contributing Member
Cash: $ 2.75
Joined: 17 May 2016
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I opened a restaurant with two partners (well known chef in the area and my bother) two years ago. It has done well mostly on the reputation of our chef friend, but it is an inordinate amount of work -- especially in the beginning. Revenue is irregular and margins can be very tight and staffing has much higher turnover and much more drama than I am used to in my other business (biotech software).
A restaurant can obviously be rewarding, but as a "retirement plan" type career change, I wouldn't recommend it. The money invested is almost a sunk cost -- most restaurants operate until they are no longer profitable and at that point, the assets compared to $ invested is pennies on the dollar.
Tue May 17, 2016 11:19 am
raybenz1985 New Member
Cash: $ 2.70
Joined: 20 Feb 2016
I would recommend to invest in stocks. It is the big opportunity to make profit with your invest. If you are interested then you need to learn it first and you should join a good stocks course. So I would recommend you can get a good course about stocks here: http://courses.wallstreetsurvivor.com