What to do with extra money?

[optimist]

So were these 2 mortgages both 30-year and how far into them are you?

Do you have the opportunity/desire to switch to a 10-, 15-, or 20-year mortgage for one of them if the numbers make sense to do so?

25 years left on condo, 24 - on house. No, I'm not looking to pay a bunch of money to refinance into a 15-year mortgage since I don't have a prepayment penalty on my current one.

[optimist]

I was really hoping for some insights into what would be a better investment at this point - condo or mutual funds. I am not looking to pay off my primary residence and I'm not planning to increase my contributions to retirement accounts.

[Jluke]

I was really hoping for some insights into what would be a better investment at this point - condo or mutual funds. I am not looking to pay off my primary residence and I'm not planning to increase my contributions to retirement accounts.

Stock Market seems to be cold right now. Could be a good time to start Dollar Cost Averaging (DCA). For investing, google bogleheads. They believe in a 3-fund diverse investment (VTI, VXUS, and a bond fund). Very simple.

You need to gauge how the real estate market is in your area. Are there renters? Are condos overpriced or is there room to appreciate in value?

Either move will have a tax impact. You may even want to consult with a CPA/accountant or tax expert. Avoid financial "advisors".

Hope that helps.

[optimist]

Stock Market seems to be cold right now. Could be a good time to start Dollar Cost Averaging (DCA). For investing, google bogleheads. They believe in a 3-fund diverse investment (VTI, VXUS, and a bond fund). Very simple.

You need to gauge how the real estate market is in your area. Are there renters? Are condos overpriced or is there room to appreciate in value?

Either move will have a tax impact. You may even want to consult with a CPA/accountant or tax expert. Avoid financial "advisors".

Hope that helps.

Good point. Thanks!

[Petunia 100]

I was really hoping for some insights into what would be a better investment at this point - condo or mutual funds. I am not looking to pay off my primary residence and I'm not planning to increase my contributions to retirement accounts.

Another condo might be a much better investment, if you pay a low enough price and if the development appreciates faster than the rate of inflation. Also if you are able to keep it rented and don't end up with renters who trash your house more than once or twice (over many years). If you are handy and can do many repairs yourself, rather than paying to have them done, your odds of success go up.

Mutual funds are definitely a more hands off approach. If you have the patience to invest month in and month out, in all market conditions, you can expect to earn about market returns over time. For stocks, that is about 10%. For bonds, that is about 6%. And keeping in mind, the next 20 - 30 years may prove to be an anomaly for bond market returns due to artificially low rates now.

Personally, I prefer stock and bond index funds to rental real estate. They are less headache, less work, and liquid. They never have a sob story about why they can't pay their rent, you never have to hire an attorney to evict them, and they don't move out and leave you a huge mess to clean up.

If you do choose to buy mutual funds in a taxable account, choose them with care. You want funds which have low turn-over and pay little to no dividends. Otherwise, they can generate tax bills, even if you have not sold your shares. If there is a fund with high turn-over and/or high dividends you wish to own, keep it in your tax-advantaged accounts.

[tripods68]

I was really hoping for some insights into what would be a better investment at this point - condo or mutual funds. I am not looking to pay off my primary residence and I'm not planning to increase my contributions to retirement accounts.

This are good ETFs Vanguard low cost funds. I owned 3 out of 4 funds below.

VOO - Vanguard 500 ETF, or
VTHR - Vanguard Russell 3000 ETF
VGT - Vanguard Information Technology ETF
VHDYX - Vanguard High Dividend Yield Index

Alternatively, the Oil and Gas Industry are beat down at this point. Check out
VDE - Energy ETF

[clatoden99]

Unless you have a good feel for picking stocks I would also suggest a mutual fund or ETF. ETF's are probably the better choice and there are many that don't have a commission. Look for ETF's or Mutual Funds with a very low fee structure. All studies have shown that the lower the fee the better the return and it can make a pretty big difference.

[autoxer]

I was really hoping for some insights into what would be a better investment at this point - condo or mutual funds. I am not looking to pay off my primary residence and I'm not planning to increase my contributions to retirement accounts.

What are you investing for? Do you have a goal and timeline for this investment? If you don't expect to use the money in the next 10-20 years, then you are better off taking the tax deduction and maxing out the retirement accounts.

If you just strictly compare investing in mutual funds in a taxable account vs. paying down the condo quicker, then historically a long term diversified mutual fund portfolio will outperform the interest rate of your condo debt. You need to be comfortable with that type of investment, to make sure you don't pull out when the market tanks. If you can't stomach the volatility, then accelerating the condo debt pay off would be a better choice.

[Nutria]

I don't handle stress very well, so not having a lot of liquidity can really dampen my spirits.

That answers your question: don't buy a condo for rental.

25 years left on condo, 24 - on house.

I'm confused. Do you have a house and a condo? But you sit on the Condo board...

what would be a better investment at this point - condo or mutual funds.

Since you don't handle stress well, invest in two types of funds:

1. "blue chip" (giant, financially sound companies that pay larger than average dividends) stocks.
2. high grade bond funds.

They're boring, and the growth is lower than the S&P 500, but... so is the decline. Just right for someone who doesn't need extra stress.

Naturally, Vanguard or Fidelity.

Dollar cost average to take advantage of periodic market declines.

[Claudia Bob]

What to do with extra money

Hi, I may suggest that you put your extra cash in a mutual fund, stocks or any asset that won't depreciate even it takes a longer time. You may consider a house and lot also!

[Pstreicher]

What to do with all that money, real estate is still king.

I am a female in my late 30s and I'm finally getting to the point where I have extra money to invest. The question is - how and where?

Here's the big picture:
39 years old, one 12-year old child
Income - $135K/yr + $12K/yr in child support
Expenses - about $5K/mo
401K value - $300K
Emergency Fund - $40K
Prepaid college fund for kid (4 years at state school)
Rental condo - $100K equity, $150K left on mortgage, $200/mo profit
No debts except mortgage on primary residence and rental condo

Right now I save 10% in 401K and another $1K for miscellaneous trips, repairs, remodel, emergencies, etc. My emergency fund is where I want it - 8 months of living expenses. Pretty soon I expect that I will have close to $2K a month to invest. Where should I put it? I can see two main options: investing in low-cost mutual funds, such as Vanguard, or paying off my condo. Frankly, I would looove to pay off the condo and potentially buy another one in the same development (I know it well and sit on the Board), but I'm concerned about the resultant lack of liquidity, which I may need to carry a mortgage if I have no tenant or make repairs, etc. Investing in mutual funds seems safer, but also a lot less exciting for me, since I don't really get much satisfaction from watching the digits on computer screen. A condo, on the other hand, appeals to me due to its very tangible nature. At the same time, I don't handle stress very well, so not having a lot of liquidity can really dampen my spirits.

Any insights would be greatly appreciated.

Your opportunity is right in front of you. Only thing is you don't want the headache of managing. Okay. So, a lot of realtors manage properties very well. They only take a 10% commission. You can sit back and let them do the work and all you have to worry about is where to find that next rental property in your community. An income stream from rental property can make life so much more enjoyable. I would forget the equities markets, unless you can take the ups and downs. With rental properties it's all up. Rentals are in high demand right now as are sales of both condos and houses. I am seeing more condos for sale lately than houses too. So, what do you think now?