i will be getting 40k what to do with it

[HubertGarfunkleIII]

ok guys so i will be inheriting 40k in like 6 months. I am not sure what to do with the money. I want to just buy a nice bike, gear, etc. But reality is I need this money to benefit me somehow someway. It takes money to make money. Now I will have the money. I am 25, still need to finish school, and work for minimum wage. I was thinking of 2 things. 1) put the money down on a house. I can get a 4 bedroom house out here for $1500 a month. I cant afford the payments on my income. But if I rented 3 of my rooms out for $500 which is about the going rate out here to rent a room, I would have my mortgage payments covered. I could than not have to pay rent, save money, etc. and go from there. option 2) start my own business. If I did start my own business I was thinking of just doing something simple like opening up a chinese fast food joint, or a dairy queen. I know I could do either but I dont know if 40k will be enough to do it, get started etc. option 3) One more thing I have been contemplating is ( i work 2 jobs) quiting 1 job, and just living off that money and my regular income to finish school. The 40k will give me the chance to not work as much free up some time and let me finish school. What do you guys think would be the smartest decision? or maybe something I havnt even thought of? if you were 25 again and in my shoes what would you do?

:cool:

 

[wake_rider]

I would go with #3. Take some stress off yourself and just work one job while going to school. That will give you more time to focus on studies as well as give you more free time, which equals quality of life. Also, it will open up time and opportunities for internships which will help tremendously when it comes to hitting the workforce. Remember, it's not about what you know, it's about who you know and an internship is the best way to put a foot in the door or gain name recognition in the workforce. "A fool and his money are soon parted." Best of luck to you, and be STINGY with that money!

 

[BigRedAF]

Roommates suck
Most first time business's fail
40K will disappear in hurry and it will be hard to replace at minimum wage
The housing market is failing across the country, the bottom isn't here yet

Take the money to a professional and get into mutual funds, they're diversified. They're not as risky as stock, you can let it ride or use the earnings to supplement your income. Your principle will still be available when you finish school. By then you'll have a better idea what to do. There are several funds that are still preforming well in the current market. You can conservatively make $400 per month in interest with the right funds.

Just my .02 worth...

 

[IndyMX]

Send it to me, I'll make sure you don't spend it unwisely.

Oh, if you could, just send it in $100's please.. ;)

 

[HubertGarfunkleIII]

Roommates suck
Most first time business's fail
40K will disappear in hurry and it will be hard to replace at minimum wage
The housing market is failing across the country, the bottom isn't here yet

Take the money to a professional and get into mutual funds, they're diversified. They're not as risky as stock, you can let it ride or use the earnings to supplement your income. Your principle will still be available when you finish school. By then you'll have a better idea what to do. There are several funds that are still preforming well in the current market. You can conservatively make $400 per month in interest with the right funds.

Just my .02 worth...

who is a professional? how would I go about getting into mutual funds?

 

[stumanarama]

You could just take ten for yourself(new bike, gear, other self induglences) and put the rest in a mutual fund like red said or just put it into a long term cd and forget about it, then later on when you want to buy a house, or a corvette or invest in some obscure stock, BAM! problem solved you'll have all the money you'll need. I wouldn't just piss it away though for a short term gain, but then again what do I know, I'm only sixteen.

 

[HubertGarfunkleIII]

it would be so cool to run my own business as in open up a mx track! I doubt that would be a good idea. What about buying a mobile home? as of now I can only afford to rent rooms in apts/houses. If i owned a mobile home I have a place to live all the money i make goes straight to my pocket. minus utilities.

 

[Aryain]

Can I borrow about 6k? Ill pay you back in full with my contingency money.

 

[BigRedAF]

I use Fidelity and have for several years. There are other company's but this one is offered through my employer. I've had very good success with the international funds but I'm not going to make any recommendations for you.

Sit down with a pro and tell him what you would like to try and they will build suggestions around your needs. If you don't like what they say walk away and drop into a CD in any large name bank. CD's are lame but safe. They can put your interest in your account each month or let it compound for a better rate. You can expect 5% in a short term CD or ??? in a mutual fund. I've averaged 18% over the past few years. Some people do better others do worse.

https://www.fidelity.com/

 

[IndyMX]

If i owned a mobile home I have a place to live all the money i make goes straight to my pocket. minus utilities.

HAHAHA.. The ignorance of youth!! (ignorance is not a bad thing here..)

Owning a mobile home is going to be just as expensive as renting. The amount you have to pay to keep the thing livable will be just as expensive.

If you think you make enough money now to make a modest mortgage payment, I'd put some money down on something other than a house on wheels and put the rest into a fund that will earn you some money.

Or just send it all to me, and I will make sure it gets invested properly for you.. Promise!!

 

[tnrider]

Take the money to a professional and get into mutual funds, they're diversified. They're not as risky as stock, you can let it ride or use the earnings to supplement your income. Your principle will still be available when you finish school. By then you'll have a better idea what to do. There are several funds that are still preforming well in the current market. You can conservatively make $400 per month in interest with the right funds.

and then forget that you even have the $$$. just let it ride...

 

[HubertGarfunkleIII]

I use Fidelity and have for several years. There are other company's but this one is offered through my employer. I've had very good success with the international funds but I'm not going to make any recommendations for you.

Sit down with a pro and tell him what you would like to try and they will build suggestions around your needs. If you don't like what they say walk away and drop into a CD in any large name bank. CD's are lame but safe. They can put your interest in your account each month or let it compound for a better rate. You can expect 5% in a short term CD or ??? in a mutual fund. I've averaged 18% over the past few years. Some people do better others do worse.

https://www.fidelity.com/

whats a cd? as of my my education goes as far as a Good Enuff Diploma!

 

[BigRedAF]

and then forget that you even have the $$$. just let it ride...

The rule of 72 BABY!

Divide 72 by your rate of return and that is how fast your cash doubles if you let it ride... :cool:

If you spend this cash it will be gone, 40K will disappear faster than a cat can clean it's own ---!

 

[HubertGarfunkleIII]

ok good to know, so a mobile home is a bad idea. I like the idea of mutual funds allthough I know nothing about them. I also like the idea of putting money down on a house and renting out the rooms. seems like most guys are saying go with the mutual funds?

 

[BigRedAF]

Certificate of deposit. It's offered by a bank with FDIC coverage. That means government insurance coverage and guaranteed not to loose money up to 100K per account.

You're young, take a chance and put your cash to work for you. CD's are safe but 5% will only make you $166.66 per month.

 

[IndyMX]

I also like the idea of putting money down on a house and renting out the rooms.

Another bad idea.. Unless you happen to enjoy fixing what other people destroy..

The only way that's a good idea is if you do it for a living. And then you have to be very careful about who you rent to.

It's just human nature to not take care of other people stuff as if it was your own. At least in those who rent from others. (mostly)

Like BigRed says, get a financial adviser. Find one you feel you can trust. Interview them like you were going to hire them to put a new roof on your house. Make sure they are going to be able to help you meet the goals you have.

At your age you can afford to be fairly aggressive with your finances, unless you aren't comfortable with risk. Do what your gut tells you is right. But only when you have all of the options layed out.

 

[BigRedAF]

Houses are a pretty good bet too. Just get a Realtor and try to find a foreclosure so you get a smoking deal. With home ownership comes taxes, insurance, utilities and liabilities. Roommates are good ways to screw up friendships.

It's going to be hard to by a house with 40K and a low paying job. The bank's are a little more stingy under the current market conditions. I don't know your situation but unless you have signed leases with renters the bank isn't going to allow that income to help you qualify for a loan. Also insurance company's charge higher rates for rental property.

 

[rickyd]

I agree with talking to a professional. I gave about 35k to Merril Lynch a few years ago, it jumped to about 60k and right now is at about 55k. Put it away and work for your house, like mentioned earlier, the bottom has not fallen out yet.

 

[Jaybird]

Buy oil stock

 

[Patman]

Hang out on the house thing for a bit and wait for the market in your area to go totally flat. We did that with out first house and it was easy pickins. When we sold 12 years later we pulled in $55K and this was starting with a $84K house but we bought way low and sold at the peak. In the mean time do exactly as BigRedAF has suggested. My wife and I started early and even had a couple of really deep valleys from 2 different investmet managers that didn't do their best for us and we're feeling pretty good about where things are today. It's very tempting to go blow the money on stuff but in the end your stuff will be worth less that the security you'll get from a well planned investment and you'll have a smile on your face for much longer.

 

[thorman75]

Find a nice piece of land and buy it. Dont build on it till your out of school. You can use the land as security when building it and as it's your house if you feel your up to it you can general it yourself and save a ton of cash. Taxes will be next to nothing until you improve.Main thing is do your homework so you dont fail the test. What is your major?

 

[Bodge]

Take the short term loss for the long term gain, Finish your education!

 

[bsmith]

Do you currently have any debts? Car loan, bike loan, or credit cards? If so what is the highest percentage rate and how many months do you have left?

OK, so a $1,500 a month home payment is not as easy as it seems

This house in Little Rock for example, no idea if it's close, is $234,900 newer construction and 4 bedrooms. You will need 20% as a downpayment in todays market, thats $46,980. You don't even have enought for a down payment. You'd also need probably another $3500+ in closing costs.

Leaving your payment on $187,920 for 360 months @ 6.5% of $1,187 for P&I (principal and interest) You still need to figure your takes and Insurance costs, so probably $1,500 monthly is close.
http://littlerock.craigslist.org/rfs/590182037.html

Now as for $500 a room, I think that's a bit high. we have similar home prices and in my collge town you'd get $250-$350 a room.

I see this a 4 bedroom home in Little Rock for rent at $1250. That's $312.50 per room. This is close to the home above, so if you sublet 3 of your 4 rooms, your still not getting enough to cover your expenses. If that was the case you'd see a lot more rental houses out there.
So for me, I don't think the rental route is going to work well as an investment in your scenario.

I've been looking at a foreclosed house here, 3 bedroom $200,000 is what they want, I can put 50% down, but even at that my payment is about $800 with PI, Taxes, and Insurance. Since it's a college town I have 3 months empty, so I'm short $1,176 a year if each room was $312 a month. My investment would be in the equity and the increasing value of the land. However with the surge and explosion of property value I think we are leveled of here for a long time. Therefore my money would be parked making about what a savings account does.

 

[truespode]

Option #4... buy 3 CR500AF's.

Ivan

 

[ckassen]

I would pay off debts (and not go back in) then talk to a advisor and invest the money into something...I would personally just go and invest in commodities (like gold or oil companies) They are almost all guaranteed to go up when the market goes down....

But investing on your own mean RESEARCH RESEARCH RESEARCH....