Any investment suggestions? Have $75k?

Question

We recently sold our home and moved to a city with a lower cost of living. After paying off all debt, excluding mortgage, we'll have $75k to reinvest. I want to purchase a duplex and keep some cash available for emergencies. My husband does not want the headache of being a landlord, but I feel that real estate is our best investment (it was my convincing him to buy our last home that netted us $174k...Men!) I'm presently not working, but will probably start a job around the first of the year, and my income will be "gravy."

Presently, the money is in a savings acct. earning 5.05% Any suggestions? Neither of us has a retirement plan per se, and don't want to rely on social security in the future.

Answer 1

If you aren't wanting the headaches of being a landlord (and believe me, there are plenty), consider investing in a Real Estate Investment Trust (REIT). REITs invest in rental real estate all over the country (usually in office buildings, commercial untis, etc.) My preference is the Vanguard REIT index fund. The minimum is about $3K and it invests in REITs all over the country. The performance has been hot lately so it is probably due for a slowdown along with other real estate. Personally, I've been selling some of my holdings in that fund. You should not buy something like this if you need the money in the near term. There are others out there, so don't take my word for it.

You should get a retirement plan. You can buy REITs and REIT funds within a retirement plan.

If you want to purchase a duplex, there are great advantages to it from a tax standpoint. With $75K, you could probably pay 20% down and have money left to invest elsewhere. That way, you leverage your upside. Make sure the property is very close to where you live. I made that mistake once and will not do it again. There are a lot of resources to help beginning landlords. Try mrlandlord.com. It has a good forum of experience landlords who are eager to help newbies.

Answer 2

Real Estate IS your best option. If you don't want to keep properties for long term, you could try flipping properties, or purchasing unbuilt homes. Houses will always sell for less while they are still building them, and usually sell quickly once they are finished.

You can also look into the cost of hiring a landlord or a management company. Some of them can be cheaper than you might think.

Answer 3

Start by contributing $4k each to an IRA now and again in January (a ROTH would most likely be the right choice since you're not working). Check out Vanguard.com. A Roth IRA can also double as an emergency fund becuase you can withdrawl your contributions without penalty. After that it all depends on your willingness to accept risk.

Answer 4

Investigate some solid mutual funds and be diverse. Say 20% bonds, 30% cash and the rest in a few mutual funds. They are easy to research. T. Rowe Price has some nice funds that consistenly do well and they have no sales charge.

American Funds has some well performing funds too, but they are front load at 5.76% - still they perform well.

Answer 5

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