Non traditional investing. Should I?

[corn18]

Thought I would start a new thread because we had hijacked another.

I am 50. If I stay the course and work for another 9 years, contribute the max to my 401k and IRA's and some additional to my taxable account, I can retire with enough investments and pension to live very well for the rest of my life ($150k annual income with COLA). If nothing catastrophic happens, my children should inherit a sizable estate. I can accelerate this plan to retire at age 55 if I can sustain my current income.

I'll be honest, this is boring. But relatively safe. As many of you know, until a few years ago, I was a financial idiot. Now that I have a shot at being financially independent, I am scared to death to take much risk. But TexasHusker got me thinking about doing something different. I like my job, it pays a metric boatload and I would like to keep doing it until 55. But I will always need to be involved in something. Maybe I could find my way into one of these non-traditional investments and derive some enjoyment from the challenge.

I don't think I want to be a landlord. But I like running a business. Know nothing about franchising. Maybe an angel investor? What alternate investments should I look at and should I even think about it given my situation?

Thanks, Tom

[TexasHusker]

There are a LOT of really good things out there that could do well for you.

Angel investor is a possibility though it is extremely high risk for several, very distinct reasons.

I know a guy making really good money off of buying life insurance policies from various people. There are companies that specialize in these. They are also infamously called "death futures". But...you are helping someone in a time of great financial need !

There are infinite ways to make good $$ in real estate - I took the real 101 approach, although vacation homes are a little different bird.

I invested in a franchise that has done super, and about all I do is stop in once a week and do the payroll. Managers run the business. The ROI is amazing.

You could partner and provide capital to home builders or even cabinet makers, kitchen re-dos, renovations, or new homes.

Self Storage buildings are good.

You could take $250K, and buy a $1 million small apartment complex with an annual yield of 12-14% after all expenses. In 6 years it's all paid for and worth $1.2 to 1.4, AND your income is more because rents go up. Rinse, lather, and repeat.

You could buy collector cars - I've owned 3 Ferraris at different times - all at least 15 years old - and sold each one for a small profit after driving them a year or two.

The key is, you have to invest in something that you know, and something you have a lot of fun with.

[TexasHusker]

If you want to talk about idiot...I walked away from a job paying me $240K. But I hated it. Easiest job ever, too, they practically paid me to do nothing. But I hated it. I don't know that I would have lived to 60 had I stayed.

[Nutria]

[QUOTE=tomhole;426708]I like my job,

Then stay.

it pays a metric boatload

Icing on the cake for deciding to stay.

I'll be honest, this is boring.

How can it be boring if you like it?

[tripods68]

I think he meant his job is not challenging enough; thus want a new career.


Tomhole,

You probably need to list in paper want you want to be versus what you don't want not to be. List pro and con the skillset you like to do. You say you want to run a business, maybe you can ask a friend that you know that has a business that you can learn from. Do some research about the industry; market, capital requirements, labor, etc to route you to new endeavor. One thing I wouldn't do right a way is to quit your job yet. But once start making some money (after a few years) you can begin the transition.

[Nutria]

I think he meant his job is not challenging enough; thus want a new career.

If that's the case, then he can push himself is that career.

[corn18]

My job is very challenging and rewarding. Definitely not boring but I may need to slow down a bit. It's the investing side that's boring.

[Like2Plan]

My job is very challenging and rewarding. Definitely not boring but I may need to slow down a bit. It's the investing side that's boring.

It's taken me a lot of years to get to where the investing side is boring and I have found that I like it that way.

What does your long suffering wife say about this latest scheme?

There are tons of things you can do after you reach retirement to keep you engaged. I would think the goal would be to do it because you want to and not get in a situation where you have to work yourself to death because you have to.

The bogleheads have a general rule--risk no more than 10% of your portfolio on these type of investments. Would that be in line with what you are thinking ?

[tripods68]

My job is very challenging and rewarding. Definitely not boring but I may need to slow down a bit. It's the investing side that's boring.

Thanks for clarifying that part. If you think investing side is 'boring' you can try to be a Trader or do Option.

[Fishindude77]

Since you are presently working a full time job, I'd stay away from any sort of franchise because that could wind up taking too much of your time. Residential rentals could also be a pain due to tenant turnover, maintenance and upkeep, rent collection, and misc. tenant problems.

Consider purchasing a commercial property to lease. Benefits over residential rentals include:
One party to deal with.
Significant income from a single tenant.
5-10 year lease commitments are normal.
Lease can be structured so tenant maintains and insures the property.

[Nutria]

Thanks for clarifying that part. If you think investing side is 'boring' you can try to be a Trader or do Option.

You can lose your shirt, pants and undies trading options. So close to retirement, I'd stay as far away from them as possible!!

Any other hobbies???

[feh]

My job is very challenging and rewarding. Definitely not boring but I may need to slow down a bit. It's the investing side that's boring.

Investing should be boring. If you want excitement, go to the casino.

You're only a few years away from easy street. Why would you want to jeopardize that?

[Singuy]

I wouldn't quit a job that pays 400-500k/year because that's just crazy. The amount you have to invest to yield such a return is around 5 to 6 million...meaning you will need to put 5-6million at risk(from bank loans and such) just to yield you similar returns.

Right now everything is expensive...houses are expensive...franchises are expensive...storage units are expensive...the economy is too good for you to jump on anything for cheap.

I probably would do some peer to peer lending, preferred stocks and munibonds on top of your mutual funds.

Get preferred stocks and munibonds with the most tax benefits. People who are in your tax bracket should try to get away with the most amount of taxes in all your investments vs trying to find new avenues.

Honestly, most business owners would kill to make 500k/year of pure profit....

Now, you can keep your job and look for something else..but will require a lot of your time and work. Hotels are pretty lucrative but you can imagine a decent hotel will cost 5-6 million and requires a lot of your attention from the start.

[tripods68]

You can lose your shirt, pants and undies trading

Nah...with $150K a year in retirement w/cola, he has plenty of shirts & undies!!!

[TexasHusker]

I don't think there is anything wrong with looking for higher yields. The OP isn't saying he wants to go riverboat gambling.

It really is a matter of what your goals are, as well as your risk tolerance.

If you are happy with your high-paying job, there's no reason to leave it. There's an old saying that goes something like this: "If you can find something you enjoy working at, you'll never have to work."

And at 50, you're getting so close, there is no need to take any risks that could upset the end game.

I started my "escape plan" from the corporate world at age 43 and it took me 3 years. If I had waited till 50, I probably would have just held on for another 10 years. You do reach a point of "no return" I think. I'm not sure where that is for everyone, but 50 is getting close.