100k of home equity to invest....how would you invest it?

Question

I pay 6.8% in interest on my mortgage and I would like to invest some of my equity. Given this situation, how would you invest it?

Answer 1

Property like land, wooded acreage, or a building sight. You make an excellent return on this type of property 'cause they don't make any more of it.

Answer 2

Pay it into the mortgage. The sooner you own the home the better. You'll have no payments which is that much less to worry about. You could also invest in home repair/updating in things that will increase house value such as a new yard or kitchen/bathroom. But overall unless you can find out a way to consistently make more than 6.8% interest you are better off keeping the money in your house until you may or may not need it.

Answer 3

I would NOT use the equity in your home for any investment purpose. Keep the equity in your house where it belongs. In a slowing housing market, with interest rates going higher, why take the risk when the deck is stacked against you? Look at it this way, CD's are paying 5-5.5%, Corporate Bonds, 6-6.5% and Muni's are paying a whopping 4.5 - 5% tax free. You do the math. Any financial planner who recommends you using home equity to invest in anything should be fired.

Just my opinion, but I am a relatively conservative financial planner.

Answer 4

First of all, why are you asking a question like that over Yahoo?

You need to ask yourself some serious questions, like what your cash flow is, whether you have enough emergency funds (6 months' expenses is a good standard), upcoming expenses (10 yr old will be in college in 8 years), do you have credit card debt, where do you already have funds invested, etc etc, and most importantly,

what are your goals and what's your timeframe? If you're 25 years old, you have at least 40 more years where you can work, and 40 years to invest for retirement. If you're 55 years old, you have not so much time. A financial planner can help you out with all of this, look for someone with CFP (certified financial planner) designation with at least 5 years of experience. Make sure you shop around and find out how he gets paid, because you WILL pay for this service. If you have the time, you can do your own research but make sure it is thorough. Good Luck.

Answer 5

OK so you have £100,000 cash to spare? Or are you going to re-mortage your house via equity release and then re-invest the money elsewhere?

You could buy another property and rent it out. If you are in the UK, you will be taxed under Schedule A on any profits you make - you will also need to keep some accounting records. Also would be preferable to open up another bank account.

You would also need to change your mortgage to a buy-to-let mortgage which will have slightly higher interest rates due to higher risk. Also consider insurance, type of tenants, rent prices, do some budgets etc etc. Seek professional advice

Answer 6

If you can pull the equity out to buy another home and rent the first home out for a positive cash flow then go for it! You should have enough rent roll to cover all your monthly expenses (including repairs) and also factor in a vacancy of 2 - 3 months per year.

Also in the new home you buy make sure your current salary can pay for the new mortgage.

If you can't rent out your current property to earn a positive cash flow then don't do anything. Pay down your mortgage low enough for you to pull out equity to earn a positive cash flow. Then do my suggestion.

Remember that risk should be always considered.

Good luck..

Answer 7

I would give it to an under employed young man, with the idea that he'll use it for college to improve himself. The pay back can be one of two things
The first payback, knowing you have helped someone, that's always a nice feeling.
The second, would be a percentage of his future earnings, over a certain amount of time. You might first want to see this young man wants to go school to take, before going with the second idea.

Answer 8

High yeild mutual funds, GIC's (Imay be Canada based only, not certain), give it to a stock broker or financial advisor who you trust and comes with exceptional credentials and have them invest for you with your consent.

Good luck with this no matter what the route is that you take.

Answer 9

I would buy 50k worth of beanie babies and 50k worth of baseball cards.

Answer 10

It is invested... Do not pull it