How would you make money ?

[Guest]

Hello,

I'll receive a big check (enough to buy a house for instance) within a week or two;I'd like you to know how you would make money/how you make money with money.
Would you buy shares ? Would you take risks or just put the money in a bank ? Would you invest it ? Would you make a 'buy and sell ' business ?
What would you do ? or what do you already do to make money with money?
I don't want to sound like a greedy capitalist or something like that,but I prefer to make money on my own rather than letting a bank make money at my expense.

~Abramelin~

[Urza-DSF]

Hello,

I'll receive a big check (enough to buy a house for instance) within a week or two;I'd like you to know how you would make money/how you make money with money.
Would you buy shares ? Would you take risks or just put the money in a  bank ? Would you invest it ? Would you make a 'buy and sell ' business ?
What would you do ? or what do you already do to make money with money?
I don't want to sound like a greedy capitalist or something like that,but I prefer to make money on my own rather than letting a bank make money at my expense.

~Abramelin~
[right][snapback]62377[/snapback][/right]

Hmmm, not really up on how the market is doing right now, but for a long-term investment real estate is always a smart investment...as long as your in an area that is constantly expanding.

[Doc]

Hmmm, not really up on how the market is doing right now, but for a long-term investment real estate is always a smart investment...as long as your in an area that is  constantly expanding.
[right][snapback]62385[/snapback][/right]

Buy land. It's a limited resource, there is only so much to go around, and sooner or later, it's in demand by somebody that just has to have it.

Most of my own wealth comes from the land I own.

Buy land. Cheap land. Get in on one of the government grabs going on now, like in Washington, where in order to pay the bills, the Government is selling off chunks of land for as little as 55 dollars an acre. I don't remember the exact details on this, look around, do a search, but land grabs like these are common, happen every year, and allow you to make a real steal. Go to government and bank forclosure auctions and buy houses and land for pennies on the dollar. Houses siezed in drug busts, bank forclosures, and for tax purposes can be bought for as little as a few hundred dollars, and then sold for about half to two thirds of full price, and make a huge profit. And people will buy because it's below market value, and can't resist. Sadly, many farms are going under, and you can get HUGE plots of land from bank auctions, for maybe a few grand out of your pocket. And you can turn around and sell this family farm land to the factory farm type folks that have been wanting it for a long long time for a tidy profit, if they haven't bought it out first.

And never pay full price.

[Nystul]

I would probably consult a professional with that much money at stake. It makes a difference whether you need access to the money in the short term or can lock into longterm investments, and of course some investments are riskier than others (and some require more personal attention than others). I wouldn't dump any more into a bank account than the amount you may need short term access to, because there are relatively risk-free, long term investments that will give higher yields than a bank account.

Of course, if you have unpaid loans, rent your residence, etc., the old-fashioned approach would be to square up those issues first and invest afterwards.

[[wcip]Angel]

"Buy real estate. God ain't makin' any more of it."

[Ashock]

"Buy real estate. God ain't makin' any more of it."
[right][snapback]62406[/snapback][/right]

While usually Real Estate is a good investment, at this time prices are very high. Maybe in your area they did not go up much, but they did throughout much of the country. Buying high is usally not a good idea.

What you might consider doing at this time, is allocating some of your money towards future Real Estate purchases, and put it somewhere safe, like CD. Maybe liek a 12 month CD. Rates are pathetic at this time, but it's better than under your matress.

The other chunk of your money you should contact an investment professional for, if you are not very savvy with that. Make sure that if you do, he/she does not put all your eggs in one basket. Any reputable investment/financial advisor will show you an asset allocation model suitable for your particular age and financial state. Usually, the younger you are, the more risk you can take. The closer you get to retirement, the more money should go into safe vehicles, like investment grade bonds. Annuity is also a possibility, as the cap gains on them are tax deferred.

Find someone you can trust, and talk to them. Do not go for individual stocks if you do not know much about them with more than 5 to at most 10% of your investable capital combined (not per stock, but for all individual stocks combined). If you want to participate in the market, Mutual Funds are a better vehicle for inexperienced investors. If you do buy some stocks, try to stay away from stocks that are under $10, especially $5. Those have a tendency to go down to nothing and for every MSFT/DELL/CSCO, there are hundreds of companies that do not exist anymore. These cheap stocks, commonly referred to as penny stocks, should be treated as pure gambling.
If you do buy some stocks, try to put the bulk of your money into Blue Chips (the old established companies) and some into Red Chips (The Blue chips of the tech sector like INTC, MSFT, DELL etc.) Not necessarily those names, but just in the same category.

Anyway, talk to a *good* pro and do not listen to most and possibly all amateurs.





-A

[Bolty]

http://www.bankrate.com/overkeyword/news/l...s/20010813e.asp

Now, the cost for providing this valuable link to you will be $1,000, payable to the future joy of hundreds of dedicated Lurkers. :blush: Heh.

-Bolty

[Ashock]

Anyway, talk to a *good* pro and do not listen to most and possibly all amateurs.

[right][snapback]62411[/snapback][/right]

I guess Bolty did not see this line in my post :)


-A

[Guest]

http://www.bankrate.com/overkeyword/news/l...s/20010813e.asp

Now, the cost for providing this valuable link to you will be $1,000, payable to the future joy of hundreds of dedicated Lurkers.  :blush:  Heh.

-Bolty
[right][snapback]62419[/snapback][/right]

Bolty,thanks for the link.
As for helping LL , I'd be willing to donate.How much,I don't know.

[kandrathe]

Hello,

I'll receive a big check (enough to buy a house for instance) within a week or two;I'd like you to know how you would make money/how you make money with money.
Would you buy shares ? Would you take risks or just put the money in a  bank ? Would you invest it ? Would you make a 'buy and sell ' business ?
What would you do ? or what do you already do to make money with money?
I don't want to sound like a greedy capitalist or something like that,but I prefer to make money on my own rather than letting a bank make money at my expense.

~Abramelin~
[right][snapback]62377[/snapback][/right]

My only advice would be to not put it all in one place. Consider risks vs rewards, and what portion of loss would you consider to be tolerable. The most % amount of money I ever made was when I was 18, young and stupid. My first employer of only 5 years offered fairly significant profit sharing and retirement plans, which I devoted 100% into high risk investments (what did I care?). 20 years later, that sum has become the foundation of my retirement savings. I continued to get statements every year, which I didn't even look at until a few years ago. My wife pointed out that my meager investments of 1975 had grown exponentially throughout the 80's and 90's.

For instance, if you are young and can afford to risk it all, look for a good stable managed higher risk fund to drop it in and check on it once in a awhile. Doc's ideas for land are sound as long as you look for a good deal on land that is undeveloped, but will be eventually. I wouldn't speculate on developed properties at this time, except that if you do not currently own a home, then buying one is a better deal than renting.

[Guest]

While usually Real Estate is a good investment, at this time prices are very high. Maybe in your area they did not go up much, but they did throughout much of the country. Buying high is usally not a good idea.

What you might consider doing at this time, is allocating some of your money towards future Real Estate purchases, and put it somewhere safe, like CD. Maybe liek a 12 month CD. Rates are pathetic at this time, but it's better than under your matress.

The other chunk of your money you should contact an investment professional for, if you are not very savvy with that. Make sure that if you do, he/she does not put all your eggs in one basket. Any reputable investment/financial advisor will show you an asset allocation model suitable for your particular age and financial state. Usually, the younger you are, the more risk you can take. The closer you get to retirement, the more money should go into safe vehicles, like investment grade bonds. Annuity is also a possibility, as the cap gains on them are tax deferred.

Find someone you can trust, and talk to them. Do not go for individual stocks if you do not know much about them with more than 5 to at most 10% of your investable capital combined (not per stock, but for all individual stocks combined). If you want to participate in the market, Mutual Funds are a better vehicle for inexperienced investors. If you do buy some stocks, try to stay away from stocks that are under $10, especially $5. Those have a tendency to go down to nothing and for every MSFT/DELL/CSCO, there are hundreds of companies that do not exist anymore. These cheap stocks, commonly referred to as penny stocks, should be treated as pure gambling.
If you do buy some stocks, try to put the bulk of your money into Blue Chips (the old established companies) and some into Red Chips (The Blue chips of the tech sector like INTC, MSFT, DELL etc.) Not necessarily those names, but just in the same category.

Anyway, talk to a *good* pro and do not listen to most and possibly all amateurs.
-A
[right][snapback]62411[/snapback][/right]

Very good advice,Ashlock.As I don't live in the USA (I live in European Union),I don't know if all of your advice would be good advice where I live.
In real life I hardly trust people.It is a good idea to buy stocks for 5 to 10 % of the capital;I could do that,I think.As for real estate,I am no expert.Do you mean buying real estate in order to sell at higher price or just keep it ?

[Guest]

My only advice would be to not put it all in one place.  Consider risks vs rewards, and what portion of loss would you consider to be tolerable.  The most % amount of money I ever made was when I was 18, young and stupid.  My first employer of only 5 years offered fairly significant profit sharing and retirement plans, which I devoted 100% into high risk investments (what did I care?).  20 years later, that sum has become the foundation of my retirement savings.   I continued to get statements every year, which I didn't even look at until a few years ago.  My wife pointed out that my meager investments of 1975 had grown exponentially throughout the 80's and 90's.

For instance, if you are young and can afford to risk it all, look for a good stable managed higher risk fund to drop it in and check on it once in a awhile.  Doc's ideas for land are sound as long as you look for a good deal on land that is undeveloped, but will be eventually.  I wouldn't speculate on developed properties at this time, except that if you do not currently own a home, then buying one is a better deal than renting.
[right][snapback]62426[/snapback][/right]

How lucky.
Is it worth buying Microsoft stocks?
I have considered buying a flat.Is it better to buy cash down or take a credit for it?

[Guest]

I would probably consult a professional with that much money at stake.  It makes a difference whether you need access to the money in the short term or can lock into longterm investments, and of course some investments are riskier than others (and some require more personal attention than others).  I wouldn't dump any more into a bank account than the amount you may need short term access to, because there are relatively risk-free, long term investments that will give higher yields than a bank account.

Of course, if you have unpaid loans, rent your residence, etc., the old-fashioned approach would be to square up those issues first and invest afterwards.
[right][snapback]62390[/snapback][/right]

I have no debts at all,no credits.As for consulting a professional,I could do,but I hardly trust people in general;I wouldn't need access to money in the short term,but as I don't want to live in Europe (violence and bad attitudes),I wouldn't choose long term investments.
Thanks for the advice.

[Munkay]

I don't want to live in Europe (violence and bad attitudes)[right][snapback]62434[/snapback][/right]

:blink:

I'm having a hard time coming up with a place that under scrutiny does not have those two attributes in one form or another. Granted, I'm not trying to argue moving to europe, but rather just pointing out those generalizations could be applied to anywhere you could live.

As far as trusting people, why is the advice of people on the internet any better than a person who makes a career out of advising financially? Also, it's doubtful they'd swindle you, seeing that a lot of their continuing profits come from you making profit and coming back to them. Once again, I'm not trying to argue that its the perfect solution, or that there aren't bad people out there, but rather appealling judgement to a more qualified source may be better.

The best investment one can make is in education!*

Cheers,

Munk

*Note: this is the opinion of a student horribly in debt, forced into more debt of eminant grad school upon graduation. It's an egotistical justification for the pathetic financial state said student is in. Said student won't deny either that he contemplated knocking you off and running with the money. Said student would probably sell his mother, future wife, and his children to lower the interest rate on his loan even by .1%

[DeeBye]

Bet it all on black!

[kandrathe]

How lucky.
Is it worth buying Microsoft stocks?
I have considered buying a flat.Is it better to buy cash down or take a credit for it?
[right][snapback]62431[/snapback][/right]

On Microsoft... I don't know. I own some, but I bought them before the bubble burst. I'm still down about 20% on that and Intel. There are some signs that the business economy is improving, but $50 barrels of oil, and the uncertainty of our current global security stance regarding terrorism has investors pretty spooked. I've moved the bulk of my portfolio into staple goods and services, and occasionally strike on a short term profit potential. I spent at least a year studying the stock market before being confident enough to play, just as I studied craps and blackjack before I went to Las Vegas on a two week business junket. I'm not the type of person that can just throw down my stake on chance at roulette, lose, and not walk away feeling very stupid.

I would also council you to pay off all your debts. The interest you pay on outstanding debt is only making the other guy richer and you poorer. I like to pay cash for things when I can.

Buying your residence is a good thing if your payment is less than or equal to your rent, which it seems to be in most places. In the US, we get some tax deduction on the interest we pay for our primary residence (but, spending a dollar to save a dime is not good sense). Since you say "flat", I'll assume you are in Europe, and someone else might know better the benefits. The best approach in the US at least is to go ahead and use the banks money, but size your loan such that your payment is extremely comfortable. Then, I paid double my loan payments, and I made 13 payments per year. That way I was able to pay off my 20 year loan in a much shorter period, and minimized the interest that I paid the bank. I also had the fall back position of being able to cut back my payment if I say lost my job, or something critical happened during the loan period. Once you own your "flat", all the money that was going into rent is now available for savings and investment.

Remember that buying the flat, also presupposes that you will furnish it, and need many other things in it. The best advice I can give regarding money is to buy what you need, and not what you think you want. I am happiest when I live frugally, and then reward myself once in awhile for my hard work with something that I truly enjoy. Never try to keep up with the other guy, he probably borrowed the money to buy that Ferrarri anyway.

[whyBish]

The local consumer advice site is http://www.sorted.org.nz/ which gives good overviews of options, but will not be tailored to your situation.

I have done a Finance degree, and know enough that I know I shouldn't advise you :P

Things that someone giving you advice would need to know:
- What are your goals
- What are your cash requirements
- Do you have a budget?
- What is your risk tolerance
- What is your age (has a large effect on risk tolerance)
- The local taxation environment

Some of the things that you can invest in (ordered roughly from lowest risk&return to highest risk&return):
- Government bonds
- "State" (or whatever subdivision of country) bonds
- Bank term deposits
- Corporate bonds
- Property (There are tons of options in this category. Note that unless you intend to sell the property at a profit later, or to rent it out, then it technically is a purchase and not an investment. Also note that property risk is hard to classify when I'm lumping it all together)
- Stocks
- Partnership / Franchise etc.
- Your own business

Anyway, my recommendation would be the same as some of those above... seek professional advice. If you want, come back here afterwards for verification. It would be hard to get decent advice over the net unless you happen to know someone in the field that also has particular knowledge about your local tax situation.

[eppie]

Very good advice,Ashlock.As I don't live in the USA (I live in European Union),I don't know if all of your advice would be good advice where I live.
In real life I hardly trust people.It is a good idea to buy stocks for 5 to 10 % of the capital;I could do that,I think.As for real estate,I am no expert.Do you mean buying real estate in order to sell at higher price or just keep it ?
[right][snapback]62427[/snapback][/right]

Real estate is usually one of the few things that will for sure retain it's value (like land). So it depends what you think the world is doing. If next year a big war will break out (more terrorism etc.), you would want to have a house or some land. While if the world is calming down a bit it would have been better to by stock instead. It is really up to you and the risk or security you want.
Why not take say 20.000 euro and start trading on the stock exchange (you can do it yourself with some banks just via internet). And for the rest you buy a house, or put it in a savings account. This way you will get some trading experience, and you don't pay such high commisions. Just to make it handy get yourself a house and live there (or rent it to others).

Another option is buying a Ferrari...fun for a year and then you can get on with life. :D

[Concillian]

The best approach in the US at least is to go ahead and use the banks money, but size your loan such that your payment is extremely comfortable.  Then, I paid double my loan payments, and I made 13 payments per year.  That way I was able to pay off my 20 year loan in a much shorter period, and minimized the interest that I paid the bank. 

Houses clearly cost less as a proportion of income in Minnesota than in California. The house I bought ~6 months ago had a cost of about 6 times my gross salary, and this was the bottom of the barrel for a house you could actually move into without doing major repairs. 13 double payment a year on a 20 year loan?!? :blink:

But real estate is what my parents did, and the path I am following.

They bought their first house, lived in it like 5 years, then moved and rented out the old one. Then 20 years later they did it again. Now the income from the other two (paid off) houses pay more than the payment on the third, so they will be able to pay that one off in less than 10 years. The rental income from the other two, coupled with retirement savings, has lead them to a very comfortable retirement.

Oddly enough, paying down your mortgage (at least in the US where we get a tax break on interest from a primary residence) is not always a wise financial decision given the low rates on home loans and the tax break on interest. In my parent's case, they locked in a 30 year loan that was about 5%. Then inflation set in in the late 70s/early 80s. Bank accounts were making double digit interest rates. So by saving money that was not used in paying down their loan, they were able to lock in a long term CD at some ridiculous amount, like 15% or something. Given that the actual out of pocket of the 5% interest is closer to an actual of 3-4% after tax benefit, they were way ahead by NOT paying down their loan.

Only problem I'm having with following that plan is that when they bought their first house, the purchase price was about equal to my father's gross yearly salary.

But when in a situation where I had a large sum of money available (from stock options at work) I bought a house. Rarely is a house a poor investment. Even if it doesn't appreciate, when you finally pay it off, your living expenses go WAY WAY down.

[kandrathe]

...13 double payment a year on a 20 year loan?!?
...
[right][snapback]62542[/snapback][/right]

My wife and I both had pretty good jobs right out of college. Our first house was about equal to one of our annual salaries. We stayed in that one about 5 years and the value went up about 50%, so when we bought our second and current home we were able to put a sizable chunk down (1/3). The remaining loan was a little larger than on our first home, but not much. During that time our careers took off and we both became pretty high up in management. Anyway, with the house paid for and our retirements pretty much set, she quit and we had a couple kids. She will return to work part-time once the kids are both in school. It worked out for us that way, but everyone has different values and we were lucky to be investing in our house when its value was appreciating.

I think California real-estate is insane, BTW. I looked at houses around Palo Alto (near our corporate headquarters), and the smallest little cracker box house on a 50' x 50' lot was selling for 1.5 to 2 million. I think the secret would be to get a nice conversion van, work hard earning the big bucks, live out of your van for a few years, then move to Georgia, or northern Arkansas and retire.