What to do with extra cash decision

[bambambam]

I frequent another financial forum with a very different mindset from this group, and I find myself agreeing with both sides. Love MJs books and have nothing negative to say about the entrepreneurial mindset!

The other forum is probably considered stereotypical sidewalk, but their premise is “financial predictability”.

anyways, I own a medical practice and have a significant portion of equity in a private fund merger that I’m hoping to cash out in 4-6 years. I also take advantage of available tax advantages retirement accounts.

im pretty debt averse, but do owe 230k at 2.675% on my mortgage.

I’m trying to decide what to do with a mid 6 figures amount of cash.

the general consensus over there is: pay off mortgage and/or invest into taxable account mutual funds.

I value this forum so I wanted to see what the other opinions look like. Are people still bullish on some crypto? I’ve made and lost some with Doge, Bit, Eth and don’t know enough about the space to commit yet.

I have a full time job running a large practice and have 2 young kids and a wife who I prize my free time with. I’m not really looking for a major time commitment- which is what attracts me to paying off debt and passive stock investing.

I’ve tried leveraged multi family and single family real estate- didn’t care for it due to the time requirement or stress/lack of control with tenants.

Prior to my private equity merger I dabbled in starting companies related to my business- product creation, blogging. I found that I disliked the time commitment outside of my regular job.

with my aversion to time commitment outside of my full time career, should I just stick to the slow lane- or is there an option available I should explore that may have a high barrier to entry but minimal time commitment that could return beyond expected stock market and mortgage pay off returns ?

Appreciate the feedback- thanks!!

 

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[Raoul Duke]

YOLO. Models & Bottles.

 

[bambambam]

YOLO. Models & Bottles.

Lol. Not the way to go for me!

 

[MJ DeMarco]

I’m trying to decide what to do with a mid 6 figures amount of cash.

Can you earn more than 2.6% on it safely? If not, pay off the mortgage.

Hard to make recommendations without information on your business ventures.

A CENTS based business can generate asymmetric returns, general market investments do not.

Therefore I always say your business is the best investment.

If you can't put the money there (and it sounds like you're pretty set in your biz operations) then I'd allocate the funds in boring dividend stocks and then write covered calls on them. Of course, I'd wait until we get some type of market pullback (a few %).

As for crypto, I'd only put speculative money there. I have a nice chunk of change in crypto, but recently I looked at it, and it lost 50% of its value in mere weeks. That's not investment, that's speculation.

 

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[TheNectarOfCow]

As MJ said, paying off the mortgage is definitely a good decision. Less debt = lesscommitment, and more freedom earlier from those commitments. 2.675% is very low interest rate so I wouldn't say it's saving you a ton of money to pay it off quicker, but if shit ever hits the fan for you somewhere in life, atleast your house is paid off.

How's real estate in your area? You never really make money off your primary residence, but if you have 6 figures in cash you could certainly consider putting a down payment on a duplex or a 6 unit apartment and renting it out to cover the mortgage. In my area housing has quadrupled in the past 10 years (it was quite undervalued back then) which came out to approximately 40k a year strictly on my property evaluation. If you're renting it out and that money covers the mortgage, it can certainly provide a great return. Not everyone has the cash to throw around buying up properties so there's your edge. Maybe not the most optimal fastlane strategy to making money, but will be making you more money than paying off a mortgage with such low interest.

That said, there are a few cryptos out there that have potential, but never invest any money in the space that you are not ready to completely lose. Considering that you bought doge with any other intention than for a joke, I would be careful. I think your risk to reward ratio with buying BTC and ETH is so bad right now that you'd have a much better return going to a casino and throwing your money on black at the roulette table. Wouldn't hurt to throw a few thousand at Monero right now given that it's the only crypto with utility, but that's my opinion. It still is leaving your future up to chance and that goes against the fastlane mentality.

 

[bambambam]

Can you earn more than 2.6% on it safely? If not, pay off the mortgage.

Hard to make recommendations without information on your business ventures.

A CENTS based business can generate asymmetric returns, general market investments do not.

Therefore I always say your business is the best investment.

If you can't put the money there (and it sounds like you're pretty set in your biz operations) then I'd allocate the funds in boring dividend stocks and then write covered calls on them. Of course, I'd wait until we get some type of market pullback (a few %).

As for crypto, I'd only put speculative money there. I have a nice chunk of change in crypto, but recently I looked at it, and it lost 50% of its value in mere weeks. That's not investment, that's speculation.

Thank you for the reply, MJ!

will have to research the dividend /covered calls strategy but sounds interesting.

with my business structure I’ve sold down to a minority ownership- plan is to eventually own the building but beyond that my business investments are limited.

where I find myself coming back to CENTS with this cash is if I could create a product that fits my niche industry. Just trying to decide if the juice is worth the squeeze considering the time/stress it may involve

 

[bambambam]

As MJ said, paying off the mortgage is definitely a good decision. Less debt = lesscommitment, and more freedom earlier from those commitments. 2.675% is very low interest rate so I wouldn't say it's saving you a ton of money to pay it off quicker, but if shit ever hits the fan for you somewhere in life, atleast your house is paid off.

How's real estate in your area? You never really make money off your primary residence, but if you have 6 figures in cash you could certainly consider putting a down payment on a duplex or a 6 unit apartment and renting it out to cover the mortgage. In my area housing has quadrupled in the past 10 years (it was quite undervalued back then) which came out to approximately 40k a year strictly on my property evaluation. If you're renting it out and that money covers the mortgage, it can certainly provide a great return. Not everyone has the cash to throw around buying up properties so there's your edge. Maybe not the most optimal fastlane strategy to making money, but will be making you more money than paying off a mortgage with such low interest.

That said, there are a few cryptos out there that have potential, but never invest any money in the space that you are not ready to completely lose. Considering that you bought doge with any other intention than for a joke, I would be careful. I think your risk to reward ratio with buying BTC and ETH is so bad right now that you'd have a much better return going to a casino and throwing your money on black at the roulette table. Wouldn't hurt to throw a few thousand at Monero right now given that it's the only crypto with utility, but that's my opinion. It still is leaving your future up to chance and that goes against the fastlane mentality.

You make some great points and thank you.

my crypto buddy is pushing me to: Bitcoin, ethereum, dot, link and Ada. Do you not think highly of those last 3? I agree on the risks of bit and eth. My hope on Doge is Elon to save the day, but may be wishful thinking

with real estate- are you talking about with or without property management? I’ve tried without and hated it!
The real estate market here is weak, but an hour north I’m in a big metro market and 3 hours south I’m in Dallas so there is potential

 

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[TheNectarOfCow]

You make some great points and thank you.

my crypto buddy is pushing me to: Bitcoin, ethereum, dot, link and Ada. Do you not think highly of those last 3? I agree on the risks of bit and eth. My hope on Doge is Elon to save the day, but may be wishful thinking

with real estate- are you talking about with or without property management? I’ve tried without and hated it!
The real estate market here is weak, but an hour north I’m in a big metro market and 3 hours south I’m in Dallas so there is potential

Personally I wouldn't touch bitcoin with a ten foot pole. It is my belief that bitcoin gained traction due to its use in the darknet as a form of payment, however now it's simply become a commodity strictly for trading. The bubble will burst once the market realizes there is no utility to the stuff. I'm invested in Monero because it is essentially what bitcoin n00bs think they're buying when they buy BTC: a private, fungible currency. Given that the most popular darknet markets have moved from bitcoin to monero, I believe it's safe to say the crypto won't hit rock bottom anytime soon. I'm also invested in Harmony because I believe in the development team and staking rewards earn me 10% per year (relatively safely, as long as value does not decrease significantly which is a big IF), or 600% APR when I put it into the ViperSwap DEX, which comes with higher risk due to the possibility of impermanent loss between the tokens Viper and One.

Keep in mind, what we're seeing right now is nearly identical to the dot com boom back in the early 2000's. A couple will come out on top, and the rest will fade into useless internet code. I think harmony has the potential for widespread use due to 2 second confirmation and fractions of a cent in transaction fees, and monero for what I described previously. And as Warren Buffet once said "Consolidate to build wealth, diversify to protect it". If you're going to get involved in crypto, pick one or 2, otherwise your account will just shift up or down a couple hundred every week and not really go anywhere, until one day you just lose a bunch on one of your shitcoins.

For God's sake, sell all your doge and take your losses. I'm not going to explain the technicals as to why it is total shit, but it will be at a penny by christmas.

Dot's inflation makes me a no, Ada's high circulating supply makes me a no (however not a bad pick, just not my best bet), and Link seems like too much of a circlejerk, acting like they're meeting the peoples demands when no one really is asking for this shit.

As for real estate, your pick. Managing it yourself is trash and you deal with scum all the time, it becomes a full time job. Hiring a property manager is your best bet, but you can get by if you find some unicorn tenants. Either way, money doesn't come without a price of some sort. Pick your suffering, be it profits or managing it yourself.