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HELP! 300k but no income- what should I do?

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branchville
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HELP! 300k but no income- what should I do?  Reply with quote  

I am 25 years old, and have a useless bachelors degree in liberal arts. I use around 1-2k a month since my expenses are very low right now but will be going higher next year.

What can I do to generate some income and not lose all of my capital?

Should I buy and absentee business and try to go back to school at the same time?

or should I go all out in a business and forget going back to school?

Please help any advise appreciated.
Post Wed Jun 24, 2015 7:10 pm
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payment proof
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If you're considering making money online, you may want to start your own blog or site. There are many ways to monetize a blog or site with things like Google AdSense, Affiliate Marketing, etc.

Is this along the lines of what you were asking? You can buy your own site/domain for a small investment.

Put the rest of the money in safer investments like a diversified portfolio of mutual funds, bonds, and savings.

See Proof. You can make free money online.
Post Wed Jun 24, 2015 11:17 pm
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oldguy
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quote:
HELP! 300k but no income- what should I do?


You're in a great spot, a wonderful life opportunity. Most of the Lib Arts grads show up with nearly $100,000 student loans - and no hope of earning enough to repay it. You have the opposite situation, historically the generic US Market grows at 11%/yr (measured by the SP500 Index). At that rate your $300k will be almost $7,000,000 when you are age 55, all you have to do is leave it alone and wait (easier said than done).

Check a few 30-year blocks of time, get a feel for the historic results -
http://politicalcalculations.blogspot.com/2006/12/sp-500-at-your-fingertips.html#.VYs3QEbmeUl

Info - lottery winners, on average, are brok in about 7 years. They are unable to keep the lump sum intact and invest it well. Instead, they pay off the house, pay off their credit cards, buy a car - and then invest the remaining $25,000 or $50,000 "for their future", don't make that mistake.

quote:
Should I buy and absentee business and try to go back to school at the same time?
or should I go all out in a business and forget going back to school?


Neither - business is overrated, people seem to think that the only way to wealth is to start a business, but the success rate is about 15%. In my case, I was never in business, I worked for the Man for over 35 years - and became wealthy, my 401k alone was a million dollars when I retired. And we also had stocks and rental houses.

You should take whatever good paying job that is available in your era of life. (As opposed to waiting around for your dream job.). An example would be driving truck - not glamorous, doesn't seem to fit your degree, doesn't matter. Look on the interstate, you'll see "drivers wanted" on the back of half the 18-wheelers on the road. Trucking companies can't find drivers that have clean DMV Records and can pass the drug test. (I drove during college, summers and one year off, often got 60 or 70 hours of work per week, I was making as much then as I did after I got my engineering degree).
Post Wed Jun 24, 2015 11:23 pm
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christcorp
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$300k for a 25 year old is nice. And you could definitely use it to supplement your income. But I wouldn't suggest it. Even if you could safely generate 10% interest on it, which you can't on a guaranteed basis, you'd just about cover your current living expenses.

Just my opinion. You didn't say if you had any debt. If you do, pay it off. Totally. Take $200-$250k and pretend it doesn't exist, and in vest it for your retirement. Compounding interest over the next 40 years starting off with $200+k will set you for life. You'll probably be able to retire completely by the time you're 50-55. Use the remainder to tie you over while you get a good job. If you think you can't get a good job with your degree, then use it to tie you over while you spend the next 2 years in school developing a trade or a degree that's useful.

300k for some may seem like the world, but it's an in between amount. Too much to put in your wallet or a savings account, but not enough to live on comfortably. Some will tell you the average for say the S&P over the last 80 years is 11-12%. While this is true, the reality is, over the last 20 years, the average return is less than 9%. Not saying that we can't see the market continue up for the next 30 years. Simply saying, 300k isn't enough to live on. 3 million on the other hand, even at 4%, could generate over $120k a year.

So again, I say to eliminate all debt first. Invest long term around 200k, and use the rest to position yourself for a good job. This way, your 200k will be worth millions when you're ready to slow down and retire.
Post Wed Jun 24, 2015 11:23 pm
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christcorp
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P.s. I started posting at the same time as old guy. Basically the same info.
Post Wed Jun 24, 2015 11:26 pm
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branchville
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What about investing in real-est-state so i can make some income off tenant rent and save having to pay rent myself every month? With 200k cant I buy a couple condos?

I still need to be able to live until I retire.

Besides driving trucks, how else can I educate myself for a profession without eating in to my capital too much? What about coding or trade school?
Post Thu Jun 25, 2015 4:17 pm
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oldguy
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quote:
With 200k cant I buy a couple condos?


I owned 4 rental houses over a 35 years period - and you're right, they made good money. But more importantly, every time one of the houses built up equity, I refinanced it, removed the equity, and invested it elsewhere. I put it in the SP500 at 11%/yr. Eg, I take out an extra $50,000, that costs about $300/m for 30 yrs ($108,000). I put the $50,000 in an 11%/yr fund and grow it to $1,100,000. - ie, I used the borrowed $50,000 for seed money to earn a million. (You don't need to do that, you already have the seed money.)
But if you spend your money on condos your seed money will be gone (see the part about broke lottery winners in my first post).

What are you good at? And what are you interested in? That is more important than how much money you can spend on education. I like math & physics, so I drove truck until I had the money to get my engineering education - that worked well for me - you have to go with what you are good at.
Post Thu Jun 25, 2015 5:55 pm
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christcorp
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You've gotten some good advice. But I feel I need to reitterate a point i made earlier.

$300K is a an "In-Between" amount of money. It's great for an investment that can set you up to retire at 50+ years old and never have to worry about money again. But it's NOT ENOUGH MONEY to provide you with a living for the rest of your life. Even if you could pull off a 10% return, that's only about $30,000 a year. That's not much of an income. After tax, you're sitting on about $22-$24,000 per year.

As for using it for buying rentals, it's possible. Depending on the part of the country you're living in. But to get the same return as the 10% I just mentioned, (And that's assuming it was a guaranteed 10%, which nothing is guaranteed), you'd have to generate a monthly rent of about $2,500 per month. That's a lot harder than it sounds. And again, that only produces you about $30,000 a year. less after taxes. And even less when you consider you will have to put money into the rentals for repairs, property taxes, etc...

Your best bet on the $300,000 is to keep out $50,000 and use that to live on while you learn a trade or go back to school. Invest the remaining $200-$250,000 long term and forget that it even exists.

For a young person, you're in a great position. unfortunately, a young person also thinks that $300,000 is a lot of money. As I said before, it's too much for some things, but not enough for other things. There;s definitely no way I can imagine you can generate a "LIVING INCOME" from that amount of money. Not a NICE living income. Then again, there are some people who live on $20,000 - $30,000 per year. But if you let that interest compound over the nextt 30 years, even if it runs between 5-10%, you are going to be sitting pretty and able to retire at age 50-55,.
Post Fri Jun 26, 2015 4:23 pm
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branchville
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christcorp, thank you for the reply, it was very helpful.

Could you please answer a followup question?

If I could live on 20-30k a year (which is what I am doing now) for the next 30 years, will I then have enough money to retire? If so, how should this money be invested over the 30 years, in real-estate or stock or both? If stock, should I wait for a market correction and then get in when stock is low, or get into stock now? Or basically, if I keep on taking out 20-30k every year, in 30 years I will be left with the same amount as I started with? Unless I invest in real-estate while I can collect rent and it changes drastically over the next 30 years.

If I want to learn a trade and go back to school, instead of taking out 50k to live on, can I invest the money and live off the 20-30k while I am school and take out student loans? Or instead could I buy a laundormatte or other part-time business and generate 50-100k while Im also in school, and then when I get a job I will sell the business for the 300k I purchased it for or more, then re-invest the 300k in real-estate or stock, and then go back to my job?

If I am going to go back to school, do you recommend learning software programming which is less expensive- or go for law, accounting or medical?

Help REALLY REALLY appreciated[/b]
Post Sun Jun 28, 2015 4:04 am
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quote:
If I could live on 20-30k a year (which is what I am doing now) for the next 30 years, will I then have enough money to retire?


No - if you spend the 20-30k a year as you earn it, that $900,000 is GONE. To utilize the power of compound interest, you have to leave that 30k/yr inside the investment and let it grow along with the $300,000 - that's how you get the $7,000,000 that I was talking about.

quote:
If I am going to go back to school, do you recommend learning software programming which is less expensive- or go for law, accounting or medical?


I doubt that you'll be successful at those - you need to select a line of work that interests you so that you are reasonably good at it. If you simply say I wanna be a doctor/lawyer, you probably won't have enough interest/drive to earn the degrees. (When you get into grad school, the math/science gets HARD, it's not like high school geometry where all you need to do is show up.)

Think about what you were good at in HS, what courses you liked in Lib Arts school, what entry level jobs you liked, which ones did you hate. (I worked in an auto paint shop, hated it - drove gravel trucks one summer, had a ball, worked on farms during the harvest, milked cows, worked w/ horses - when you're 18 to 25 you hate some stuff, you enjoy some stuff, follow your own inclinations). Not to put too fine of a point on it - but that's how you ended up with a Lib Arts degree, you were unable to decide on a major .


quote:
Or instead could I buy a laundormatte or other part-time business and generate 50-100k while Im also in school, and then when I get a job I will sell the business for the 300k I purchased it for or more, then re-invest the 300k in real-estate or stock, and then go back to my job?


You probably need to rethink that - or, better yet, abandon it. Those part-time "money makers" most often turn into money pits.The probable outcome is that you'll burn thru the $300k, wish to sell, then the neighborhood gets slummy, the protestors run by and break all the windows, and you'll sell it for .salvage.
Post Sun Jun 28, 2015 1:22 pm
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branchville
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But if I invest in real-estate, and get 20-30k a year in rent, wont I still be able to sell the house in 30 years for a lot more than I purchased it for? Thus preserving my capital from inflation and getting cash-flow at the same time?
Post Sun Jun 28, 2015 4:26 pm
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oldguy
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quote:
and get 20-30k a year in rent, wont I still be able to sell the house in 30 years for a lot more than I purchased it for? Thus preserving my capital from inflation and getting cash-flow at the same time?


Investing in RE or investing in equities follows the same physics.
1. If you put the $300k into two condos and draw $2000/m rent (8%) minus 2% for repairs/vacancies, you'll be getting 6%/yr. Then 30 yrs later you sell for $1,300,000 (a 5%/yr gain). Ie, an 11%/yr return.
2. Or, you could put the $300k in the SP500 generic market average and get 11%/yr. You can break the 11%/yr into a 6% draw & a 5% growth if you anted to.
3. In my world, I'd rather work a job, pt or otherwise, and leave the 11%/yr for growth (ie, about $7M).
Post Sun Jun 28, 2015 5:07 pm
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christcorp
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You've received the right answers. You just need to understand them. There are certain variables you have to understand.

1. IF, you invested the $300K and IF it generated 10% interest, that's around $30,000 a year. IF you spend that interest to live on, then in 30 years, it will still be just $300K. Worth actually less because of inflation.

2. While the stock market and S&P have indeed averaged 11-12% over the last 80 years, over the last 20 years, it's averaged less than 9%. And there's no GUARANTEE that you'd be able to get the 10% interest you're hoping for. More importantly, you could get 15% one year, but only 5% the next year. It still averages out to 10%, but you might have some very lean years.

3. The best answer is to invest the $300K for the LONG TERM. Even if you only got 5% interest averaged over 30 years, the $300K would turn into $1,340,000 in 30 years. If you averaged 8% interest, it would be worth $3,280,000 in 30 years. At 10%, it would be worth $5,951,000 in 30 years.

4. You need to find an occupation to live on for the next 30 years. You don't want to use the $300K to try and generate an income. It's simply NOT ENOUGH MONEY. Investing $300K in rental properties won't generate the same income as investing the money. And when you go to sell the property, it won't be worth anywhere close to what you could have made investing it.
Post Sun Jun 28, 2015 5:45 pm
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branchville
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Thanks again,

So you recommend taking the 50k out and investing the 250k in stock. Apposed to buying real-estate or a laundromat with the owner keeping a 50% note or a franchise and get financing.

I dont see anyway to make money to live on and raise a family for the next 30 years with only 50k to help me go back to school and get a job. So it looks like I am out of options, unless I think of something else Crying or Very sad
Post Mon Jun 29, 2015 12:22 am
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christcorp
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You already have a Bachelor's degree. Albeit in liberal arts. To go back to school and get an education in something more useful and lucrative, doesn't require another 4-5 years. You're allowed to use all the GER (General Education Requirements) towards another degree. So, in other words, to get another bachelor's degree, would only be about 3-4 semesters. My wife had a Bachelor's degree in liberal arts. She actually went back to the local community college and got into the Para-Legal field. Got certified as a licensed para-legal and does quite well with income. Not saying to become a para-legal. Simply saying that your current Bachelor's degree isn't totally useless. 1/2 - 1/3 of the degree is made up of classes that are required for most degrees.

I think that you can go to your local Community College or similar and find a career path that excites you. Something you're passionate at and will succeed at. The $50K, based on what you've said, should be able to last you until you finish training in the career of your choice. It might also require a part time job during the week and maybe another one during the holidays and summer when you aren't in school/training.

The only difference in opinion that I may have over what Oldguy said, was that I might diversify the $250,000 that you invest. In other words, I wouldn't put the whole thing into an S&P500 fund. Just like I wouldn't put it all into ANYTHING. If it were me, and I knew at 25 years old, what I know now, and I had $250,000 to put away for retirement, I'd mix the portfolio as such:
50% S&P500 fund
25% International Fund
15% Small Cap fund
10% Precious Metals (Not paper stock that represents gold/silver. Funds in the metals/mining industry. This is much broader that saying you OWN 100 ounces of silver, but it's PAPER. I don't believe in that.

Now, which funds you choose, I suggest you seek professional advice. I do suggest that you look at funds and management that has a good track record with good fund managers. Do your homework. Same applies if you decide to put it all into an S&P500 fund (Which is definitely diversified as far as US companies go).
Post Mon Jun 29, 2015 2:25 am
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