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What is a "quality company" and how will he know this is a better investment than an index fund? No I stick with my thoughts that an index fund is much less risky than putting hundreds of thousands of dollars in a few individual stocks. Especially in this climate.
OP did't mention college for his teens, is that in the picture? Sounds like they are pretty well set with other investment which is why equities would be my play. But I may bump the 20K emergency fund with a family of 4 and a mortgage, and I keep it outside of a CD as you pay a penalty if this emergency does not come exactly when the CD matures and you need to pull it out early.
Here is what I’m doing with $400K, it’s in savings, checking and MM accounts and I call it my emergency fund. I have no mortgage or car loans and I just paid this month CC bill in full. I currently have no intention of placing any money at risk and have enough invested in the market.
I was going to purchase a home, so I have about 450K sitting in cash at the moment. It's too early IMO to invest in equities at the moment until I see more on where we are going with this virus and the lock down.
I'm actually keeping my money in cash because I'd like to purchase a rental property in addition to putting a down payment on a new home for my family.
I was going to purchase a home, so I have about 450K sitting in cash at the moment. It's too early IMO to invest in equities at the moment until I see more on where we are going with this virus and the lock down.
I'm actually keeping my money in cash because I'd like to purchase a rental property in addition to putting a down payment on a new home for my family.
by the time we see a direction , markets will have long recovered . as you see they march to a totally different drum then main street does.
if it is short term money it doesnt belong in equities and if it is long term money trying to time the bottom will more than likely shoot you in the foot
by the time we see a direction , markets will have long recovered . as you see they march to a totally different drum then main street does.
if it is short term money it doesnt belong in equities and if it is long term money trying to time the bottom will more than likely shoot you in the foot
Totally agree with you, but I have a plan with my money which is to try and purchase real estate at bargain prices.
Totally agree with you, but I have a plan with my money which is to try and purchase real estate at bargain prices.
then it should not be in equities regardless ....
mismatching time frames is likely the biggest cause of poor investor behavior . investors make that mistake speculating in the short term all the time with money they will need sooner as well as they don't understand bond funds and just buy them blindly again without regard for duration and type
Thank you to all who have replied. I am 49 years old. My wife is 47. We have two kids. One is in high school and other one in middle school. I have 529 funds for them. I sold my old home so this money is from the old home. For this new home I bought current mortgage is $450K. Balance is $450K after closing.
I don't have any C.C debt. No other loans. We only have $400K in hand.
We both have 401K from work.
I have $20K as E.R funds in CD.
Few stocks I was thinking to invest such as MSFT, DIS and SPG.
What’s the interest rate of your mortgage? At nearly 50, you maybe don’t want to have another mortgage hanging over you for 30 years, especially since it sounds like these proceeds are from a home sale. Maybe consider doing a 15 year?
As an approximation, how many times your income is your 401k balance?
On the surface, it sounds like your situation is good. I’d personally blow 100k or so on travel while you’re still young and invest the rest for retirement. A lot of people lose their good jobs in their 50s.
What is a "quality company" and how will he know this is a better investment than an index fund? No I stick with my thoughts that an index fund is much less risky than putting hundreds of thousands of dollars in a few individual stocks. Especially in this climate.
A quality company is one with a strong balance sheet and a track record of success in an industry that will not be fundamentally changed by this pandemic.
There's nothing wrong with an index fund, of course. Yes, it is less risky. But the returns will also likely be lower (of course, more risk means individual stocks could underperform). Risk tolerance is personal, but to me, I think there are enough attractive buys on good companies that have taken a bigger hit than the market in general.
Quote:
Originally Posted by DaveinMtAiry
OP did't mention college for his teens, is that in the picture?
He said he has 529 plans for them.
Quote:
Originally Posted by DaveinMtAiry
Sounds like they are pretty well set with other investment which is why equities would be my play. But I may bump the 20K emergency fund with a family of 4 and a mortgage, and I keep it outside of a CD as you pay a penalty if this emergency does not come exactly when the CD matures and you need to pull it out early.
I recommended adding $100k to the emergency fund. I said to put it in a money market account, but it doesn't really matter. Returns on anything conservative will be super low anyway, so even cash would be fine.
Whatever you do don't touch REITS. That said, I would hold off before jumping back into stocks. The time to buy stocks was 3 weeks ago but hopefully we retest the lows again and probably go lower. If I had $400K, my options would be
- buy stocks if the go lower
- pay off part of your mortgage
- If stocks don't get cheaper, wait a couple of months to see if you can buy a rental property
I was on track to paying off my mortgage but I stopped making extra payments in Feb because I think there will be opportunities down the road once the dust is settled.
I also vote against REITs. They are not meant for growth, but for income. Expect your principal to decrease, and dividends you get are taxed as income. And don't expect dividends to remain steady. Look at the historical priced and dividends of REITs like NYMT, AGNC, ARR. Nothing but downhill. They can quickly get cut dividends next quarter, prices drop. Issue more shares to dilute, share price drops, sure the higher dividend then looks nice, until they cut dividend.
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