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Post by dustdevil28 on Sept 27, 2007 2:48:23 GMT -8
For the past two years I've had a large sum of cash stowed away in a CD with my bank. While the percentage that I'm receiving (6%) leaves something to be desired, I enjoy having this account because it is money that I know I'm not going to touch and so I can watch the account accumulate a extra nice chunk of change before it matures.
My Financial counsler at my command has recommended that I look more towards other investments though. Stuff like mutual bonds and such. He's stated that on average the lowest return I should see from my investments in those areas would be about 6% and more then likely it would be much larger.
Do you have any thoughts or advice in this area?
Thanks
-Zach
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Post by bounce on Sept 27, 2007 6:56:09 GMT -8
For the past two years I've had a large sum of cash stowed away in a CD with my bank. While the percentage that I'm receiving (6%) leaves something to be desired, I enjoy having this account because it is money that I know I'm not going to touch and so I can watch the account accumulate a extra nice chunk of change before it matures. My Financial counsler at my command has recommended that I look more towards other investments though. Stuff like mutual bonds and such. He's stated that on average the lowest return I should see from my investments in those areas would be about 6% and more then likely it would be much larger. Do you have any thoughts or advice in this area? Thanks -Zach There is no way anyone can advise you on what you should do with that money until you have some "NO SHIT" clearly defined goals for your life. Where is it you want to be in five years? You need to put some serious thought into this and not just say, "I want to be rich, of course." Will you need to touch that lump sum for a large consumer purchase (careful, that's a set-up question - I never spend saved money on consumer purchases - that is a loser's game). Seriously though, where do you want to be? Do you want to be financially independent of your job or do you have some other goal in mind? |
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Post by bounce on Sept 27, 2007 16:11:25 GMT -8
For the past two years I've had a large sum of cash stowed away in a CD with my bank. While the percentage that I'm receiving (6%) leaves something to be desired, I enjoy having this account because it is money that I know I'm not going to touch and so I can watch the account accumulate a extra nice chunk of change before it matures. My Financial counsler at my command has recommended that I look more towards other investments though. Stuff like mutual bonds and such. He's stated that on average the lowest return I should see from my investments in those areas would be about 6% and more then likely it would be much larger. Do you have any thoughts or advice in this area? Thanks -Zach Zach, I do have some advice... Read my post on how I teach my kids about money. It has to do with allowance, but the lessons are directly applicable to you here. Consider the money you have FIRST MONEY. Never spend it. Remember - THE ONLY PURPOSE OF MONEY IS TO MAKE MORE MONEY. Promise yourself that no matter what, you will only spend the RETURN you get from investing this money (second money). I don't know how much you're talking about, but lending it to a bank is worthless. The returns you will get are NOTHING after inflation and taxes are considered. If I were you I would consider investing it elsewhere. My investment of choice is commercial real estate. I can buy it using 75% bank money (if not more). Here are the benefits of real estate: 1) Growth - your investment will grow on its own 2) Positive cash flow - your investment will write you a check every month 3) Tax write-offs - because of the nature of the tax code, you can receive cash each month and have it look (on paper) like a loss (after depreciation, interest and other business expenses are deducted). You can get cash in hand and show a loss for tax purposes at the end of the year. If you meet the criteria of being a real estate professional (it's easy to do) that loss can be forwarded to your personal tax return and you can get a refund for overpayment (from your W-2 income taxes withheld) as a result of making the investment. Now I ask you, HOW BAD DOES THAT SUCK? 4) Ability to leverage - let's say you invest $10,000 at a 10% annual rate of return. At the end of the first year you will have $11K. Now, let's say you use your $10K as a downpayment and buy a $100,000 property (borrow $90K) and it gives you a 10% rate of return the first year. You will have a 100% return on your $10,000 investment. You have to be able to take advantage of leverage if you want to break free of W-2 enslavement. Now, as an aside, I have some commercial properties that are returning 40%, not 10%. Consider that when thinking of the numbers. 10% in real estate is a shitty return. I probably wouldn't even get involved with a property that returned 10%. 5) Control - I control my properties. I know where my money is, the properties are insured, I keep my eye on them. When you give your money to a bank or to Wall Street, you have no earthly clue what the hell is going on with your money and you damn sure don't control it. Real estate is the only thing I have found that gives me all five of these things. |
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Post by dustdevil28 on Sept 28, 2007 5:51:22 GMT -8
Bounce,
Thank you for taking the time to write up your advice.
Perhaps my greatest failing is that I don't think that much about the future and so I don't know where I see myself in five years. I love my job in the Navy right now and I don't see myself doing anything different in five years.
I saw the thread between you and AP and so I'm sure your advice to me would be about the same which is to learn to set specific and achievable goals.
My question and purpose of this thread was to get your take on CD's in general. I expected it to be negative like that of my command's financial counselor, but I was curious as the reasons you would be negative on it.
No, I keep enough money in my checking and savings to ensure that I won't have to touch this money at all until it matures, and when it does I'll probably just take about half of it's maturity for my own purpose of pleasure spending. When it does mature though, I may want to look into different areas to invest it so that I can see a higher rate of return.
Real Estate is something I've been interested in for awhile, but it take's a good bit of cash to get that rolling and right now I don't have enough personnal finances to pull it off and I imagine that a combination of my age and my job would keep a bank for taking out a overly generous loan on my behalf.
The property market can be fickle in some areas though. If I could, I'd love to take the money I have and invest it in property in my hometown about 15 years ago. My father still laments selling a house he got for 60grand which is now worth about 250,000 before the big housing boom hit.
Nevada has been the fastest growing state in the country for about the last decade and the greater effects of that can be seen in my hometown, but Arizona over took us last year for growth and a big story in Nevada this year is that the housing prices have started to fall into decline and lots of people out of state who bought properties in the hopes of making a generous profit are finding themselves selling now at a significant loss.
Thanks for the advice, I'll probably continue to prod about a few things here and there if you don't mind.
-Zach
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Post by bounce on Sept 28, 2007 8:23:51 GMT -8
Zach, you mentioned "housing" a couple of times.
I'd stay the hell away from residential.
Rent the Michael Keaton movie Pacific Heights.
The movie is a fantasy, but the truth behind the movie is undeniable.
To me, investing in residential rentals is a ticket for the express elevator to Hell.
You also mentioned not having enough money to invest in commercial.
To that I say, BULLSHIT!
What makes you think you have to invest YOUR MONEY?
STOP THINKING LIKE THAT!
That single bogus, bullshit and untrue idea - WILL KILL YOU. It IS killing you and it HAS BEEN killing you.
By "you" I mean your financial future.
Reread my signature line! Then reread it again, and again, and again!!!!!!!!!!!!!!
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