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Old 12-14-2009, 09:09 PM
 
1,915 posts, read 4,606,525 times
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Quote:
Originally Posted by kevxu View Post
I am 71, am in middlin' health and living on retirement income. I rented all my life, and then when I moved to Europe in 2000 I bought a house with cash. I have moved several times, and each time I paid cash.

I consider having my home completely mine as one of the most important things in my life...the psychological reassurance that ownership of my home provides at my age is incalculable. And since I did not pay an inflated price for it, it remains a reasonable investment.

Since I live rather modestly, by choice not necessity, I continue to be able to put money in the bank.
This is a healthy lifestyle I can relate to. Where do you live?
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Old 12-20-2009, 12:07 PM
 
20 posts, read 76,215 times
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Great thread guys, a lot of information here.

I need some advice from the wise, more experience people on this thread.
I'm 36 years old, and have been working as a government employee since I was 20 years old. Once I complete my 30 years, I will be eligible to retire and draw from my pension for the rest of my life. I estimate my income will be around $80K per year, not sure if it will adjust due to cost of living. Since I have 14 years left to go, i'm wondering whats the best thing I could do with the money I have today and also, how dependable do you think my state (NV) or even government pension is?

Profile:
Age: 36
Retirement Age: 50
Pension Income when i hit 50: Est. $80k per year. ** I do still plan on working for 10 - 20 year after **
Cash in hand: $250k, sitting in a 1.5% savings account
RothIRA: $50K
I currently owe $120k on a mortgage, rate is 5.875% on a 30yr fix, purchased in 2003. If i rent it out, it will cover the mortgage and then some.

Other than that, i have no debt.

The options I'm thinking about is
1) Pay off current home (Most likely not)
2) Cash buy a nicer home closer to my work, prices have come down so much.
3) Cash buy rental properties ($50k - $70k for SFR / 4plex ) *Residual income*
I've been a landlord before, on a SFR, i estimate I could rent for $900 - $1000
4plex i could get $1800-$2200. The 4plex is about 30 - 40 years older and in crappy area.

4) Invest in some index fund

Goal: Biggest bang for my buck.

Thanks in advance!
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Old 12-20-2009, 12:24 PM
 
Location: SoCal desert
8,093 posts, read 13,229,344 times
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"Goal: Biggest bang for my buck."
  • Pay off home mortgage.
  • Fund this year's and/or next year's Roth.
  • Leave 50K as cash in hand as emergency fund.
  • Ladder 50K in long-term CD's
  • Take the remaining as a down payment on a rental property. With no primary house payment, it should be easy to get financing. And also with no primary house payment, you'll have enough discretionary monthly income to make payments on the rental when it's not occupied.


:::shrug::: I'm sure others will chime in. But in the end, do what makes you feel comfortable and safe.
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Old 12-20-2009, 12:50 PM
 
71,517 posts, read 71,694,121 times
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biggest bang for the buck dosnt mean it coincides with your tolerance for pain in the downturns....
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Old 12-20-2009, 12:51 PM
 
71,517 posts, read 71,694,121 times
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Quote:
Originally Posted by Gandalara View Post
"Goal: Biggest bang for my buck."
  • Pay off home mortgage.
  • Fund this year's and/or next year's Roth.
  • Leave 50K as cash in hand as emergency fund.
  • Ladder 50K in long-term CD's
  • Take the remaining as a down payment on a rental property. With no primary house payment, it should be easy to get financing. And also with no primary house payment, you'll have enough discretionary monthly income to make payments on the rental when it's not occupied.


:::shrug::: I'm sure others will chime in. But in the end, do what makes you feel comfortable and safe.
ill 2nd this not knowing anything about the op
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Old 12-20-2009, 02:02 PM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
22,548 posts, read 39,934,465 times
Reputation: 23673
Default ~

I will deviate (as usual) based on the bolding / Blue of OP (but would like to know if married or single, as my suggestions would vary) ALSO NV habitat, my advice would vary Reno / Carson City vs LV. Gov employees tend to be conservative on investing, but don't need to be, as they have a high likelihood of getting pension to cover them in later life.

Goal: Biggest bang for my buck
. (try to DIVERSIFY and invest your excess NOW in a position to give you an additional $80k income stream at age 50 'Rule of 72' says you can easily do this in 14 yrs with current $300k assets).
1) DON'T Pay off current home if it can cash flow as a rental and the rental market is conducive for that.
2) USE some minimal Cash to buy a nicer home closer to my work, prices have come down so much. Buy something under valued but EZ to unload in 24 months (tax free gain, do this ever 24 months if possible) I'd buy something that seniors would like, near transit, medical, senior center, low maint, low SF, EZ access, nice view or location. Or buy something that is in the SURE way of commercial development. (no fix-up needed as future buyer will bulldoze, you will drive to the bank and deposit your $250 - $500k gain)

DON'T buy a large or expensive home or a tract home = tough to sell.

3) xxx buy rental properties ... *Residual income*

4plex i could get $1800-$2200. The 4plex is about 30 - 40 years older and in xxxxxxx. Buy a NICE 4 - 8 plex in a desirable "senior" neighborhood, finance heavy at current LOW rates to infuse cash minimally NOW to give maximum tax / equity growth advantage. BUT be prepared to eventually carry more equity in this place as rates will ratchet in 5 yrs when you need another loan (you will have done 2x primary residence rolls by then and have $250-$500k spare change available to dump into income props IF NECESSARY). (doubt need to do this at age 39, keep it growing)

4) Invest in some index fund - go to Bogleheads.org for good advice on index investing


5) stick the ROTH into highest growth potential investments, and keep it fully funded.

Diversify your pot... 30% in income producing Real estate (non-primary residence). 30 % in cash equivalents (conservative for your age) I often use VFIIX (ginnie mae) for ~5% returns. 40% in growth equities, be sure to have good international coverage. NO MORE than 5% in any risky stuff or single issues. (Like GM stock...)

Quote:
Originally Posted by CiDatak View Post
...I have 14 years left to go, i'm wondering whats the best thing I could do with the money I have today and also, how dependable do you think my state (NV) or even government pension is?

Profile:
Age: 36
Retirement Age: 50
Pension Income when i hit 50: Est. $80k per year. ** I do still plan on working for 10 - 20 year after **
Cash in hand: $250k, sitting in a 1.5% savings account
RothIRA: $50K
I currently owe $120k on a mortgage, rate is 5.875% on a 30yr fix, purchased in 2003. If i rent it out, it will cover the mortgage and then some.

Other than that, i have no debt.

Thanks in advance!
Quote:
Originally Posted by Gandalara View Post
do what makes you feel comfortable and safe.
yeah, sleep well, be consistent at reaching your goals.
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Old 12-20-2009, 02:53 PM
 
71,517 posts, read 71,694,121 times
Reputation: 49088
i agree too, but as far as paying off your home if that was one of your lifes goals and you finally will have the money to pay it off, dont throw that money back into the at risk stage again....


if paying off your home wasnt a goal that you were saving for or hoping to achieve yet then go for the gusto and invest it for higher retruns.

you should have goals along the way, when those goalss are met that money should be utilized for that goal...

we all have to remember that we can go hog wild investing for these different goals we set , it dosnt matter yet if we loose money as we havent met that goal yet anyway so if it takes an extra few years so what.

but once you achieve that goal dont put that money back at risk again.. you should have your other money for your other long term goals that your working towards that goes for the gusto.
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Old 12-20-2009, 07:06 PM
 
20 posts, read 76,215 times
Reputation: 23
Quote:
Originally Posted by StealthRabbit View Post

2) DON'T buy a large or expensive home or a tract home = tough to sell.

3) xxx buy rental properties ... *Residual income*

4plex i could get $1800-$2200. The 4plex is about 30 - 40 years older and in xxxxxxx. Buy a NICE 4 - 8 plex in a desirable "senior" neighborhood, finance heavy at current LOW rates to infuse cash minimally NOW to give maximum tax / equity growth advantage. BUT be prepared to eventually carry more equity in this place as rates will ratchet in 5 yrs when you need another loan (you will have done 2x primary residence rolls by then and have $250-$500k spare change available to dump into income props IF NECESSARY). (doubt need to do this at age 39, keep it growing)
Thanks for the feedback StealthRabbit

You said don't buy a large or expensive home or tract? Well, mostly everything here is a tract type home, but if it's in the mid rage price point, i would say it's not that hard to sell.

As far as 4 plex, anything nice here would be around $140k - $200k for a 4plex, and that's going to eat up my opportunity cost / cash flow.

From other replies.

As far as being single, yes I'm single with no kids yet. I do plan on getting married within the next 4 years or so with my current gf for over 3 years.

As far as risk, i would say that managed my risk, I'm not too conservative, but i won't leap on a cliff either. The money that have i accumulated thus far is because of the risk / investments that I've taken, not from savings, bonds or CD's.

I've been pretty frugal all my life, and i rarely spoil myself with rewards. I wanted to ask you guys, at what point do you enjoy the fruits of your labor? I do not have a big car or a big house, but I know I can afford them, but I always hold off to do the smart thing. I would imagine that is must feel good to be able to drive that Porsche to your big guard gated home. I know i'm doing the smart thing, but sometimes, the smart thing kinda sucks.

Could there ever been enough money for retirement? for most people, i would say no.
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Old 12-20-2009, 09:19 PM
 
Location: We_tside PNW (Columbia Gorge) / CO / SA TX / Thailand
22,548 posts, read 39,934,465 times
Reputation: 23673
Quote:
Originally Posted by CiDatak View Post
..
You said don't buy a large or expensive home or tract? Well, mostly everything here is a tract type home, but if it's in the mid rage price point, i would say it's not that hard to sell. Just be aware that having something 'unique' (on a park, close to bus, good view, nice lot / neighborhood...) will set you apart from the hundreds of 'look-alike' when it comes time to sell, REMEMBER in Real estate, you make your money when you buy, so buy right.

As far as 4 plex, anything nice here would be around $140k - $200k for a 4plex, and that's going to eat up my opportunity cost / cash flow.
$200k investment should support rents to $600-$700 per unit. I would try to get a place with 8-10% cap rate, and LOW vacancies / turnover and low maint.
Quote:
From other replies.

As far as being single, yes I'm single with no kids yet. I do plan on getting married within the next 4 years or so with my current gf for over 3 years.
Congrat, be sure GF is on the same page financially, (that will help you live happily ever after, she likely is, but BE SURE she is NOT High Maint, that would be painful)
Quote:
...
I've been pretty frugal all my life, and i rarely spoil myself with rewards. I wanted to ask you guys, at what point do you enjoy the fruits of your labor? I do not have a big car or a big house, but I know I can afford them, but I always hold off to do the smart thing. I would imagine that is must feel good to be able to drive that Porsche to your big guard gated home. I know i'm doing the smart thing, but sometimes, the smart thing kinda sucks.
Quote:
Could there ever been enough money for retirement? for most people, i would say no.
I would take this 'golden' opportunity to evaluate what YOU want in retirement and what the GF wants... each will feel somewhat different about being 'retired'. Basically it is defined as being financially; at 'critical mass', or having enough assets to not have to work again, tho many continue or return to work BY CHOICE, not need. Being on the same page with the spouse is paramount to long term happiness. (such things as being able to vacation / explore / work / function / camp separately). Being aligned in your GIVING (time and $$) and in elder care roles. Be Prepared to 'fall on the sword' for each other in times of need and NOT.. (That could mean a radical change in expectation of retirement; stuff happens... strokes, accidents, health, elders, kids, substance abuse...)

I would be content and have tons of fun doing volunteer international community aid age 50 -65, then more local 'elder aid' 65 - 75; and to have built / developed / funded to perpetuity... a really nice 'free' elder community in which to live age 75 -??. Currently I love to travel, and do plenty of that via cheap SWA and Priceline. When that gets too expensive, I have no problem finding alternatives such as Workamping, or even commercial truck driving. (I keep my CDL and DOT health card current)

Personally I'm pretty low maint in retirement, and would not think twice about working PT, since I have no pension or healthcare benies. (I pulled the plug at age 49, about 15 yrs later than desired). I drive a $35, car that gets 50 mpg on free grease and is 30 yrs old. ( I also have a couple 'Sunday Cars' that are only 10 yrs old, but still get 52 mpg on free grease, they cost me almost $2,000). I eat on $100 / month (by choice), but I do live in a beautiful home we designed and built as a family, ith materials brought home for a Europe work assignment. (Its In a National Scenic Area, no future building allowed). The views are 'mind-stunningly' beautiful and change many times / day with clouds, sun, moon, and winds. (taxes are killing me since they went from $800 / yr to $12,000 rather unexpectedly), BUT I can re-allocate assets to cover if necessary, tho house is for sale as I consider a 'shoestring' budget; not required BUT I'm not keen on such a huge asset not working for me for the next 40 yrs, tho I have plenty of other assets working.)

No Porsche and no desire, I had many nice vehicles in early life but had to sell them to do 30 yrs of elder care for a disabled parent, That changed my perspective of need. I have spent thousands of nights in 5* hotels in wonderful places around the world, traveled first class for 10 + yrs and got my fill of that too. Retirement will likely take many forms in my '2nd' half of life. I first went back to school and got a Masters in a study field quite different than my career. I have a son that is bent on getting an antique Porsche so I will ride with him . I also have friends with Corvettes, AC Cobras, and Ford GT40's and I enjoy THEIR toys. I have a few 'old-school' motorcycles that are really fun to ride & CHEAP (like under $500, most I've had for over 30 yrs...I used to race MC 'flat-track' in the 1970's -BEFORE getting married...). I also like to fly and sail so never pass up a 'lift' that way. I frequently help relocate boats, so I get my fill for free. One of my friends relocates aircraft so that works too. There are lots of free ways to satisfy fun (and expensive) desires. I do keep a stash of tools and hobby stuff (entire full sized machine, wood, welding, and automotive shop, gardening / farming equip, dozers, dump truck, trackhoes, sewing and quilting, canning and preserving, model air and trains. Too much stuff, but it comes in handy at times and will help to build a 'senior village'.

I do like experiencing other cultures in depth so new languages and challenging living conditions in foreign countries is my current desire (that sometimes kinda sucks. ... as you say, BUT I really like spending myself on others rather than on me).
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Old 12-21-2009, 08:01 AM
 
Location: SoCal desert
8,093 posts, read 13,229,344 times
Reputation: 14870
Quote:
Originally Posted by CiDatak View Post
I've been pretty frugal all my life, and i rarely spoil myself with rewards. I wanted to ask you guys, at what point do you enjoy the fruits of your labor? I do not have a big car or a big house, but I know I can afford them, but I always hold off to do the smart thing. I would imagine that is must feel good to be able to drive that Porsche to your big guard gated home. I know i'm doing the smart thing, but sometimes, the smart thing kinda sucks.
When I felt comfortable and safe. I don't like high-maintenance things - I never wanted a big or fancy car, I wanted a truck (Silly boys! Trucks are for Girls!). I never wanted a big and fancy house, although I ended up bigger than I needed because of a deal I couldn't refuse

"able to drive that Porsche to your big guard gated home" - are you feeling deprived? Wanting to Keep Up With the Joneses? (I'm not being snarky or disparaging here! Honest!) Take another look at your Cash in Hand - you're in FINE shape!
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