Ask the Readers: How Would You Invest $100,000 Today?

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If you’re like me and read a lot of forums (whether stocks or real estate), a common question that always comes up is, “If you had x amount of money, how would you invest it?

So, I thought this would be a great question to ask the readers of this site. Just as an arbitrary figure, suppose that you had $100,000 in readily accessible funds to invest with today. What would you do?

The most common answers I come across are typically: individual stocks (such as dividend growth stocks), index funds, single family homes, multi-family homes, or commercial real estate.

But perhaps your outlook for 2015 and beyond isn’t so bullish… In that case, would you stash the cash and wait for a substantial market pullback? Invest only half the funds? Or, as an even more defensive play, shelter the capital in gold/silver? Are bitcoins still en vogue?

What about peer-to-peer lending? Or would you, instead, be the bank and act as a hard money lender? Start your own business?

So many options… And what would your underlying goal be with the $100k? Build passive/semi-passive income? Bet on future appreciation? Or, find a safe haven and wait for better opportunities to present themselves in the future?

I would love to hear your own thoughts and strategies for 2015 and beyond! I’m still working through my own plan, and will share with everyone when I release the 2015 Goals post!

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Luke
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Luke

Hmmm….I would probably pay down the loans on my rental properties. But I noticed that option wasn’t on your list 😉 [I’m assuming you’re talking about what to do with the proceeds from a cash-out refi on a rental property.]

In all seriousness, if you don’t have a ready purpose for it, I’d question whether you should be investing it, given that you can get a guaranteed ~4% by paying down debt (or by not borrowing the equity in the first place!).

The best argument I can see for a cash-out refi in your situation is because it will be more difficult to qualify for a loan once you retire. Two other benefits – 1) it makes it easier to pounce when you DO see an opportunity, and 2) it locks you in at a rate that may not be available in a few years. That said, being liquid is going to cost you ~4% per year, maybe a little less when you factor tax deductibility in, so unless I had something that I was confident would make me more than 4%, I’d skip the loan.

Even Steven
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Been thinking about something similar in the new year. I have started to ask myself can I ever have enough emergency fund built up? Let’s say I’m comfortable with 6 months, what about an opportunity fund, something that sits there waiting for that foreclosure, bear market, etc.

Steve Adcock
Guest

Nothing special here – I’d put the entire thing in my brokerage account that I have with Vanguard, which is divided up between several varieties of funds, and simply watch it grow. Nothing complicated over here. It would become part of the funds that I will use to live off of once I retire by 40.

Leigh
Guest

I would hands down make a $100,000 payment on my mortgage, bringing the balance down to ~$47,000, meaning I could pay off my mortgage in entirety by May/June 2015. That would be pretty amazing. That would then allow me to invest 80% of my monthly paychecks going forward or about $6-7k/month, which would be about 3x monthly expenses invested per month. Looking forward to that day!

Ton
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Ton

Investing in derivative products like equity options and futures would improve your ROC dramatically.

Mr. Captain Cash
Guest

Nothing new here. I would put the entire $100,000 into my diverse index fund portfolio and be forever grateful that I am now a couple years closer to achieving financial independence at the age of 26 instead of 28. One thing I would not do is in any way, shape, or form attempt to time the markets.

James
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James

Hmm..actually, my father passed away a year ago, and I got his insurance money for 100k. After I had got that money, I tried to find a rental property in Las Vegas. It took me 4 months to get the first deal and 3 weeks to closed an escrow because I underestimated the market there(low ball offer). In 2011, the house price was super super super cheap(30k+15k for rehab), but now it has gone up100% in 2014(I just bought it for 73k+4k for rehab for the a little bit higher rent). I’m not sure if I should happy since all of the my family’s property appreciate 100% or sad since the property over there no longer give good cash flow anymore.

FerdiS
Guest

Personally, I would invest $50,000 where it can earn 8% without too much risk. That would just about counterbalance the $100k loan at 4%. I would keep $25k for emergencies and/or opportunities and “speculate” with the rest, selling put options on dividend growth stocks that I wouldn’t mind owning outright.

DividendsForDummies
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Would probably put 70k into portfolio, and 30k into a new car. Yes cars do quickly depreciate in value but hey, putting ALL your money into savings is no way to go through life. You gotta do things for yourself too.

Kathy @ RentalRealities
Guest

I’d use $100k as the down payments for two more duplexes, and then whatever is left would help knock down that mortgage I’ve been chipping away at. Our “master plan” includes a minimum of 5 properties, so this would top us off!

I know my husband is concerned that mortgage interest rates will eventually rise, so this would probably get prioritized ahead of some other things.

Rat Race Quitter
Guest

I’d probably drop 40% in the Vanguard 500, 25% in single-family rental real estate and, 10% in dividend stocks, 5% in Peer-to-Peer lending hold the rest in a “high yield” CD until Title 3 of the JOBS act actually gets passed this year (if ever!).

James
Guest

I’d start by paying off my high interest student loan (about $25k).

I’d probably drop the remainder on down payments 2 leveraged turnkey properties out-of-state. This would enable me to focus my day job cash on stocks rather than splitting my focus like I will in 2015.

JP
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JP

I’m sure you have tapped into mr money mustache’s blog every time and again. He might say pay down all springy debt, ie. Credit card and equity debt, debt that gives you a buffer as you pay it down. In the Boston area, I can take 100k and buy a multi family for 400k that can profit $1500/month, but I know that the Bay Area doesn’t allow for that. I am about to close on prop #3 for a total profit of $4500/month from real estate. I was lucky to be born in an area with so many “up and coming” neighborhoods that I can invest in and bet on.

Our mini retirements this year include Charleston, SC, key west and Italy for 2 weeks. No sense in waiting until 65 to travel and have fun.

No Nonsense Landlord
Guest

A HELOC might have been a better option.

Just park it in an ETF, $10K a month for 10 months. Or a Federal government bond fund, that is inflation protected.

Or put it in an offshore safe deposit box, and declare bankruptcy…

Martin
Guest

I would definitely invest it, or actually trade with it. I trade options and with 100k dollars I could make a significant stream of income and maybe become a semi-retired. But if I were a beginning investor without knowing what I know today, I would invest it into dividend growth stocks. Pick maybe 20 good stocks and start slowly allocating it until fully invested. In the meantime I would be learning how to get more out of investing/trading.

DoneByForty
Guest

I’d lump sum invest the entire amount into my asset allocation, whatever that happens to be. (With the added benefit that you can rebalance via a large buy.)

Waiting for a market downturn seems like folly to me. None of us really knows where the market’s going in the next year…we all know the general pattern is up and to the right. So the best time to buy is yesterday, and the second best time is today. 😉

FIHopeful
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FIHopeful

The first question to ask, of course, are what are the goals (FI, debt reduction, etc.), but assuming that we’re talking about someone with an already diversified portfolio of income-generating assets and you’re not worried about generating marginal extra income, I’d park it into a semi-liquid investment (intermediate term muni-bonds, maybe for tax preferential treatment of any income).

One thing I constantly hear is to have cash (or semi-liquid investments) available for potential opportunities. I’ve always liked to keep myself close to 100% invested and it has led to a lack of cash when unexpected buying opportunities come up (e.g., wouldn’t it have been great to be sitting on $100K in cash in 2009?).

Elroy
Guest

New kitchen for the wife and that detached workshop I’ve been wanting. Done.

Jacq
Guest
Jacq

Did you consider a CD ladder? When I looked at CDs a few years ago it wasn’t worth it to get in for less than 10k (which I did not have, more like 1). The ladder is investing in different time (3 year, 5 year, 10 year) which gives access to some money sooner while letting other part of the funds earn more, it’s just not as liquid.
Aside from index funds or dividend stocks, since it sounded like you wanted it somewhat liquid.

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