What to do with 500k?

[goingforit]

I have 500k in cash.

Mid 30s, no debt, no investments, no house.

Business is profitable. But I'm tired and want to quit.

Spending 30k a year. Half of it is rent.

Scared of stocks. Renting real estate seems like headache.

Thinking of buying house for 200k to cut spendings by half.

What would you do with 500k in cash?

[mohawkbrah]

give to me

i love you long time

[ooeei]

I have 500k in cash.

Mid 30s, no debt, no investments, no house.

Business is profitable. But I'm tired and want to quit.

Spending 30k a year. Half of it is rent.

Scared of stocks. Renting real estate seems like headache.

Thinking of buying house for 200k to cut spendings by half.

What would you do with 500k in cash?

Well if you don't have that 500k invested, you're actually losing money on it.  Inflation is eating away around 10-15k (2-3%) per year, that sounds scarier to me than the stock market.  You're losing half of your yearly budget to inflation every year. I second the advice to read jlcollinsnh's stock series.

[mxt0133]

In your situation I would take a sabbatical and do what think will help you recuperate.  If you like to travel do it.  With those assets you have lots of options.  Reevaluate when you can think clearly and are rested.

You are almost there if your expenses really are 30k a year, don't forget to include insurance and taxes.  If half is rent.  You can get that down by getting roommates or moving to a LCOL area.

Is it really the job or something else that is make you 'tired'?  Unless you are working 60+ hours a week, it might be more of boredom than the actual stress of the job.

[Jeremy E.]

If you own your own business and it's very profitable, train someone to do your job and hire him as manager, It will be a little bit of work to check up on it, but much less work. Before buying a house, make sure it makes sense. Heres an article on that
http://jlcollinsnh.com/2012/02/23/rent-v-owning-your-home-opportunity-cost-and-running-some-numbers/
Also make sure you KNOW you will stay put long enough to make it worthwhile.

If you are willing to learn a lot about finding good houses to buy and rent out, you could hire a property manager to deal with the rentals, but it will be less profitable.

I third reading JLCollinsNH Stock series, if you invested mainly in stocks per Mr. Collins advice, you could likely turn that $500,000 into an inflation adjusted $20,000-$22,000/year of sustainable income that would likely not run out in the next 60yrs or so thanks to the increasing value of the Stock Market. Although, not quite the 30k you need, it will help a lot.

However, if it was me that had $500,000, I'd probably put $480,000 into a Vanguard account and invest it all into VTSAX, retire and live on $20k/year.

[Bateaux]

Yep.  Put it in VTSAX.  I'd buy a cheap sailboat for 10k or a cheap backpack for 100 and see the world livu g reallg cheap for ten years.  By then you're a millionaire.

[ooeei]

Before buying a house, make sure it makes sense. Heres an article on that
http://jlcollinsnh.com/2012/02/23/rent-v-owning-your-home-opportunity-cost-and-running-some-numbers/
Also make sure you KNOW you will stay put long enough to make it worthwhile.

Here's a good calculator on rent vs buy if doing the manual calculations in that post doesn't sound appealing:  http://www.nytimes.com/interactive/2014/upshot/buy-rent-calculator.html?_r=2

[PtboEliz]

give to me

i love you long time

Thanks for the morning giggle!

[patrickza]

Yep.  Put it in VTSAX.  I'd buy a cheap sailboat for 10k or a cheap backpack for 100 and see the world livu g reallg cheap for ten years.  By then you're a millionaire.

Exactly what I would do if I was single and childless around now! $10 on a boat, $15k a year to live on while exploring a few islands for about a 3% draw down rate. Should mean you grow a very healthy amount over time!

[Fishindude]

I'm older but have similar circumstances, cash that isn't doing much work for me.
Already have plenty in the market, so not much interest in putting it in stocks.

Leaning towards purchasing income producing property such as farm ground or commercial rental real estate.

If you like where you live, purchasing a home free and clear is a pretty good idea.

[Bearded Man]

Yep.  Put it in VTSAX.  I'd buy a cheap sailboat for 10k or a cheap backpack for 100 and see the world livu g reallg cheap for ten years.  By then you're a millionaire.

This. Money gives you OPTIONS. I've considered that with the same amount of money (500K) I could do any number of things and still get richer over time. I could move to Thailand. I could travel the country with a tent. I could move to Florida and buy a bunch of rentals paid in full and a house for myself paid in full and live off the rental income and save half of it!

I think the prudent thing to do in this case as someone else suggested, is to train someone to take over and just watch from afar, checking in on them here and there. This way you get a break, can go try a few of the scenarios above, and see if you want to go back to work or keep adventuring, either way, you have the option, and the business is still making you money. You can always sell it later.

[sstants]

I think that easing into investing may be a good idea for you. You don't have to throw the whole stockpile into a mutual fund today. Start with an amount you're comfortable with (say 25k) and put the rest into a money market.

Investing is more psychological/emotional than many of us realize. Getting over your initial fear of it will take some time, but give it a try! If it doesn't work out for you, it doesn't work out and maybe you could put your money into another business endeavor with some friends.