What Non-Real Estate Vehicle Are You Investing in for 2018?

12 Replies

Like the title says I'm just curious to see what you all are investing in other than real estate (if anything) for 2018. I have a few rental properties already, all doing well, but I am about to inherit some money and am thinking it would be smart to use that to diversify into something other than real estate. The two main vehicles I have been thinking about are...

1. Putting it into an index fund that tracks the market as a whole.

2. Putting it into a good, well established REIT fund like Vanguard's.

The hesitation I have with the above, however, is that real estate is as we all know very high right now and we all know the old mantra, buy low, sell high. I also have the same concern with putting it into the stock market at this time. 

I realized both the REITs and stocks could keep going up and up for another several years...but the opposite is also possible. I know if I keep it invested long term...15+ years...it is almost guaranteed to increase in value even if it crashes in the short term. However, I'd prefer to avoid that dive in value if possible. 

So, back to my original question. What are you all investing in now other than real estate? Any feedback is much appreciated :) 

Maxing annual contributions in a vanguard target retirement mutual fund IRA and having some fun with crypto currencies

Bitcoin!

Kidding. Don’t do that.

I contribute to a 401k (employer matched amount). This sits in a Total Stock Market Index fund.

Also considering different areas of real estate vs. just rental properties. Such as lending hard money and funding other people’s flips.

Good luck! Looking forward to seeing what others are doing too. Great question.

Joel

I take a very Boglehead-esque approach to investing, although I am probably more aggressive in my allocation strategy than is normally recommended. I have a military pension that I treat like a fixed-income investment (like it is one big bond) for asset allocation purposes. Meaning I allocate almost all new money into stocks. I'll probably pick up some more VNQ (a Vanguard REIT) later this year, though. I think I am under-allocated to RE.

I hear you about the stock market looking toppy. No doubt about it. I stopped trying to time the markets decades ago, though. I just buy in on my own schedule and try not to get distracted by the market. That philosophy doesn't work for everyone, but it works for me.

Best of Luck with Your Investing!

@Tim Porsche in addition to income producing properties I'll be reinvesting in my biz (hiring more people, growing the leadership team) and myself (conferences, EO, books, classes, mastermind groups, etc). The more I invest in myself and my primary biz the more surplus cash flow I can put to work in income producing assets.

401K and random index funds, but I'm leery of this ridiculous, overpriced market and have turned to Syndication deals, private loans (for real estate of course) and mobile home park. I keep waiting for the stock market to crash. (I keep getting disappointed/not disappointed - I still have money in the market.)

Stock market and real estate. This way I have exposure to most major asset classes. Only thing I’m missing is crypto lol

@Tim Porsche I still dump money into the stock market. It's HUGELY unscientific but I look at the amount going toward mortgage principal and have it roughly match what I put in the market. I figure it's keeping "capital contributions" roughly the same. I'm basically in a bunch of broad-based ETFs, nothing fun...nothing sexy. I do steer clear of publicly traded REITs. Not because I don't like them or think the kids at Blackstone aren't smart (they're crazy smart) but because I already have exposure to real estate through...well...real estate. But I don't think it's a bad place to start (publicly traded REITs) if you want exposure to real estate because it really just costs $6.99 to buy and $6.99 to sell. So that's a heck of a lot cheaper than 5%-6% on the sell side of an REI transaction. So it's the only area in a pseudo-balanced portfolio that I don't need exposure to. The same can be said for publicly traded home builders if you want to go down that road.

I wouldn't try to time the top of bottom of either market.  There were people saying that Dow 21,000 was lunacy and we're up another 5,000 points.  All the while there are people waiting for a "buying opportunity" and the market to drop 10%.  Okay, it drops 10% tomorrow.  They all buy.  They just bought at a 23,400 when last year they said 21,000 was "too high".  That's really the challenge with a lot of the "buy the dip" scenarios.  You never know if the "10% dip" is going to be "after a 20% run".  Who knows, I'm not an analyst.  We could be at Dow 18,000 by the end of the year or Dow 28,000.  I have no clue.  

I also don't have any gold bars hidden under my mattress of random cryptocurrency tokens that may or may not be ponzi schemes...  

@Tim Porsche

Mfh mobile home parks and self storage are some of the obvious investments. But I’m learning that a lot of sophisticated investors are trying to move outside of real estate and into things like life settlements, land conservation/oil investments for the tax benefits.

@Tim Porsche

There's a lot of other passive index investors on the thread, and I echo in that chorus. ETFs have really opened up great, diversified market segments and low prices.

On top of that, I have spent more time in the last few years investing in myself. Often the most underestimated and impactful. While it does sound like a cliche, here are some good suggestions:

1) Professional certifications & licensure

2) Foreign language (have some friends swearing by italki)

3) Lifestyle simplification (get rid of cost, complication, distraction)

4) Focus and productivity monitoring (I have really enjoyed  RescueTime for this)

5) Health and wellness

Much of my real-estate journey in the last few years has been the realization that my professional skills are my best asset in real-estate. In other words, I generate money so as to buy real-estate and passively put other people to work.

Thanks for all the great responses everyone! Lot's of good advice, especially about investing in yourself and education.

Just curious have any of you heard of Ray Dalio's "All Weather Plan"? If so what are your thoughts on it? I bought Tony Robbin's book, "Money, Master the Game" recently and am reading through it. One of the plans he really touts is the All Weather plan...which basically is putting your investment money in these proportions:

30% Stock Market Index Fund

40% in Long-term U.S. Treasury Bonds

15% in Intermediate-Term U.S. Treasury Bonds

7.50% in Gold

7.50% in broad Commodity basket

Apparently over the last 80 years if you analyze the data, this investment strategy would have only lost you money 4 separate years, and the WORST loss you would have seen was 4%...one of the "lose years" was really break even almost, with something like 0.003% of a loss. Over time is has averaged just under 10% returns year after year. This is assuming you rebalance the portfolio at least once a year though to keep the same percentages invested. 

The returns seem similar to what you would get with just dumping all your money into an Index fund, but with much less volatility...I'm really considering doing this with the inheritance money. Still want to do some more research before I make a final decision though. What I like about it is, if the stock market is going to have major correction sometime in the near future, this strategy *should* really limit your downside and prevent you losing a ton of money. 

@Tim Porsche - do those returns include transaction cost? And how would you invest in a broad commodity basket? (ETF comes to mind but I'm not sure a commodity ETF would be the best approach)

If the returns aren't much different from simply investing in a Vanguard Stock index, not sure if the costs and reallocation effort is worth it, but to each his own I suppose. If you're worried about a market correction, maybe it makes more sense to break up your inheritance and just invest a portion of it in a Vanguard index every month vs buying all at once (I don't think Vanguard charges commission for buying on their platform)? I would think volatility and a correction shouldn't be a big concern if your plan is to invest for the long term and regularly contribute to your investment account regardless of what the market is doing.

@Abel T. Good question, I'm not sure if they include transaction costs or not. I would assume you would use an ETF or some sort of mutual fund to invest in a broad commodity although I have not done this before. Another thing I've come to see will eat into the returns of the All Weather portfolio are the tax implications of rebalancing the portfolio every year. 

I'm leaning more towards just putting the money in good index funds that track the market as a whole now, due to the reasons mentioned above. I'll most likely make the stock purchases incrementally over time instead of all at once.

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here