Author Topic: What to do with the money now?  (Read 529 times)

KBurns

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What to do with the money now?
« on: April 15, 2018, 11:33:22 AM »
After starting the MMM ways last June/July we have saved our first 10,000! After reviewing multiple options we (Hubby and I) think rental property would work best for us. We live in a small neighborhood with great rental property potential. Both my husband and I are quite handy and think this is what we want to work towards. We are currently debt free.

As we keep saving for a down payment on a home is there something we should do with the money now or just let it sit in a saving account? Realistically we could have enough in a few years.

Would more information/backstory be more helpful here?

MDM

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Re: What to do with the money now?
« Reply #1 on: April 15, 2018, 03:17:12 PM »
As we keep saving for a down payment on a home is there something we should do with the money now or just let it sit in a saving account? Realistically we could have enough in a few years.

Would more information/backstory be more helpful here?
As with many investment decisions, a working crystal ball would be even more helpful, but particularly with "medium term" investing.  You should have it earning at least ~1.6%, the going rate for The Best Online Savings Accounts in April 2018.

See also Investing with a medium-term timeline - Bogleheads.  Note the lack of specificity there as well, but some of the linked threads may help.

daverobev

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Re: What to do with the money now?
« Reply #2 on: April 16, 2018, 11:53:46 AM »
If you don't have other assets, owning a home and then rental properties in one city is putting a lot of eggs in one basket.

I would suggest building up a decent stock market pot first. You can invest in thousands of companies all over the world for tiny management fees. Vs, with rentals, buying yourself a part time job.
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jlcnuke

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Re: What to do with the money now?
« Reply #3 on: April 16, 2018, 12:02:11 PM »
If you don't have other assets, owning a home and then rental properties in one city is putting a lot of eggs in one basket.

I would suggest building up a decent stock market pot first. You can invest in thousands of companies all over the world for tiny management fees. Vs, with rentals, buying yourself a part time job.

+1
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phred

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Re: What to do with the money now?
« Reply #4 on: April 16, 2018, 12:48:53 PM »
The type of investing you should do depends on your time frame.  If you need the money within five years, then stocks are not for you because of the chance of fluctuations and volatility.

Investigate 5 year CDs paying about 2.25% (for "new" money), Treasuries from TreasuryDirect pay 2-3% last time I checked.

Many people choose rental property over stocks, so, good luck!

frugaliknowit

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Re: What to do with the money now?
« Reply #5 on: April 16, 2018, 01:56:25 PM »
You and your spouse should first decide on priorities, then draft a timeline.

For example:  $200K house in 5 years, saving an additional $10K per year, $150K rental property in 10 years, saving $5K per year (personally, I would investigate likely returns first; rental properties seem like a lot of work...), 15% of income into retirement accounts, etc.

For savings of <5years, safe only
For 5-10 years, maybe a balanced fund
For 10+ years, equity fund(s).