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And don't write off investing in stocks. The last few years have been really hard on a lot of people. I prefer mututal funds, but I do mutual funds with stocks rather than bonds.
did your financial planner advise you to be an aggressive growth investor? based on your age, i wouldn't be surprised if they did- it's the typical thing they push on 20somethings. the premise being: "a young person can withstand more risk because they have plenty of years to ride the waves of highs and lows. youth is the time to gamble/learn and build worth (hopefully)." older folks (50s and older) want to preserve what they've got so usually they're called income investors, taking on less risk but growth takes a 'backseat'. you'll also hear the word 'preservation' associated with older investors. i say reconsider re-entering the markets and tell those planner guys you prefer balance over aggressive.
.:w hand1. Try to keep living as close to possible on your former income/budget
2. Increase your retirement savings (via 401k or IRA) to 20% of gross income.
3. Ensure your e-fund is at 6-12 months of expenses.
4. Splurge on somethig to celebrate your big raise- vacation, new handbag, etc.
5. Keep on renting and try to maximize tax write-offa via max retirement savings and giving to charities. Start saving for your dream vacation property....yet realize there are NO tax write-offs fOr mortgage or property taxes if it's not your primary residence. It's definitely a splurge but if you can keep your city life manageable, it is possible.
yet realize there are NO tax write-offs fOr mortgage or property taxes if it's not your primary residence. It's definitely a splurge but if you can keep your city life manageable, it is possible.
For vacant land, there are no tax deductions since the IRS considers vacant land an investment. (Although I think there's a rule that says if you start building within 2 years, there are deductions. Not sure if that rule still exists.)
For second homes, there are tax deductions like mortgage interest and property taxes. They haven't taken that one away. Yet.
Congratulations on your new job with the "big bucks"!
Please do yourself a favor and consult a Certified Financial Planner - their education includes long term "planning" and not just "selling of products".
Some of the advice given here has been pretty good, but it's all general in nature - no one knows all the details of your situation (as it should be with financial matters); that's something best to share with a local professional.
Good luck!
P.S.: You might want to ask up-front if they're knowledgeable about real estate - not all are.
I'm trimming down your quote, but I did read your whole post. I have a question to pose to you: what would you think of continuing to rent ($1450 a month) and saving my money, then after a few years buying the raw plot for my hobby farm? Then I could just throw a manufactured home on it until I was ready to build, just like my current landlord did when he built this house. Since my ultimate goal is to have that property, I don't know if it would be wise to try and go through some other piece of real estate I wouldn't particularly like, and which might hit me with assessments or other unforeseen expenses, then depend on my ability to rent it out at a reasonable price when I moved onto the little farm.
Or I could just work my butt off, try to get an even bigger promotion and then see what my options are.
I hope there are enough jobs in the Silicon Valley that I shouldn't need to worry about that. I could arguably have a better quality of life somewhere else in the country, but I'm a lifelong Bay Area resident and I don't mind the tradeoffs. If my specialty is going to be service parts logistics for high-techs, and I keep climbing the ladder, I think owning anywhere in Santa Clara County would be a pretty safe bet.
Well with regards to buying some intermediate property that you might not like that much, I think that depends on the time frame really. If you think you might have to live in such a place for 10+ yrs, it might make financial sense, but you wouldn't want to spend much money on it, otherwise it would be unwise I would think. I would hope you could sell it when you're done living there. If you think you can do things at a quicker pace than that it wouldn't make financial sense, moving too often when owning places will cost a lot of money, especially for condos.
As for the other 2 points, talking to many people here, the fastest way to get ahead financially seems to be to get as fast an income increase as possible. In many companies you might be ready for the next step up, but the company might not have a position for you to move into, which means that to move up you have to go to another company. From what I can tell this means jumping from job to job every 2-3yrs, or even quicker. You're still in your 20s moving up in your career is a wise move, I would say even if you have to work hard, and long hours to do so, but I wouldn't do that forever. Luckily the number of companies in the Bay Area mean you don't have to look far, but as far as searching for jobs, if you say bought a condo in San Jose, you might not want to look for jobs in San Francisco for example, whereas if you rented you might be willing to move to SSF and commute from there. Last time I job searched I interviewed at companies as far north as SF, and as far south as Sunnyvale, for both SF and Sunnyvale I would've had to move, living at Foster City at the time, working at Redwood Shores. Now I work at Mountain View, and live with my boyfriend at San Jose. If I had bought a place mid-peninsula I would be stuck with it, that is what I meant. I know some people are willing to put up with a commute from SJ to SF, but some aren't and that can limit ones options.
Yeah, I'm not fond of long commutes. In my last job alone I moved from the South Bay all the way to the north peninsula when they relocated, and then back again when that office got shuttered. This new job is a relatively short commute, though it's annoying with two sets of metering lights to sit through..
I'm in my late twenties. After 5 years of working in the high-tech supply chain sector and one short month of unemployment, I've got two great offers from high-techs on my plate, and either one would more than double my previous income to around $80K before any bonuses. I feel very fortunate that I was laid off right when these companies were starting to hire again; everyone has told me that the market is strong now for qualified people.
The offer I prefer (because it's permanent with full benefits) has a 6% 401k match, so of course I would contribute at least up to the match. Beyond that, I'm really not sure what to do with this newfound money. I currently rent a comfortable apartment and drive a simple family sedan, and I have no need to upgrade any time soon. We are a same-sex couple, so we don't need to plan for a family. After messing around with my money in the stock market for the past 6 years and mostly losing it, it feels more like a casino than an investment strategy, so I'm not too keen on throwing a lot of money at it. But, maybe with more cash to play with my options will be better.
I figure that if I keep my expenses at the level they are at, I could probably stash away around $30-40,000 a year. That's a good chunk of money to try and find a safe home for. With that in mind, would real estate be the right way to go? Or something else? I would eventually like to have a few acres for a hobby farm in Morgan Hill or Gilroy.
i'd speak to a financial advisor personally. if you have that much disposable income added to your life, you want to steer it into some solid investments. you can go at it on your own for sure, but if you can get a referral to someone you trust, it might be worthwhile to get someone's professional opinion.
i'd contribute to get the match on your 401k, but do a personal IRA beyond that so you have more control over your investment options.
i think investing in real estate is a great way to make your money work for you (for renting out). You just have to do your research well. Multiunit homes are the best in terms of profit, or commercial units. As long as its cash flow is positive (you collect enough rent to cover the mortgage+tax/repairs) it wont be a big burden and u have yourself a great investment.
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