What is the best way to invest $100,000?

Question

What would be the best use of $100,000?

We are considering buying a house and paying cash- owning it outright instead of a mortgage. (House prices in my area are quite low)

This seems like a good idea because we will never have to worry about a mortgage, which is a long commitment.

We no nothing about investing, and we wonder if there is a better way to use the money- perhaps invest it so that it turns us a profit- albeit the profit we made would have to be big enough to offset the mortgage payment we would then be making.

Any advice?
thank you.

Answer 1

It is hard to argue with your logic about not having a mortgage.

If you were going to consider alternatives, several points to think about are ...

(1) taxes ... the interest paid on your mortgage is tax deductable; this is the largest single deduction for many taxpayers; without a mortgage, you also have no deduction

(2) mortgage rates are relatively cheap at this point in time ... there is a reasonable chance that you could find investments with a rate of return in excess of your mortgage rate ... when you consider return, though ... weigh risk of principal loss in your thinking ...

... one potential upside to safely investing and getting a low fixed rate mortgage is that you are effectively borrowing from yourself ... the monthly mortgage payment re-inforces the discipline of not spending the money each month ... and if the investments are safe and reasonably liquidy, you could pay the mortgage off later by selling some of your investments.

(3) risk and diversification
--- risk - stocks and bonds both carry some risks that a dollar you invest in them today might be worth less than a dollar in the future ... you need to carefully consider the market and credit risk inherent in any investments and be sure that risk is within your tolerance range (ie ... can you afford to loose that much if things go badly with an investment)
--- diversification - if you choose to invest, dont put all your eggs in one basket - some of the best diversification for small investors is via mutual funds

(4) your financial goals and risk appetite ... you need to think about what your long term financial goals are ... an important part of that is how much risk you are willing to take ... those answers are different and depend on things like (i) how close is retirement, (ii) how much can you afford to lose, (iii) do you have the earnings capability to replace losses (ie, betting one months pay vs your whole retirement fund), and (iv) as Dirty Harry said, are you feeling lucky?

Best of luck with your decision

Answer 2

Buying the house outright is a great idea, however you may consider getting a mortgage on a home you want to live it. Perhaps a HUD foreclosure for living. There are tons of restrictions on being able to purchase a foreclosed property to immediately sell for profit, but you can start with 10's of thousands in equity for a decent propert.

Then take the 100k you have and buy another house outright. Then rent it out. Then you are now getting your mortgage payment via your rental property while building equity on 2 homes and not just 1. Tax returns at the end of the year for both properties will be VERY NICE, you have a GREAT retirement plan in place, and if you ever run into trouble you have a property you can sell if you need the cash. Beyond that you could continue to expand on properties and maybe even eventually make it your career. If you are worried about being a landlord, look into AHM, American Home insurance. For about 45.00 a month (which you include in your rental price) they will cover EVERYTHING in your house at a base rate of 35.00 per visit.

Answer 3

Invest in stocks or mutual funds instead. I realize rates might be high in some states right now but if you want to make money invest don't buy the house. If you can afford the $600 a month for the mortgage for 30 years then whats the problem? You can always make double payment without penalty.

Answer 4

I think real estate is expensive in New Jersey, where I live. I would rather invest in the stock market at this point. I have owned investment properties in the past.

If you decide to invest, the best way to find investment ideas is to see what the best investors are buying and selling. Go to http://www.top10traders.com - this is a free site that lets you create a portfolio of stocks with $100,000 in "play" money. Each day the site ranks the best performing portfolios, so you can see how your picks perform compared to other investors. You can also read posts on investing from the best traders, as well as share your own investing ideas. There is also a charting feature , so you can see how your portfolio performs compared to the S&P 500.

Here are this month's best traders:

http://www.top10traders.com/Top10Standings.aspx

Good luck.

Answer 5

Short term, your idea is easy and it will work.

Over long periods of time, investing in stocks / mutual funds will return MUCH larger profits and returns than real estate.

I would recommend using a 20% down payment on the home and then consult an independent investment advisor to recommend some moderate risk long term investments.

Answer 6

Sorry even though it feels like you want gaurantees and there only are not any. yet on the different hand in the journey that your keen to have self belief someone can furnish you with some thing like that you deserve each thing you get. there's a hardship-free tennant of making an investment ---more desirable threat equals more desirable advantages---- and by using a similar token if someone provides you with an excellent advantages perchance you ought to offer up and picture about the prospect.

Answer 7

could you not buy a property to let out using this money and then continue with mortgaging your own home, the rent from the renters could pay towards your own mortgage and if you needed money you wouldnt lose the home you were living in as you could sell the other property?

Answer 8

yes tha sound the bes way cause of the houde prices where you live. But you could always give it to me i know how to spend it wisely. other than that you could always try some on stock exchange and some on house. with the return from the stock exchange you could pay off the mortage and reinvest the left over money

Answer 9

goto ur local bank and see the fiancial adviser he will give u free advice on ur choices of investments long term or short term

Answer 10

Invest in real estate, you will never lose your investment.