I'd rather chop off a limb than read financial books right now. I wouldn't even know how to go about investing in any kind of stocks or bonds and don't really know what other possible avenues I have to choose from other than starting a business or buying property to rent to tenants. Currently, my money is rotting in a checking account, at the very least, I should put it in some kind of high interest account to defeat inflation. I've felt overwhelmed lately with personal projects and what to do with my life, and this keeps getting put on the back burner.
I remember Ty's post on Lending Club, how's that going? Peter Parker, you're with Prosper, right? I'd be happy with consistent 10% returns, is either of these two sites safe enough to dump a majority of my cash into?
Background info: I'm 30 years old, live in the Rialta, probably spend under $700/month on normal expenses (super frugal, not glamorous at all), 2-months unemployed by choice and living off what I have saved: a little over $32k, engineering drop-out, don't seem to have many high-paying skills, and don't know what I'll do in the future as far as making income. I'm not a dumbass, but I'm not a "runner" as Tynan might put it, and I don't know if I can change that... I don't want to work forever. I love my leisure time. I guess it's different if the projects you love are making money... maybe that's another discussion. Along with Tynan's goals, being able to bank a few million and comfortably support a family would be awesome, but I'm not that hopeful; fortunately, I don't seem to mind living very simply and without kids (for now at least...). My goal might be making $1-2k/month passively. Some of the entry-level oilfield jobs here pay well, $1900/week for driving a truck a limited amount of hours for example, so I might consider putting up with that for a year or two, but I still need to find out what to do with that money. Thanks everyone. Great job with SETT and your whole blog, forum, & book history, Tynan; we're lucky to have you.
My main source of income is my main website, but I'll share what I'm doing as far as investing:
1. A few years back, I dropped $500 each into Prosper and LendingClub. Prosper account value is now at $559.63, with an annualized return of 4.19%. LC account value is now at $600.03 with a Net Annualized Return of 7.29%. I just set an auto-invest plan that is fairly conservative and let it sit. I was actually just thinking about dumping a lot more money into this, however it sorta locks your money away for the duration of the loans.
2. Stocks - I max out my SEP IRA each year, and then essentially "gamble" with stocks. I basically buy things I hear a lot about, like silver, gold and other precious metals, but also things I think are going to be the way of the future - apple, google, Whole Foods, Netflix, retirement homes, etc. Finally, I play with penny stocks from time to time just for fun. I wouldn't say that I'm an expert at stock investing by any means.
3. Foreclosure Flipping - I'm an investor in an LLC in California that buys foreclosured homes in a specific market, rehabs them and then sells them on the market. I don't do any work except keep a spreadsheet of the profits. We've averaged about 10%+ per year.
4. Rentals - I own a few 4-plexes in Reno, NV along with a house. Property is EXTREMELY cheap there, but the rents aren't great. I have a great Property Manager handling EVERYTHING. The house is cash-flowing, the the 4-plexes are not because there are still a few vacant units, and we've spent a lot on maintenance.
5. Websites - I spent a few years acquiring websites, but spent the last year selling them off. I've tripled my money on each website on average, but it has taken a bit of work to find them, make offers, transfer everything, fix them up and then finally list them at auction after I get some good stats. Since my main website is taking up all my time, I've given up flipping websites because I don't have the time.I've been sharing my whole strategy with everyone in a series of posts on my blog: TomsAdventure.com
I'd take the $1900 a week for driving a truck, that's almost a 6 figure income,...I'd do that for a while and in the meantime... Now is the best time to buy and own property, the interest rates are historically low. CD's, money markets, bonds, etc aren't making anything...gold and silver and metals are falling the last couple months...stocks are going up, but the volume is down.. the market seems only propped up due to excessive QE stimulus and printing of money,things are probably going to slow down in the 3rd or 4th quarter this year...
If you don't mind doing a bit of maintenance work and upkeep, I'd take your 30k, use it to put 20% down on a $150k multi-unit or duplex property to avoid mortgage insurance (I'm assuming that you're not in a major metropolitan area like NY, DC, LA,etc. otherwise I doubt if you'd find anything that cheap there) Use 1 unit to pay the taxes and mortgage and the other side should put in your pocket as you live in an RV. If you can rent both sides at $700-900 a month, the 1 side should make at least $8,400/yr, after taxes you'd probably be taking in around 20-23% minimum on your money...also, you can probably use it is a writeoff for your other expenses. When you save up another chunk of money from your job, buy another property....do this until your rental income becomes enough to live off of where you don't need to work a 9-5 and then travel and do whatever you want.
Invest in yourself, maybe finish that enginnering degree, or can go to night school and pick up a trade, computer, or other practical skills that can build a better job off of.
What areas of the US could you get a 150k multi-unit (assuming 2 units in your example) and rent both sides out for 700-900? Doesn't sound like anything feasible in California as the cheaper multi-unit areas are all rural and probably charge much less in rent. 700-900 maybe in extreme Northern California (Redding Area) is the closest I can come up with but a multi-unit there might run quite a bit more than 150k depending on area.
Also do you have more information on how QE is propping the stock market up lately? They've been doing QE since 2008 in multiple bursts and it's only recently the stock market has began to 'bubble' again for some unknown reason. What factors would constitute a slowdown later this year as the Fed has no plans on reducing QE and intends to stay the course and keep the interest rates low for at least the next 2 years.
Obviously, I wouldn't expect the price to be the same...although I just checked Craigslist in the Redding area... Search for "Multi-unit, multi-family, etc in the real estate section.. (I'm not familiar with that area, could be a run down area) and there are several duplexes and fourplexes that are priced in that same price per unit range I just mentioned. As the original post author mentioned that he lives in an RV, this would present a more flexible means to relocate most any place.
I think Florida would be a good place to invest...my cousin and aunt both bought condo's down there in the 70k range. After the housing market took a hit, there was an oversupply...with shift in population demographics, there are going to be more seniors looking to move there when the babyboomers all start retiring or those that are working a couple extra years start retiring.
Run a search engine for articles on QE or stimulus and propping up the market, then run another for how it's not. I don't want to be biased and quote any particular source, but I'm sure you can easily find a bunch...there were a couple how they are going to start cutting back stimulus in 4th quarter this year.
The coasts (East or West) are not indicative of the US housing market. There are plenty of places in the middle of the country where you can get 150k houses. I live in NYC so obviously I'm not going to find any of them here, but one of the ways to make a lot of money investing your capital is by looking in places where there is not a lot of competition from other investors, which basically means the middle of the country.
You can also try and get creative with buying liens, short sales, etc. but those require more specialized knowledge.
JWes, I don't think
you can make proper financial investment decisions without understanding, at least somewhat, what you are doing. You could just
hand your investment money to a financial planner but caveat emptor! You might try following a site I found that is run by someone who knew nothing about investing, lost most everything in the dotcom bubble and decided to learn. Her site is entertaining and chock full of investment strategy. http://www.kungfufinance.com/
That being said, here's some of what I do:
1) I've been invested in Lending Club for about a year. I do loans in $25 increments and don't take the basket of loans Lending Club suggests. Instead, I go through the somewhat laborious process of choosing loans. I mix it up, but weighted on the Bs & Cs. My criteria is no or very little
negative credit history, a steady job history that pays well compared to what the borrowers owes and is asking from Lending Club and most important (to my mind), I only choose the borrowers who have taken the time to answer the Lending Club questions. I figure if they can't even bother to answer those few simple questions then they are not all that responsible. Also, I don't lend money to people looking for big bucks just so they can have a bang-up wedding or remodel their house. I mostly choose those who are honestly trying to get out of debt by consolidating their high interest rate credit card debt. So far, not a single default and a return of around 11-12%. However, I would not put more that 10% of my investment basket in Lending Club as if the economy makes a sharp turn south, there will be the risk of many job losses and that will necessarily include a certain percentage of Lending Club borrowers.
2) Gold mining stocks. I am a firm believer that gold mining stocks are undervalued and offer a big upside. But you need to do a little homework on this one. Find companies with a history of good management and if you go for the big cap stocks paying a dividend, it is a safer bet than the "juniors," but, of course, not as much upside potential.
3) The stock market is tricky. You must realize that over 80% of the trading these days is done by computers in milli-seconds, i.e. the focus is very short-term. I figure it is fairly safe to go with big cap, dividend paying stocks. Also energy stocks have been a pretty good bet. Here's a good strategy: pick your stocks based on some research (it does take a little work) and set up alerts. If your stock goes up 20%, sell it, no matter what you think it's going to do, i.e., don't be greedy. On the other hand, if it is going down, set a point, say 20% down where you will also sell and take your losses. And, btw,if we experience another crash like 2009, consider buying when everyone is selling.
4) You must be an accredited investor (which you are not) to make private placement loans but if you have a trusted friend or family member who needs to borrow money for a worthy endeavor, you might consider that. I loaned a considerable amount to a land partnership (of which I am also a partner) at 8%. Best investment I've made!
5) Finally, I really believe everyone should own at least 10% of their wealth in physical gold and silver. This is more like an insurance policy than an investment. If you understand what the Central Banks are doing, you will understand that fiat (paper) money is being destroyed. However, in order to understand this, it takes some mind-work and if your eyes glaze over after a paragraph of financial print, then I suppose you either have to take this advice or leave it. (and if you leave it, just hope that I am wrong.)
6) For what it is worth - I would avoid U.S. Treasuries like the plague.
Whatever you do, realize that inflation is eating away at your money "under the mattress" or even in a savings account or CD, etc. You are still young, you can lose a little and it won't really be a big deal. There are good investment opportunities out there but if you aren't going to
put a little work into it, it is like driving your Rialta blindfolded.
Warren Buffet once said to only invest in things you understand. Honestly, stock trading is so complicated that not even top analysts fully understand it. I would say the best way to invest is to find something you understand well and put money and effort into it
Safe & Simple: 50% Cash, 50% What's Real™ (Gold, Silver, Undervalued Land, FAMILY, etc)
If you're young, you should go with your gut and not worry about money. It will come and go with rich & unique experiences. When you get closer to 30, then you should bring more Safe & Simple into your life while constructing your masterpiece.
When you hit 40, fire yourself. Open yourself to meeting young souls and help them build their masterpiece.
I love this post, I've been a daytrader for nearly 13 years and I love finance. I think we're in a fascinating time in history & unfortunately I dont they're an easy answer to this question. I think yield at Prosper & LC are very interesting, and probably will work well, although I havent yet participated. Personally, i think the government is making it so that you have to own commodities i.e. gold, oil, silver, farm-land, etc.. its a tricky thing to own, but we're slowly moving back to a gold standard as the world debt is crushing all Western societies!
If it weren't for the weight aspect of it, I would buy a bunch of silver, too.
Tynan if you're comfortable with it, look into get a safety deposit box for storing stuff like silver. They're incredibly cheap at most banks and obviously pretty secure, and the cost of storing it easily negates the weight concern.
I would double check your state laws before doing that. In California if you don't have contact with a bank for something like 3 years, the State will seize the contents of your box. Then you will have to fill out paperwork and pay a fee to get it back. That's even if the box was prepaid. They do the same to bank accounts. It doesn't matter if you have enough money in your account to cover the fees. They'll still steal your stuff.
Wow that's pretty crazy. In that case I'd just buy SLV, which can be exchanged for silver if you have enough shares (50,000), and it tracks the price nicely.
Sprott has a physical silver fund. They store the actual silver instead of certificates, etc., so there's no room for shenanigans. Plus, it's stored in Canada. I have some in my Health Savings Account. http://www.sprott.com/products/sprott-silver-bullion-fund/
I'm not much for shenanigans either - keeping a 10 oz silver bar in my room right now lol. If silver drops to 10-15 once again I'm investing in one of those boss looking 100oz bars. It will make a great conversation piece!
Update on silver: Scratch that plan. Silver isn't a very good precious metal to invest in. Historically silver hits an inflation adjusted 4-8$ and topped out around 40$ during the late 2000's before dropping down to 22 as of May 17, 2013. From what I researched Silver is rarely mined alone and is often mined along with other metals and seperated later. It has industrial uses but not many compared to other precious metals and demand might be dwindling as I read one of the big uses for silver was in non-digital photography. I keep an oz with me as a water disinfectant for the extreme survival scenario that will never happen but otherwise it's just a conversation piece.
So yeah silver - not as popular as gold - if you really want gold in small $ quantities buy the 1 gram bars online. I'm thinking of dumping out my bubbled silver once the price rises above 35 - else keep it as a VERY long term investment. Silver price has historically risen with good times as industrial demand requires more of it. We are in a slight forming economic bubble again as of May 2013 with stock market rallying again and silver has dipped. Some speculate it is a move to scare people off silver. Demand for PHYSICAL silver is at an all time high but the paper price is low. Historically it can go lower if we compare it to the past (red line is what you want to look at).
hmmm, very interested in lending club and prosper. Prospers homepage says its offering $100 for referrals, anyone want to refer me? thecaptainpower.gmail.com If either offers a decent promotion I might jump in. I heard there are several ways to get a free cash advance from some of the no-fee credit cards. If I can get 10K out of a card for 15 months and drop it on P2P lending for 5-15% thats a pretty good hustle. Only problem major risk I see is that Im not very upbeat on the market, so if the market tanks again might see a lot of defaults. BUT, sure beats having your house go down $100k in value.
Hey Jwes, I need to try the lending club. I have 100K in a CD getting 2.9%, since I have no faith in the market right now. Do you have a blog? I have been telling everyone to sign up for amazon associates. Mine is at http://thecaptainpower.blogspot.com I've been looking at real estate also with the 3.5% fha, but where I live in Brooklyn we are looking at $750K+ for anything. If you have any good idea's let me know, I also make an easy $500-$1000 a year just rotating checking accounts and credit cards....
Thanks Captain. I'm not a blogger, but great ideas. My latest scheme is to talk Dad into letting build a small RV lot (like 1-2 dozen spaces) on a field I will inherit, but need to do more research. Seems kind of low maintenance and could give quick profit; oil workers in that area would fill it fast.
I'm still doing Lending Club, averaging 15%. I think it's an unbelievably good investment... extremely likely high returns and very unlikely small losses. Any event that would trigger a big LC loss would trigger an even bigger loss in any other likely >5% yield investment.
Tynan, do you have certain criteria for selecting which loans to fund in LC? I know you mentioned you choose the riskier ones. Do you ask the borrower's any questions or do anything else to weed out possible defaulters?
I don't ask questions.. I just buy $25 at a time (up to $100 if I have a large to-be-invested balance). I go for only F-G loans, and only if they have a mortgage or rent a house.
Hey Tynan, your above and below comments seem to contradict: tangible mortgage & own vs rent. Strangely, renters have better history than owners. When looking at lendstats, I can't seem to make any combination of filters produce a significant amount of loans that reach anywhere near 15% return. Here's an example of what I've got so far, can you help explain why the returns shown aren't higher and what you're doing differently?
Thanks for the lending club reference and the no minimum cashflow notice - I'll go check it out. Out of curiosity why is one of your criteria to lend a mortgage/house rental? That seems to be the very antithesis of who you are as a person and what you represent. Is it because these people are the least likely to 'go anywhere' per se? Mortgager's and Renter's are trapped in the system - forced to work jobs they may not necessarily like just to make ends meet. If so by reflection doesn't that make the wild and free ones like you the riskiest people to lend to? Funny how that works out...
I've delayed writing this article for a while now because I'm not an authority on the subject. I don't make millions of dollars, and neither does Todd (that I know of).
However, something I realized is that it doesn't TAKE millions of dollars to make enough money to leave. Panama could easily be lived in for $1000 a month, and that's a sum that ANYONE could make.
So, instead of focusing on making huge sums of money, I'll focus on the first step : how to get out of the rat race and become location-independent.
Edit: I gave up on financial goals in late 2011 after some huge financial and artistic wins... money shouldn't be taken too seriously. For the record, they were all basically on track, some were being massively exceeded, others were a bit behind schedule, but were all happening.
I set my next 10 years of financial goals on June 28th. That was exactly a month ago.
1 year - Critical Thinking [my first book] out. Blog income trickling. Some info products. Some freelancing. Something else, some X-Factor thing bringing in cash. Net monthly income positive. Health insurance. $50,000 in the bank. Expenses = income per month minimum.
3 years - 3 to 5 books out, many products out, blog income robust, some working on big exciting deals. $10,000 per month total, $5000 passive at least. First property owned. $300,000 in the bank.
5 years - 7-10 books out, many many products out, many passive income internet properties, working on big exciting things, $50,000 per month total, $40,000 passive at least. $1,000,000 in the bank.