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What to do with $1 million?

Discussion in 'Ideas, Needs, Concept Feedback' started by Shawn50, Jan 30, 2018.

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  1. justonemore
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    justonemore Contributor Speedway Pass

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    I would definitely not put it in the stock market in 2018. I'm usually wrong about the market, so don't listen to me, but that said, the stock market scares me at these levels.

    I would take a full year studying your options. Reading books, posting this question on multiple forums, etc.

    My guess at the best idea is probably rental properties. You just have to know what you're doing first(read and study a lot first).

    The other thing I would guess would work is buying pre-existing franchises that have been around for a while. Like someone who owns the McDonalds in your town who wants to retire out.
     
  2. JasonR
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    JasonR Maverick Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR Summit Attendee

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    Personally, I'm investing in Real Estate. You can make the 10% in all kinds of ways so it's up to you do your research and do what you feel most comfortable investing in. No matter what it will take time and effort to become knowledgeable in any asset class you want to start investing in.

    It looks like you have the business figured out, and you need to start educating yourself as an investor. SteveO hit the nail on the head:

    This is essentially what I'm doing. Business is my wealth generating, "risky" endeavor; I want to see the money I make grow with relatively low risk investments. My profits are going to be funneled in mostly Real Estate in the way that SteveO mentioned: Cash Flowing RE backed by real assets.

    It does take time and effort to find RE deals that will yield 10% (and above) but it's very doable. For me, any appreciation is icing on the cake as I'm looking for cash flow. Having $1m in Real Estate cash flowing $100k a year certainly doesn't suck - and no matter what you'd never have to work again.

    Like I mentioned, you will need time and knowledge to become an RE Investor. Pick up The Millionaire Real Estate investor book. Join Bigger Pockets and start reading. When you get serious find a mentor.

    If you want somewhere to park cash while you figure this out you can look into REITs (Real Estate Investment Trusts) and/or a general brokerage account.

    Remember, finding one good deal that will cash flow 10%+ will require you to say no to maybe a dozen or so other deals. It's a process, just like anything else.

    I think there is a real problem with business owners with excess cash and not knowing how to invest it. I've seen people throw money away in bad business bets (ex: angel investing). I've seen people lose 8 figure fortunes who had no clue how to invest and who spent recklessly. I've also seen people go from poor to multi-millionaires through business to multi-multi-millionaire investors. My point is you need to start getting an investor education and figure out how YOU will invest. No one will be a better steward of your money then YOU.

    Over time as you become a seasoned investor your investment portfolio may look like 75% Real Estate, 15% Stocks and bonds, and the remaining 10% on speculative investments such as crypto, angel investing, etc. etc.

    So this is the end of my hopefully helpful, long rant, because no one can realistically tell you where to put that $1,000,000 other than you.
     
    Last edited: Feb 1, 2018
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  3. MidwestLandlord
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    MidwestLandlord Legendary Contributor Read Millionaire Fastlane I've Read UNSCRIPTED FASTLANE INSIDER Speedway Pass LEGENDARY CONTRIBUTOR

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    ??

    Not what I meant, no.

    I don't consider real estate passive.

    Passive to me is stocks paying dividends, money lending, etc.

    5% is more realistic for "passive" investments IMO. More active investments, like real estate, yeah 10% + is doable.
     
  4. WJK
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    WJK Silver Contributor Speedway Pass

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    I invest in real estate creating Passive Income -- both directly and through trust deeds. My yields are less on trust deeds, but they're a lot less management hassle -- since I have a bank escrow department do my collecting.
     
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  5. Jane S.
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    Do you see any bargains at moment since market seems overpriced
     
  6. Jane S.
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    What do you think of crytocurrencies they seem cheap now
     
  7. JoannaGl
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    JoannaGl Contributor Read Millionaire Fastlane

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    Question on time.

    I have about 10 different crypto currencies right now, my brother has encouraged me to buy some, he is a fan of them. I waited for a price drop during December 2018 and finally bought BTC a bit too early in Jan 2018, for 13 000 USD. 30% of my portfolio is in BTC, 70% consists of other currencies. But I'm not stressed and HODL :) I have decided to enter because I feel comfortable if it falls down even 70%-90%. For me it's more risky not to invest at all because this technology can change the world. So I simply prefer to get on this crazy train earlier than later when the rates can be like 100 000 USD... So for me it is not the same type of investment as described in my previous post.

    When people invest in crypto, they must have a courage to face the failure because they never know if tomorrow there will be still 50% of the value. This is the biggest challenge with crypto I think; it is really not for people that are beginner investors with tendency to panic or want a quick return after a few months. You should really feel ok with the amount of money you put in there. After an eventually negative experience most of beginners will not have courage for other investments. The safety is another basic thing. I see many people just invest without any knowledge about basic safety issues.

    But as all we know, the last investors who bought BTC for 20 000$ are often people who do not invest at all... After such a tragic investment they sell with a loss to get some money back, going back to work from 9 to 5 and tell other people that investing is a bad thing.

    Following the news/tweets/hills and holes and making many transactions per week can be very effective here too, but it requires a lot of time and being online 24h per day (my brother type).
     
  8. JoannaGl
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    Agree to some extent. It is hard to call real estate as a passive income when it's one of the most time consuming investments because you have to:
    - analyze the market
    - find the right real estate
    - do paper work
    - organize renting/announcements/meetings with the clients ect...
    - take up repairs and renovations

    If you use external to do that, it is much harder to get 10%.

    But if you follow the local market and its needs and know how to maximize the effectiveness, it can be a really safe, long term and successful investment. I can hear in many discussions that people think that to get 10% of RE you have to just pick up a property in the newspaper, buy it and rent it.
     
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  9. JoannaGl
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    JoannaGl Contributor Read Millionaire Fastlane

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    Yeah, I have it too and some other currencies. Bought a bit too early for about 13 000 USD. But for me it is more a long time investment so I hold. I don't want to risk being without any crypto after a few years when the prices can be insane. So for me it is better to have than not to have.

    I bet we should wait :)
    image1.jpeg
     
  10. garyfritz
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    How, and where? I have almost $1M in properties in my local market (single-family homes in northern CO) and I think I bought pretty well -- but they only return 6%, not 10%.

    Example: in late 2016 I bought a 4br 4ba 2000ft house for $297k, good shape, nice yard, nice neighborhood, good location -- and the market will bear about $1800 rent. Take out about $2500/yr for tax & insurance and it nets about 6.4% before the occasional repair $$$. I bought two other properties last fall and they worked out about the same.

    I guarantee you couldn't rent that house for $3000, and you couldn't have bought it for $190k, so I don't understand how you're pulling 66% more return than I can. Is your cost/rent dynamic different than it is here? Or are you doing multi-family, commercial, ...?

    At least I have the comfort of knowing that I have a very good market to own in. That $300k house has gone up about 12% in the last 14 months. This area has never had a significant (> 10%) drop in real estate prices in the last century.
     
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  11. MidwestLandlord
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    The last rental I bought (about 200 miles east of you in Nebraska) I bought off the estate of a dead guy.

    Pulls an easy 14% COC return.

    I just got to know a couple of realtors in the area (amazing what bringing someone a Starbucks will get ya), and one of them brought me the deal before it was listed on MLS.

    The best deals aren't known by the public. Get to know some brokers and realtors and flat tell them you will buy properties that meet certain requirements.

    They'll be happy to send deals your way if you make for an easy sell for them.

    Hope that helps.

    Edit:

    It's best to get to know realtors that are also landlords themselves.

    Yes, they will jump on the best deals. But, they can't buy every good deal that comes along either. They usually know the rental business in the area better as well.
     
    Last edited: Feb 4, 2018
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  12. garyfritz
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    Hm. Sounds like I need a new realtor. Unfortunately those purchases in the last two years have pretty much tapped my investing funds so I'll have to think about how I want to go from here.

    Thanks for the insight!
     
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  13. Jade.backer
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    Jade.backer New Contributor Read Millionaire Fastlane I've Read UNSCRIPTED

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    You shouldn't be lacking ideas or businesses to invest your $1million if you've actually read any of the books. but still best of luck
     
  14. lowtek
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    lowtek Gold Contributor Read Millionaire Fastlane FASTLANE INSIDER Speedway Pass Summit Attendee

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    There was a guy a few weeks back looking for investors for his ground breaking idea for a video game. Perhaps you two could link up?

    :D
     
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  15. fastbo
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    fastbo Bronze Contributor Read Millionaire Fastlane I've Read UNSCRIPTED Speedway Pass

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    1. Don't invest in anything until you completely understand it. Don't rely on other people's opinions for your money. And definitely don't invest in anything if it's "guaranteed", "absolutely safe", or has ridiculous returns (shout out to bitconnect 1% per day compounded daily) because it's probably a ponzi scheme.
    2. Don't speculate. If you invested in bitcoin in 2018 you'd be down 50%. Not talking about long term, the point is speculating for short term gains is risky. You might as well go to Vegas and bet on red.
    3. You can get 10% fairly easily in lower risk investments. Start hooking up with other accredited investors. Opportunities will open up.
    4. Put the majority of your money in safer investments. Index funds, tax free bonds/funds (if your tax bracket is high), etc.
    5. Ideally invest in something which you have an unfair advantage in. If you're in the medical field, try to find an investment in that field. Whether a small hedge fund, or a business needing capital. When you find that investment where you have an unfair advantage, then go and crush it.
    6. Don't rush it. Rates are going up. Save up capital and #1 rule is "Don't lose money". Whatever you don't lose will be earning more as the rates go up. I remember getting 6% on CDs back in the early 2000's.
     
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  16. thecocopod
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    You have to be willing to do the work. Buy and read the books. Research the hell out of everything. Do your due diligence. There are no guarantees on anything. You know that, right?
     
  17. Ecom man
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    I personally like investing in websites. I just put 100k into buying one through Income Store. They buy the site, manage the marketing day to day operations etc. and you split the revenue with them 50/50. The cool thing is they have a guaranteed % that you get based on how many sites you buy. My guarantee is 15% a year. Sounds totally like a scam but I’ve done a decent amount of research on the company and seems pretty legit and they have been doing it for quite some time. I’ll let you know in a couple of years if it works out well or if it was a giant Ponzi scheme lol.
     
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  18. Johnny Bravo
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    I have been seeing quite a few questions about this. Perhaps I'll start a thread to help out in this area...

    Ditto this.

    I have been planning on purchasing a few rental properties, but will probably wait until the next market crash. (This year maybe? Next year?) With cash at the ready, you will be able to steal properties since bank lending will be tight, interest rates will be high, and prices will be low. Cha-ching!
     
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  19. Vermilion
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    @Shawn50 Always invest your money and keep it moving. There is 2 ways here that i've heard and that is:

    - Never keep your money in the bank, because bank always protect their interest and never care about your money in the first place. That's why they only secure a small portion of your money for you. After that you are on your own(at least where i live). Make that money work for you either through smart investment in the stocks or real estate. I would love to here what other guys think about this.

    - And second one is opposed from the first but if you are not a risk guy then put portion of money you decide into savings and prepare for rainy days if they come.
     
  20. JoelM
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    Invest in something that you understand. Invest in books. Search this forum for a post about recommended books.
     
  21. Kid
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    I would advice the same, invest in rental property. You can learn a lot about RE on this forum.

    I read that 6% is statistically average for renting out. (That is ,it's typical return)

    Looking at risk, its still very low compared to stocks/angel investing/crypto or opening totally new business.

    And if you don't want to be too active and snipe deals you could get mentioned return and beat 1% that banks offer.

    I agree with @fastbo on every of his advices except this one.

    Index funds are the large group of stocks representing some segment or topic.
    If the stocks market crashes, you'll have to wait another 5-10 years to get your value back.

    The reason i mention this is the stock market is overpriced now (in my opinion), Price To Earnings reaching of 50-60 for many companies. Some time ago the norm was 20. I assume that crash might be on the way, i just don't know what could trigger it.


    If you'll decide, keep us posted.
     
  22. garyfritz
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    Interesting idea! And it looks like it's probably legit. But I'd be pretty leery. If I buy a rental house, in addition to the monthly income I own a tangible asset. With luck it's even appreciating. Your website might appreciate in value but it's not a tangible asset. The value comes from the page views that produce sales or whatever. If something (maybe a competitor?) changes, your income could drop and that would cause a corresponding drop in the site's resale value.

    Maybe I'm just not seeing the full picture?
     
  23. NanoDrake
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    Yep, that's what I'm waiting for, the famous "catastrophe" that should have happened in the last 6 months...they say a correction is due and banks are going back with the money so I'm moving my position to cash and go in like a savage when the situation is dire.
    Funny thing, the person that made more profits with 2008 is Warren, he "only" made 10 billion dollars net after 10 years... I guess the 20/80 in this case is always the "buy low - sell high" saying.
     
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  24. fastbo
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    You're right. I meant S&P 500 Index Fund. Yes the market is a bit overpriced but for unsophisticated investors over the long run the S&P is relatively steady. Not great, but decent for parking some money if you don't know any better. Remember, real estate crashed harder and longer than stocks. The S&P 500 dropped 55% from Oct 07 to Mar 09 but fully recovered by mid 2013. Real estate many markets dropped even harder. Vegas, Miami, some of these markets dropped 70%. And while hot markets have recovered, many markets including most of the rust belt have not recovered.
    If stocks crash due to rate hikes it will certainly spill over to housing. We are at historically low housing interest rates and even a small rate increase reduces purchasing power significantly. Going from 4% to 6% is a 50% increase in interest versus 6%-8% for example.
     
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  25. WJK
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    How about going in on drilling a gas/oil well?
     
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