2007-01-24 13:20:27 · 8 answers · asked by sam 1 in Business & Finance ➔ Renting & Real Estate
That is a lot of money cash. Don't give it all to that house. Put a good portion down say 10 to 20% of a new home if you can get a good low interest loan and the house you really like.
Put as much as you can into a 401 retirement account (maybe about 15 to $20,000)
Put the rest into a money market which currently are making about 5% interest. then as you learn more use the money market and move some of that money into other investments that are right for you. TAKE YOUR TIME and don't jump at the first thing you think is correct-keep asking questions and read alot.
2007-01-24 16:51:57 · answer #1 · answered by Brick 5 · 0⤊ 0⤋
If your rent is less than $10,000 a year, you would come out ahead (averaging 10% return). If your rent is more than $10,000 per year, you lose money. (that's $833 per month).
If you buy a house for $100,000 and invest $833/month, both your investment and your house would gain in value simultaneously. In seven or eight years, you'd have $100,000 in retirement AND a $100,000 house that has gone up in value (maybe $130,000 - $140,000). If you just invest and rent, in seven or eight years, you'll just have the gains on the investment (minus rent spent over that time).
As for splitting it, tax deductions are not something that you seek out. If your tax rate is 30%, and you paid $10,000 in interest, you save $3,000 in taxes. You gave the bank $10,000 to avoid giving the government $3,000. That's a bad trade in my book. Also, if you're making 10% on your investment, that's cut down to 4% by the interest on your mortgage (6%). The annual rate of inflation is between 2 and 4%. That means that your investment is making you nothing while you pay on your house.
If you already owned a $100,000 house (paid in full), would you take out a $70,000 mortgage at 6% to invest it at 10%? If your answer is no, then that is the same as splitting the money between a house and investment. Pay the house first.
2007-01-24 21:36:21 · answer #2 · answered by normobrian 6 · 0⤊ 0⤋
I agree, with having the best of both worlds shop for a real estate loan perhaps putting 30% down with a 70% mortgage. In many areas in the US its a buyers Market, use the appreciation, and tax deductions and this way you will not have just rent receipts. Use the remainder for savings or investing.
Look at the long term 5-15 years.
Best to you
2007-01-24 21:30:20 · answer #3 · answered by Jimmy 5 · 0⤊ 0⤋
Can you do a little of both? First of all, you wouldn't be able to put $100K in a retirement account in one year. You could put it in a normal investment account though. a home is a god investment and the interest and taxes are deductible.
2007-01-24 21:24:20 · answer #4 · answered by Homeslice 4 · 0⤊ 0⤋
you could do the math and reasonably assume it woulld make more sense to invest and rent... me personally, I would buy the house, enjoy the tax shelter provided by writing off the mortgage interest, invest that money... if recent history is a guide, real estate is a darn good investment + you need a place to live. As a famous economist once said... "in the long term, were all dead anyway"
2007-01-24 21:27:07 · answer #5 · answered by justr 3 · 0⤊ 0⤋
You can put 30k down for a new house and put the rest in a retirement account.
2007-01-24 21:27:13 · answer #6 · answered by helplessromatic2000 5 · 0⤊ 0⤋
Put 50 k in and invest th rest in more realestate
2007-01-24 21:24:18 · answer #7 · answered by Anonymous · 0⤊ 0⤋
In real estate.
2007-01-24 23:45:43 · answer #8 · answered by Ging 1 · 0⤊ 0⤋