Question for you money guys

126coupe · 126coupe's Garage

My daughter is 19 and a sophmore at SFSU. My Dad gifted her a percentage of a small shopping center which just sold.
She will most likely realize approx 40K for her small percentage. Her college is already taken care of by me, all the way to a masters degree. I want to invest the money to start a nest egg for her and need some advise.

In addition my wife and I will be realizing approx 250K from this sale. I have no credit card debt and the LTV on my home is only 20%. I am semi-retired from commercial real estate investments and also need advise where to put the $$.

Pay off the house? Keep it liquid and wait for the RE market to bust and buy an income property? Stock Market? (which I hate and dont understand, and got burned a few years back)
Buy my dream car a GT3? NOT!!!

BGCarrera32 · 12-24-2006, 07:44 AM

Quote:

Originally posted by Minkoff
I am semi-retired from commercial real estate investments and also need advise where to put the $$.

Sounds to me like you're the one who should be doing the advising...

126coupe · 126coupe's Garage

Quote:

Originally posted by BGCarrera32
Sounds to me like you're the one who should be doing the advising...

I wish I could take the credit, but timing, luck and of coarse partners with brains and deep pockets sure helped.

bell · bell's Garage

yea no kidding.......
let's see....your kids college is paid for........you are obviosly in a sound financial "state".
time to treat yourself to something nice.....like a gt3

on-ramp · 12-24-2006, 07:51 AM

i would stay away from the stock market. it's a "game", full of risk with no control. that's passive investing. active investing is the way to go.

12-24-2006, 08:17 AM

http://www.kimsnider.com/

Consistant 10+% returns no matter what the market does. This is the real deal.

turbo6bar · 12-24-2006, 08:57 AM

If your timeline is beyond 5 years, consider vanilla index exchange traded funds.

I am in agreement regarding real estate. Commercial real estate has ugly low CAP rates, and single family real estate is sorely overvalued by historical and cash flow standards. I am currently scouting timberland, as it appears to be fairly valued. We won't see good buys in distressed RE until 2008 or 2009.
jurgen

schamp · 12-24-2006, 09:04 AM

I would look at maybe some conservative stocks like AFLAC and Southern Company. Put some in some bonds and keep the rest in a good money market account paying as high as you can find. By the way, Aflac has been the best stock I have ever owned and I have some now. Nice problem to have. You might want to check with the US Postal Service and see if you can purchase one of their Post Offices and have them pay you. I have a Uncle that did it. Return isn't great but it sure is steady. Right now a 6% return with no risk looks pretty good. Good luck.

Hetmann · 12-24-2006, 12:20 PM

Since you are so close, I'd pay off the house. Not that its the best investment, but you do need to live someplace and not having a mortgage lowers your monthly overhead. It just simplifies everything in your life. Then you can consider all your more speculative options.

MRM · 12-24-2006, 08:06 PM

Paying off the house is a great idea. It is 100% safe, and on a cash flow basis, getting rid of the monthly payment is like getting a raise. Whatever return on investment your stocks could get in competition for that money, you would have to deduct the expenses or commisions. Run the numbers, but the market probably woud have to do well to beat the return on paying off the house.

For the rest of the money, I am hard pressed to think of a better investment than low cost index funds. Put a quarter into a foreign stock fund, a small cap fund, an S&P 500 fund, and maybe a blue chip fund, and sit back and watch. Realocate over the years as necessary.

For the daughter, if she has a short time horizon, as in buying a house within five year, CDs are actually nice investments. For longer term, put it in an index fund with the lowest costs you can find.

5% of fund managers beat the S&P 500 over time. 95% do not. No one knows who the 5% are. If you don't have enough money to join a hedge fund, do the next best thing and eliminate costs and go with index funds.

pwd72s · 12-24-2006, 10:59 PM

I would suggest setting a bit aside for frivolous purposes. Pay off the house. Then? Perhaps place it in a U.S. Treasuries money market fund until you decide what to do. Why there? 100% safe, earns more than bank interest, and you do have check writing privileges. This makes moving the money easy once you make a decision on other investments. You might check out the Vanguard fund family for this...they are one of the lowest fee fund families available.
https://flagship.vanguard.com/VGApp/hnw/HomepageOverview

tabs · 12-25-2006, 05:10 AM

If U have a low % rate mortgage why pay off the house, U can make a better return on corporate paper.

Also with Residential RE in a Bear market why pay off a declining asset. The idea is to preserve liquidity.

Creat a Cash flow stream in which U use the money to pay the mortgage.

Moneyguy1 · 12-25-2006, 08:44 AM

tabs....

There is a psychological element to not having a monthly mortgage payment that has real value to some people. I am one of them. Not that it is for everyone, I admit.

pwd72s · 12-25-2006, 10:39 AM

Quote:

Originally posted by Moneyguy1
tabs....

There is a psychological element to not having a monthly mortgage payment that has real value to some people. I am one of them. Not that it is for everyone, I admit.

+1

tabs · 12-26-2006, 12:13 AM

Realize that....But the equity U have tied up in your home is still DEAD MONEY.