OT: Investing $30,000 where?????

Discussion in 'Budget Board' started by chalex, Jul 5, 2006.

  1. chalex

    chalex Mouseketeer

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    Hi,

    We purchased a lot in our neighborhood this year with the intention of building a new home and selling this one. However we have been approached to sell the lot for nearly $40,000 more than we brought it for. I figure by the time we pay off our debt and pay taxes we should still have close to $30,000 left.

    I know nothing about investing money. We do have savings accounts with ING but have never played the stock market,though I probably should if I want to be able to live comfortably when I retire.

    Anybody have any ideas as to where I should invest this money? DH wants to use the money to add/make cosmetic improvements (screen porch,granite countertops etc) to our existing house but we don't really need to.

    Angie
     
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  3. nightowlky

    nightowlky <font color=navy>I should start my own Super Nanny

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    With that kind of cash, I'd be talking to a financial advisor who would help you determine if you want to use that to help prepare for retirement or how to maximize it for short-term goals.
     
  4. mickeyfan2

    mickeyfan2 DIS Veteran

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    There was an article in our paper on Sunday. According to the article cash will out perform stocks and bonds over the next 6 months. They were talking about 6%+ interest shortly. Depending on your age and tax rate there are other options than the cash options. 1) Vanguard 2025/2035/2045 funds. The fund you pick is the one closest to the year you turn 65. 2) If your tax rate is high, then consider tax free municipal bonds. The rate is higher when you consider how much pretax interest you needed for the tax free bonds.
     
  5. disneysteve

    disneysteve You have to enjoy life, not go

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    There is no simple answer to this question. It depends on many factors, particularly your age and what the rest of your portfolio looks like currently. Do you both work? Do you both participate in employer-sponsored retirement plans? Do you have IRAs? Do you have an adequate emergency fund? How is your current portfolio allocated? Do you have any debt other than your home?

    You need to answer all these questions and more. If you need assistance, meeting with a fee-only CFP might be the way to go.
     
  6. grlpwrd

    grlpwrd <font color="orange">I'm here for the mouse more t

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    I think there are too many variables to give you a general answer. If you don't want to go to a Certified Financial Planner, please do as much research as you can. There are reliable sites like www.money.com , www.bankrate.com , www.kiplingers.com, and www.blackenterprise.com that can point you in the right direction.

    Good luck! :wizard:
     
  7. crisi

    crisi DIS Veteran

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    Do you have kids? A 529 can be a nice choice for most people. Its used to fund education.

    If you don't have a rainy day fund, $30,000 will get yours going - and probably have some left over (six months expenses is the "rule of thumb") - you want to keep that fairly liquid - a money market account probably.


    Are you adequately saved for retirement? Putting enough in a IRA to get the tax break would be a good choice.

    I'd probably do the rainy day fund first use money left over in an IRA - unless your retirement is well funded, and the rest to kids college. If that is well funded - time to blow it on granite countertops, play the stock market, or give to to charity......
     
  8. Cheshire Figment

    Cheshire Figment <font color=red><marquee behavior=alternate>Friend

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    If you have held the property for less than a full year any gain is Sort Term which is taxed at your full rate. To get an idea of what you will owe run last year's income tax return showing about $40,000 more in income than last year (plus and other increases expected) and don't forget to do both Federal and State. Also, If it a legitimate offer ask them if they will pay all closing costs.

    If you possibly can, try to delay the closing until you have held the property for more than a year, then your maximum tax rate for the sale would be only 15% rather than your real rate (again, if you used a computer program for your taxes, plug the gain in as Long Term Capital Gain and see the difference).

    And if you had been thinking about building a new home, what are the shortcomings of your current home which you might want to upgrade as long as you have the chance to do it without going into debt.
     
  9. bhoffman

    bhoffman All for two princesses and a prince!

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    I agree with the other posters, you must meet with a financial advisor. My husband has been with Edward Jones Investments for 14 years. If you don't have anyone local p.m. me and I can shoot you his 800 number and he can advise you over the phone (free of course). Good luck and congrats on your sale!!! :cool1:
     
  10. Disneyrsh

    Disneyrsh DIS Veteran

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  11. mickeyfan2

    mickeyfan2 DIS Veteran

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    How do DH and you feel about not building the new home. Would you build in the future anyway? Is your existing home big enough to be your forever home? If you find that you will build again anyway, keep the land. You windfall today might be very costly for you if you try to buy land again tomorrow. Just a thought.
     
  12. crisi

    crisi DIS Veteran

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    This is worth repeating. A few months could save you thousands in taxes. Don't be in a hurry to sell.
     
  13. chalex

    chalex Mouseketeer

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    To answer some questions:

    DH and I are middle aged 50/40's
    DH is p/t self employed and I work p/t as substitute teacher (making very little).
    We have $8,000 in an account for emergencies.
    Both have pensions from previous jobs that should pay around $4000 a mth when we reach 60.
    Children have approx: $5.000 each for college and we add $100 every month to their accounts.
    We have 3 times the amount of our outstanding mortgage balance in savings, so we could pay off our mortgage tomorrow if needed.
    Savings are in a regular account earning just 5%.

    Do we need to build a new house? No
    The house is 2000 sq ft with 3 beds and baths. We built it 7 years ago. The only thing I would probably add is a large 3 season room.
    DH is a handyman/remodeler so there would just be the cost of materials,no labor.

    bhoffman- thanks for the offer. We actually know someone who works for Edward Jones. We haven't ever contacted a financial planner. Got burned by an insurance salesman on a life insurance policy linked to the stocks that was supposed to help us with our retirement but it's not worth the paper its written on and its still costing us $125 a month.
    Must admit I am clueless on financial planning though? Do Edward Jones just sell their products?

    Regarding taxes:
    Total income $22,000 last year.
    Lot was brought Oct 2005.
    Would short term capital gains tax be that much more than long term in tjos situation?

    Angie
     
  14. staceyfe

    staceyfe DIS Veteran

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    With all due respect, I am a current customer of Edward Jones and I would not recommend going that route unless you are a person who isn't very "hands-on" when it comes to money. First, they will try to sell you only investments on which they make a commission, which limits you. Second, their statements are absolutely the worst I've ever seen. They are not easy to read at all!! If I had it to do over again, I'd have invested in Vanguard rather than mutual funds Ed. Jones is selling me--in fact, I've been trying to get everything changed over. Their sales fees are pretty steep, in my opinion. But if you want an agent to handle everything for you, by all means, give Ed Jones a call. Unfortunately, I'm one of those anal people that has to know every little detail.
     
  15. Marie17

    Marie17 DIS Veteran

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    Is that how much DVC costs? We also get a "bonus" although it is not 30k - it is a very decent amount and this year we have nothing to use it on - last year was a downpayment on a house. I would like to know how much 14-21 days would cost at a DVC resort and do you have a reduction in cost if it is paid upfront?

    Thanks.

    Don't know about Edward James as we use someone else - who does charge fees (and we even have some front loaded accounts - yikes to some people) I like not knowing every little detail in some of the accounts. This way it is not like I am feeling like I am going to cry over some spilt milk - I rather not know the daily fluctuations. We look at some of those accounts every 6 months or so. On the 401k/profit sharing accounts we look at those every 3 months and you can always change them with no problem. We are currently trying to find out when/if a ROTH 401k is going to be offered as we only have a traditional 401k - and we would prefer to have a roth 401k.
     
  16. disneysteve

    disneysteve You have to enjoy life, not go

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    I don't see any designated retirement savings listed (I don't know what's in that 3 times mortgage amount). If that is accurate, then that is where your 30K needs to go. You can each put in $4,000 into a ROTH ($5,000 if one of you is 50+). So $9,000 for 2006 and I'd set aside the remainder and put in another $9,000 in January 2007 and $11,000 in 2008 (when the limits increase). In between, park the money in a top-yielding CD (check bankrate.com for the best rates).

    Yes, I know you have pensions but those are dropping left and right. There is a big article on the topic in this month's issue of Kiplingers. I wouldn't be counting on those pensions to fund your retirement because there is no way of knowing if they will still be in existence or if they will pay out the promised amounts. You've got enough years ahead of you to build up a decent nest egg just in case the pensions don't materialize.
     
  17. leight

    leight <font color=navy>Making out in the halls in high s

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    Another less expensive route, is to call an investment specialist at T Rowe Price. They are salaried, not commissioned so the guidance they provide is based on your situation and how you answer their questions. They do only talk about T Rowe Price mutual funds, but you can look at their website too. All of the funds are no load and it costs nothing to talk to them.
     
  18. dzneprincess

    dzneprincess This page intentionally left blank

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    We had a similair amount of money t oinvest about 1 and 1/2 years ago. My DH really wanted to invest in GOLd. The man hardly ever asks for anything, so I let him, with the understanding that we would at the minimun get out if the value went below what we put in. He has sold the coins once, and made a nice profit and has moved onto another type of gold coin and he is doing very well. He has a little more than doubled the $$

    edit to add that I am very proud of him. I was very leery of doing this, but it has all worked out and worked out well!! If you need more info let me know
     
  19. DVC Sadie

    DVC Sadie <font color=royalblue>Those mashed taters are soun

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    Please, please go see a Certified Financial Planner that is fee based and NOT associated with any brokerage houses. They can help you in both long term and short term goals. They either work by the hour for you or make a percentage of what you make.

    We are blessed that we have used a CFP and our rate of return has been huge.

    I would not even think about buying into DVC unless you have all of your other ducks lined up, such as, retirement, college funds and long term goals.
     
  20. disneysteve

    disneysteve You have to enjoy life, not go

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    I agree 100%. Stick with someone who is independent, not paid by commission and not employed by a particular financial services company. Otherwise you are getting someone with a built-in bias, not where you want to get your advice.
     
  21. Disneyrsh

    Disneyrsh DIS Veteran

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    The minimum buy in for DVC right now I think is 12,500 from Disney.
     

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