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200k cash, how would you invest it?

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Blacryan
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Location: Oregon
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quote:
Originally posted by oldguy
You are exactly right about knowledge and education - no one can take it away.

You have 3 distinct things that put you far ahead of most people - (1) an income stream, (2)$200,000 lump, and (3)youth. Most people miss on one or more - eg, if you didn't have the income, you might need to cut away at the $200k at $30k or $40k/yr for school - that would spell failure. Or, if your had 1 & 3, but had a $150k student loan instead of #2, the road would be harder.

As the site that I put in the last post shows, $200k left undisturbed grows to $4,600,000 in 30 yrs - and $4.6M at age 52 is a financial success by anyone's measure. Mechanically, you would do this by using a no-load fund company, such as Vanguard or Fidelity, and putting the $200k in a SP500 Index Fund - or in a Target2050 Fund. The money would grow tax deferred, the fee is small, about 1/10 of a %, and the funds are diversified.

By using an index instead of individual stocks, you eliminate the risk of a company failure, a risk that you now carry with Disney and MSFT - that is uncompensated risk.

When you want to buy some real estate, make a small downpayment on a house(s) (as small as possible and still get the prime rate). Use only 30-yr fixed rate loans, no ARMs, no balloon payments, no designer loans - ie, confine your risk to your investment, not to your source of capital. After the house(s) grows equity (where you own maybe 40% to 50%), refi and remove the equity. Use that money as seed money for either more houses or more stocks.
A house might have negative cash flow right after a refi - so I usually refi them at different times so that the composite cash flow is positive. Altho I don't want much taxable rental income (I have a good income) - I want the appreciation from theh houses - that grows tax deferred and you only pay when you sell a house.

As for lawyers not finding jobs - yes, lots of new JDs under-employed right now. But these things cycle quickly - 3 yrs from now the opposite may be true. So build on what you are good at, if you have a knack for Law, you will be marketable. If you are good at math/physics, you can be a marketable engineer. And so on.

Don't let Obama spook you - he is antibusiness but that doesn't mean that he can cause US Business to fail. He is pro-regulation so more Attys will be needed in business, medicine, gov't. He is almost sure to make healthcare more costly & more litiguous as over-regulated docs are driven out of the field and a doc shortage developes. All these cause shifts in the economic and employment landscape. Oddly, when you look back on it after 20 yrs, the changes seem trivial. The more things change the more they stay the same?

The common determinant is human behavior - even with our knowledge & civility, we still act like we did 100,000 yrs ago. We sqaubble with our mates, we start wars with the neighboring tribe (nation), we fight for survival, we pull together in natural disasters, we invent, explore, forever grow. Eg, the economy and the GDP grow annually forever. So stocks (companies) must continually grow to build more goods - so the market trends ever upward (but sporaticaly).


You're a smart man. How do you like AZ?

I have some family there and had been considering moving there for the past 2-3 months until just recently when some personal things happened and I decided not to.

I had considered buying a 4plex there. there are some incredible real estate deals to be had there.

I really dont know what I want to do, I am really torn as there are so many opportunities and so many things that are possible. I really just dont want to make a mistake. It's somewhat stressful.

On a side note, why do u suggest as little as possible down that will get u the best rate. Is there any benefit to putting 20%? Wouldn't it be good to avoid PMI?
Post Tue Feb 08, 2011 10:11 pm
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onlyseo
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I personally prefer stock market...
Post Thu Feb 17, 2011 11:23 am
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khosta
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I probably would pay off my debt, about $20k, and then invest some in an IRA and put some in savings.... might buy myself soemthing too.... Laughing
Post Wed Apr 06, 2011 3:44 pm
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tomibraniste
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with that money I built a gym
Post Thu Apr 07, 2011 3:48 pm
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