Investing 100K

8 Replies

I have just under 100K to invest. I am trying to decide the best approach?

Should I just put that in mutual funds or is real estate a good investment? 

Its whatever you feel comfortable doing and what your long term strategy is, there are many options. Probably need to add a little more info to get some clear answers. 

You should loan it to me at 2pts and 12%! Just sit back and watch it grow...

Kidding, loaning to investors is way better than mutual funds IMO, but not if you don't know how to analyze their deal.

Like she said, what are your goals? RE's advantage over other investments is its relative stability and ability to leverage. If you bought a house for $100k and rented it for $1k/mo your return is only really 6% after expenses. More to it than that with taxes and such, but it's not like RE is always a better investment.

I'm a Harry Dent fan and he's predicting a pretty major contraction as the boomers retire. I've been out of stocks for a while now, too much I can't control and too many layers of people making money before you do.

Lots of it depends on risk aversion and how much you wanna work with your "investment"

Hello @Aaron Childers  

You can make a return of 12-27% or more, highly secured with real estate by operating as a lender. As a lender, you don't have any of the responsibilities or unexpected expenses of being a landlord. I recommend the Reverse Close process where every home is sold before you buy it. 

Investing in mutual funds provides no collateral which means big risks, regardless of what someone may tell you. Investing Rule #1: You must have collateral! If you walk into a bank and ask to borrow 100K, the first question the bank will ask is "What's your collateral?" If you say you have none, they will show you the door. 

Murphy's Law says that if you invest all of your money with no collateral sooner or later you will lose all or most of it. 

Finally, if you think about your personal experiences, you probably lost the most money when you had no collateral. Investing money in a volatile marketplace with no collateral is a recipe for disaster. 

I've learned my lessons! Hopefully these suggestions may be of value for you. 

Best of luck!

Barry

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$100,000 is a great start if you play your cards right. The  key is to determine your risk tolerance, experience with investments and time you can spend on either mutual funds or real estate.  

Whatever you do, get educated first since both investment strategies can cost you a fortune if you don't know what you are doing. 

Here's a starting point. 

For mutual funds, I would read the book "The Investment Answer" by Dan Goldie and Gordon Murray. 

For real estate, read "The Millionaire Landlord" by Gary Kellor. 

I would not loan money to people since it's extremely risky. There is no free lunch on Wall Street or Main Street. If someone promises you returns that are 10% or higher, ask your self what's the catch? 

I'm a buy and hold investor and tend to get higher returns than stocks since I treat my real estate as a business. However, it's a lot more work to get double digit returns in real estate than simply buying a diversified portfolio of mutual funds. 

Why? Owning a real estate business is riskier than buying and holding portfolio of 1,000 of stocks around the globe via low cost index funds. 

Another great resource would be the annual reports that Berkshire Hathaway publishes each year. If you were to read all of the shareholder letters from Warren Buffet and Charlie Munger, you would learn a lot about the business of investing. 

Good luck and make sure you do your research. There is nothing wrong with sitting in cash and waiting for the perfect pitch. 

Good luck!

Originally posted by @Aaron Childers:

I have just under 100K to invest. I am trying to decide the best approach?

Should I just put that in mutual funds or is real estate a good investment? 

Aaron, I think our group is a bit biased.  Of course you should invest in real estate.

Go to the mutual fund forums, and I think they would also tell you could get better returns in real estate :).

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