How Do You Make Money With Money?

[coesillian 0]

A buddy of mine I go to school with got an inheritance a few years ago and has $70K invested in some mutal funds making him something like 7-8% a year. We're close friends and we talk about his sitution alot and I need some people with life experience to weigh in here. He's 22-23 years old and is studying engineering, he is planning on graduating without any student loans in 2 years and he's living on his own working part time. What does a person do when he graduates with a good degree in a good feild and has $70k to back him? I suggest using it as a down payment to buy a condo and live in it, pay it off in like <10 years and then have a huge asset that has gained some good value over that time. He thinks he should buy an triplex, rent it out to 3 people while still living in some cheap appartment like he's living in now. He says that the rent he will be collecting will pay for the martgage and then some, then once the moetgage is paid off its all profit from there on. There would be the headaches of tenents and maintenece fees but he says this would be most profitable. I don't know much about life planning and money management, we're both students and he has money but doesn't know what to do with it. Sure we could go on a bender in Vegas, put all on red, hit the big game, get some hookers and blow etc, but honestly... what should a young guy with a good job do with 70K when he gets out of school?

[chrozzo 19]

if hes getting a good education and will graduate in engineering, he will surely find a god paying job soon out of school.he should keep the money invested, definitely

[Governator 54]

I'm young, 24 and just bought a house last week (not to rent out). If he's serious about real estate he needs advice from a specialist not a poker forum. 70k can go a long way for a young person. Depending on the area, buying real estate is always a good idea. Buying a home and renting it out is usually profit over the mortgage, but you have to consider that you need to make yourself available to the tenants living there and make repairs as needed (I don't know how handy he is).I would keep the money in the bank until that "good job" actually happens and has the papers to prove it, then he'll be able to make an easier decision. For example, he may need a new place to live if the job he gets requires commute from his current location. He then may change his mind and want a condo.

[pokerinc 0]

Single Family Home> condo. The market right now is really soft for condos and is going to be for the forseeable future. Then when that market strengthens newer units will do better than an older one.His triplex ideas a better one. We've been looking at doing something similair. Though it's worth it to measure out whether you should live in one of the units as opposed to having an off site apt. No condo though. Seriously.

[Dogpatch 2]

I don't know much about life planning and money management, we're both students and he has money but doesn't know what to do with it. Sure we could go on a bender in Vegas, put all on red, hit the big game, get some hookers and blow etc,

Always bet on black.

[CBass1724 1]

Always bet on black.

Again, everything turns into a race issue.Definitely buy something to rent out.

[quadaces 0]

Rental properties are the way to go AINEC! Stay away from condos and SFR. Multi family residences are the way to go. If I had the $70k, it would go to as many MFR as I could get into. Just make sure he is making a monthly profit from the begining other wise it becomes a liability and not an investment!

[Ron_Mexico 4,238]

Always bet on black.

Who's in charge here?I am:gunshot to the head:I'll ask again. Who's in charge here?You are.Very good.oh, and my answer to the op's question. A copy machine.Yeah, I have lines from nearly every movie I've ever watched memorized. Someone kill me.

[speedz99 145]

Who's in charge here?I am:gunshot to the head:I'll ask again. Who's in charge here?You are.Very good.oh, and my answer to the op's question. A copy machine.Yeah, I have lines from nearly every movie I've ever watched memorized. Someone kill me.

I'll have the roast beef.And how would you like that cooked?Bloody.Was I close?Edit: upon checking...not that close

[Ron_Mexico 4,238]

I'll have the roast beef.And how would you like that cooked?Bloody.Was I close?

perfect sir.Oh, with the arrival of speedz, I change my answer to the op's question.To make money with money, give it to a jew.You playin tonight? Let me know if you want to and need the buy in

[coesillian 0]

Always bet on black.

I knew this would come up when I was writting and I actually erased it and changed it to red but I was thinkin black.I told him to keep it invested for now and see where he does actually end up in 3-4 years. Is the whole real estate business more profitable or is it just that you actually have to have an idea if your going to be investing? Thanls for the advice guys.

[hblask 1]

A buddy of mine I go to school with got an inheritance a few years ago and has $70K invested in some mutal funds making him something like 7-8% a year. We're close friends and we talk about his sitution alot and I need some people with life experience to weigh in here. He's 22-23 years old and is studying engineering, he is planning on graduating without any student loans in 2 years and he's living on his own working part time. What does a person do when he graduates with a good degree in a good feild and has $70k to back him? I suggest using it as a down payment to buy a condo and live in it, pay it off in like <10 years and then have a huge asset that has gained some good value over that time. He thinks he should buy an triplex, rent it out to 3 people while still living in some cheap appartment like he's living in now. He says that the rent he will be collecting will pay for the martgage and then some, then once the moetgage is paid off its all profit from there on. There would be the headaches of tenents and maintenece fees but he says this would be most profitable. I don't know much about life planning and money management, we're both students and he has money but doesn't know what to do with it. Sure we could go on a bender in Vegas, put all on red, hit the big game, get some hookers and blow etc, but honestly... what should a young guy with a good job do with 70K when he gets out of school?

Young with the promise of a good job, and a big lump of free cash! Oh, to have such problems.I'm an old guy who has had a pretty successful investing career, so here's my advice:First: Diversify -- with that much he can do some real estate and some stock marketReal estate is a good investment because it is easy to buy it leveraged, and goes up reliably over the long run. If you put 20% down and it goes up 4%, because you are leveraged 4-1, your ROI is 20%. That's tough to beat. So my first step would be to buy a house for myself. I would allocate 20-30K of that money to a downpayment (taking into account whether your salary covers the payment comfortably. If not, get something cheaper). Set 10K aside in short term CDs or other quick-cash investments (money market funds) for furniture and emergency house repairs.That leaves 30-40K. This is tougher. For the reasons stated above, real estate is nice, but that amount will only get you one unit, and you have to deal with renters, and all your eggs are in one basket (real estate). So instead I would probably go with mutual funds. If he's making 7 or 8 percent, he's probably not investing aggressively. Since he's young and probably won't need the money any time soon, I'd probably put 20K in an aggressive fund, and the rest in some market index type funds.Then forget that you have that much money and base your lifestyle off your current income, not what is invested. Continue to add 5% of your salary to your investments. When you turn 30... you'll be seriously rich.

[coesillian 0]

Young with the promise of a good job, and a big lump of free cash! Oh, to have such problems.I'm an old guy who has had a pretty successful investing career, so here's my advice:First: Diversify -- with that much he can do some real estate and some stock marketReal estate is a good investment because it is easy to buy it leveraged, and goes up reliably over the long run. If you put 20% down and it goes up 4%, because you are leveraged 4-1, your ROI is 20%. That's tough to beat. So my first step would be to buy a house for myself. I would allocate 20-30K of that money to a downpayment (taking into account whether your salary covers the payment comfortably. If not, get something cheaper). Set 10K aside in short term CDs or other quick-cash investments (money market funds) for furniture and emergency house repairs.That leaves 30-40K. This is tougher. For the reasons stated above, real estate is nice, but that amount will only get you one unit, and you have to deal with renters, and all your eggs are in one basket (real estate). So instead I would probably go with mutual funds. If he's making 7 or 8 percent, he's probably not investing aggressively. Since he's young and probably won't need the money any time soon, I'd probably put 20K in an aggressive fund, and the rest in some market index type funds.Then forget that you have that much money and base your lifestyle off your current income, not what is invested. Continue to add 5% of your salary to your investments. When you turn 30... you'll be seriously rich.

that sounds like a sweet plan but whats the deal with aggressive investing, doesn't that equal high risk. He's young so I think he sould be happy with 7-8%. Big risk = big reward but is it worth the risk at a young age. I think he should keep the investments safe and steady because he's young. What is the risk on these agressive funds and what's the return, I'm always skeptical when it sounds too good to be true.

[rgold79 0]

Dear General,Please help me beat the S&P 500 this year.Sincerely,rgold79

[SuitedAces21 2,741]

The best thing to do is to consult a professional. An internet forum full of degenerate gamblers is no place to ask for advice on money management.

[Royal_Tour 0]

meh, real estate shmeel estate, the market will come down over the next 5 years, basically if he buys a house/condo/etc for himself he better be comfortable with where he is, he cant just pack up and leave and make oodles of profit. it doesnt work that way.there is plenty of ways to invest money safely and get high returns.tell your friend to ask himself where he sees his life goin in the next 5 years. If travel, partying and living it up while he is young is 1 of his plans, perhaps he should think about putting the money aside for when he is ready to use it properly.i mean, not to be a downer, but an engineer job doesnt get you as far as it used too, and we have china to thank mostly for that problem.working in design myself, its dirt cheap to have CAD work, and QC work done in china.not too mention engineers are always among the 1st to go when big corporations need to downsize, bombardier, let go of most of their engineers and designers because they were no longer producing product. Basically, among all this mumble jumble, just tell your friend, to graduate school, enjoy himself for a year, find a dream job that he is happy with, and just have fun with life.

[Royal_Tour 0]

that sounds like a sweet plan but whats the deal with aggressive investing, doesn't that equal high risk. He's young so I think he sould be happy with 7-8%. Big risk = big reward but is it worth the risk at a young age. I think he should keep the investments safe and steady because he's young. What is the risk on these agressive funds and what's the return, I'm always skeptical when it sounds too good to be true.

i had a 16% return this year in my portfolio. I'm medium risk.

[Tiltinagain 977]

that sounds like a sweet plan but whats the deal with aggressive investing, doesn't that equal high risk. He's young so I think he sould be happy with 7-8%. Big risk = big reward but is it worth the risk at a young age. I think he should keep the investments safe and steady because he's young. What is the risk on these agressive funds and what's the return, I'm always skeptical when it sounds too good to be true.

The fact that he is young is exactly why he SHOULD be more agressive.The idea is that, because you're young, you won't need the money for 30+ years so as the market goes through it's normal ups and downs in the short term it doesn't affect your income. The market has always out gained every other investment, even real estate, over any given 20 year period so he will be sitting pretty when he needs the money for retirement.If, however, you were 55 and going to retire in just a few short years, you would want to be more conservitive with your investments becasue you would be depending on them for your income soon and, if the market took a big down turn, it would severly hurt, or almost eliminate, your income stream.Bottom line. The younger you are the more agressive you should be....you can take the down swings but have many years to take advantage of the huge upswings. As you get older you should move into less and less agressive investments until you retire at which time you should be in very conservitive, very low risk investments like bonds, CD's and money market accounts in order to protect your assets and have a steady income stream. Thus the term "fixed income".GL

[scram 1]

One thing that needs to be made clear- the house you live in is not an "asset" no more than your car is an "asset" or the food in your refrigerator is an "asset". Commodities that are necessary for survival (like a house) cannot be considered "investments".Viewing ones house as an "asset" is the #1 mistake unsophisticated investors make. The house you live in involves you in the "real estate market" no more than the niblets in your pantry involve you in Corn futures. The home you live in should be considered independent of all other investments you make. Matter of fact, it is the opposite of an "asset". It is a liability, since it costs you money instead of making you money (and as far as growth in value over time? Once you factor in the interest you've paid on your mortgage over that same period of time, it usually completely offsets any gains in R/E value your house enjoys and you would have been better off putting that same money in a savings account)Condos are not "bad investments" in all markets (in some areas, they're actually more desirable than SFD's while in other markets, they're complete dogs asses), but they can be very, very pricey. A lot of the nickel-and-dime BS that goes along with owning a condo can seriously eat into your long term rental profits. In addition to mortgage, insurance and taxes for the condo, you also have to pay monthly association fees and run the very real risk of getting tagged with a "special assessment" whenever the elevator breaks or the garage needs repaving (plenty of "special assessment" horror stories available online). In Chicago, for example, these "monthly assessments" are often so high that they severely depress the selling price of the condo itself since prospective purchasers might have to pay a $975 monthly "condo assessment" in addition to their $1500 mortgage (not an extreme example for Chicago, either)If I were a young man with a nice sized inheritance and a reasonably secure future (lmao @ engineering being a "secure future". Hope he speaks Hindi), I would use that inheritance to secure my bases before doing anything else (since 75K doesn't do much more than that). 75K is a decent down-payment on a dwelling in most areas with enough left over for a solid, low mileage used automobile that will last another 10-15 years with routine upkeep (new cars are a monumental waste of money), an emergency fund that represents a minimum of 6 months expenses plus the cost of a 3000 mile move and a decent, long-term oriented equities package. Since he's a kid, he must avoid the urge to do stupid kid stuff- buy a brand new car, too much house, grossly speculative equities investments and $30,000 worth of beer and porn.Regarding being aggressive with your investments when you're young- That has been the par strategy for a long time since market metrics have suggested so, but bellwethers of the North American economy are seriously indicating that "elegant decay" might finally be upon us and strategies that worked in the past will no longer be applicable in the future. When we finally break 100 Trillion in national debt, shift to a completely "service based" economy (aka- crap jobs instead of good jobs), wittiness the last of North American industry shipped to China and start to see currency inflation really take hold, his "aggression" may not recoup itself unless he's investing for things to come, rather than using dated strategies of the past that do not account for the way things will likely occur. Even if he has an inordinate amount of emerging market exposure, he's still on some pretty shaky ground, since many EM's aren't fully established as far as systems, procedures and economic protections. Remember- a lot of the 3rd World emerging-market powerhouses are still basically Crapistans run by dudes who wear funny hats. This has already been a book, so ill shut up now.

[Ron_Mexico JR 0]

i had a 16% return this year in my portfolio. I'm medium risk.

Is that supposed to impress us??? Medium risk is for pussies.

[Theraflu 1,047]

Coesillian: So I was talking to some of my friends today, and they agreed with you for the most part about buying a multi-family house and renting it out, and they said that you should prob-Coesillian's Friend: Excuse me, and far be it from me to call you a liar, but I thought I was the only friend you had? Where are you getting this advice?Coesillian: Well, actually I posed your situation on an internet forum to get some opinions and they said-Friend: Oh, like a financial advisers forum? I mean okay, but how do you know those people aren't just talking out of their asses?Coesillian: Actually, it was on FCP, that Daniel Negreanu poker forum.Friend: Ohhh in that case, please continue!

[coesillian 0]

Theraflu: I'm going to post one of those funny "could be" conversations Theraflu alter ego: Dude you suck at those, don't bother.Theraflu: No I got this, I have a good puch line I read somewhere else on FCP..post..Theraflu alter ego: I told you so.