You Just Inherited A House With A Market Value Of $300 000 And Do Not Expect The Market

If you inherited $300,000 at the age 20, how would you invest it and diversify the investments to maximize gains?

Go to a financial planner and figure out how to lower your tax burden. Make sure they charge a flat fee and are not paid on commission.Invest in low cost instruments, generally weighted towards equities (you are young and can tolerate risk), but with some asset diversification.Rebalance annually (perhaps semi annually)DO NOT TOUCH ANYTHING; you don’t get to stop working, you don’t get to buy anything, this isn’t for living but for retiring (earlier than normal, or richer than normal)Continue (or start) to save for retirement like a regular working stiff. Take advantage of tax deferred accounts and employee matchesWait. For a long time. You’ll do well, if the past is any indication. But you need (and have on your side) timeLive within your means. You are not ‘stop working right now’ rich. You are ‘retire earlier than others’ lucky. But not if you create an expensive lifestyle your regular job can’t sustain, and not if you are in debt that ‘you’ll pay back later’After twenty or twenty five years:Consult with the financial planner on how/when you can convert some of your assets into income generating securitiesEnsure you are still living within your meansEnjoy your early retirementDo not (as important):Buy dumb things (boats, planes, second houses, cars, etc) that don’t appreciate unless your regular job can make that an optionInvest in dumb things (no crypto currency or gold bars or your buddy’s great idea). Let the pros (your correctly incentivized financial planner and the asset managers you’ve entrusted your money with) do the investingGet sucked into the ups and downs. Opt into paper statements sent quarterly. Rebalance infrequently.

I inherited a small single family home worth 300k (no mortgage w/ tenants paying $1,600 / month in a 2 year lease). Should I sell it?

Can you increase the rent? What do other comparable properties rent for in that area? A good site to check some rough estimates is rentometer.com.It all depends on your circumstances, but there are several things to consider.One of them is the aspect of whether you’d like to be in the landlord business at all.The other is, what does the general ROI look like of the property you have and could you do better elsewhere?Is it expected that the area will likely appreciate in value or decrease in value over the next 5–10 years?What is the general ROI?Figuring What You Make On Rental Property (ROI)To calculate the property's ROI, you divide the annual return ($19200) by the total value of the property ($300,000).You will also have to factor in the cost of managing the property, property taxes, insurance and other general expenses.The cap rate seems somewhat low (< 6.4%) even without all the expenses factored in.How to Figure Cap RateFor that kind of money if you had the interest in remaining a landlord and selling, you could get into a duplex and even apply some conservative leverage on that to obtain a second property to increase your earning potential. That 300K could acquire close to $450K in property value with a 50% leverage position. The resulting $450K could generate maybe 30–40% more positive cash flow on your investment if you can find something around a 7% cap rate which in most places is fairly doable.The added advantage is some diversification into potentially 3 renters instead of 1, but the disadvantage is any time you apply leverage you increase your risk factors somewhat.Be careful: too much leverage is what got many people into trouble during the last real estate down turn. There are many articles on the principles, but here’s one to get you started:Leveraging vs. Paying Cash: A Look at the Infamous DebateBest of luck your decision making process!

I inherited $300,000 in cash. Should I invest it in real estate or pay myself a top MBA?

Wow, I can relate.My current employer offers tuition to a number of B-Schools so we can get our MBA. I can’t give you sound advice but I can offer you an opinion with a lot of thought behind it.My thoughts on going to B-school were as follows: I could spend two years of my time and come out with a salary of 150k per year that could mature to a salary of 750k per year in 20 years time, options and everything included. The field is interesting and fun and I could have a level of portability in where I lived.Alternatively, I chose to take the time, set aside 2500 per month, plus a loan from my 401k and start investing in real-estate. In the same two year period, I’m on track to make a little less per year than I would have out of B-School. I firmly believe that in 10 years an individual could pull 1mm out of a cash flowing market with around 7.5mm in assets. In the same 20 years That individual could make 5–7mm a year with 15mm in assets.The best part of real estate investing. You can always stop and study or pursuit what you want. Put the whole thing under management and go get your MBA. You can’t put your job under management, that was my bottom line. You owe your employer that dedication each day.As an FYI: I do sometimes feel inadequate at work. Folks coming out of HBS, Sloan, and SOM with MBA’s can make me feel like I don’t fit in.

I inherited $400k. Is it better to pay off my $400k mortgage, or invest the money? I like the idea of living mortgage free, but should I pay off the lower interest rate (4.25%) and lose my tax break, or invest the money with a 6% return?

Roll yourself forward 40 years and imagine you have the same option, at age 70. Use your cash to pay off a mortgage or keep the cash? You keep the cash. If you didn’t you wouldn’t have any money to spend, and your heirs would get to enjoy the full $750k value of your home when they sell it after your demise. That was money you could have spent traveling the world. Pay off a mortgage and your home value doesn’t change - you’ve just locked up that value in a way that prevents you from using it for other things.At 30 your considerations are different but the same principle applies. Pay it off, the cash is locked up, and you won’t be able to borrow it out on the same terms (plus the tax rules are different for re-borrowed money). Having $400k in cash lets you do things most people can’t. You can max out your tax-favored retirement savings plans - 401k at work, Roth IRA if you qualify - without any change in spending. Just make up the cash from the savings. If you want to start a business, change jobs, take a sabbatical, go back to school, these are all options. If you have kids or plan to, you have cash that could be socked into a tax-free 529 college savings plan. The tax benefits go far beyond that mortgage interest deduction, but more than that, even if the tax benefits are minimal…you have flexibility with life that most people don’t have.Caveats. That mortgage had better be a 30-yr fixed, so the rate won’t pop up. If you have a bunch of other money alongside this and just don’t like debt, you might choose to pay it off. While historically it has been trivial to earn more than high-3% on your money (if that’s your after-tax cost of the mortgage) most investors do quite poorly. A buy-and-hold balanced index fund has clobbered 3% , but nobody actually does that, they Mess With Things. So the first step in not paying off your mortgage would be sticking the cash in a savings account or two and learning how to invest it so you won’t blow it. And doing a reality check: will you just be tempted to spend it all? The risk of losing it isn’t present with the mortgage-payoff alternative.