The Breitling Watch Source Forums

Had something on my mind all day,i went to the bank to make a transaction and the teller said she noticed that i have 17k sitting in my savings and that is such a waste and have i ever thought of investing or opening a cd. Now i'm just an average guy with a decent job i use my checking account to pay for everything and just drop a little extra cash in my savings and don't touch it i consider it my nest egg/emergency account.I just wanted your thoughts on what i can do with that money with low risk to make more instead of just sitting in a account?

Lots of "traditional" investment vehicles out there ranging from stocks and shares for the more risk-loving, to high interest savings accounts for the totally risk-averse.

However, with a decent sum of cash (and I don't know which part of the world you live in, or how quickly you might need access to the money in future, etc) I'd be tempted to use it as a deposit on a rental property. With the right mortgage deal on the right property in the right area, you could find yourself covering the mortage cost with the rental income from the outset, and over time you will more than likely find it'll start to generate you a income. Small at first, but increasing over time. Investing in property is always a good idea as it's index-linked, so rental incomes will keep track with inflation, plus over time you will start to generate an income from it, and you will also obviously have significant capital gains over time as well. The only thing to remember is that your money will be effectively tied up for many years as property investment is a marathon not a sprint - the market can go down as well as up, but the long-term trend over time is always up.

Certainly here in the UK, I have seen property prices more than double in recent years. So as simple example if you bought a £100K house with a £10K deposit 20 years ago, it may now be worth circa £250K, and if you had a 20 year mortgage that was fully covered by the rental income, the mortgage would now be paid off and your £10k investment would now be worth the full £250k to you. Try finding any other reasonably safe investment vehicle that will generate returns like that.

Plus, if you kept the property after the mortgage is paid off, 100% of the rental income goes into your pocket month on month...... and you always have the sale of the property to fall back on if you ever needed a lump sum.

PS - This is what I would consider (and it is what I have done in fact) but that doesn't mean that you should, as I'm not remotely qualified to offer financial advice to anyone!

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Driver8

Site Moderator

I would not want to be a rental property owner here in the states. Laws make it very difficult to evict, especially if the tenants have children. I've seen first hand horror stories with property owners trying to evict non-paying tenants; it happens much more frequently than you would expect.

If you don't have a nest egg yet for retirement, you may want to consider a Roth IRA. You can contribute $5,500 to the account each year and it will grow tax free. You can begin withdrawing from the account at age 59 1/2 I believe.

If you're not concerned about retirement, or already have an employer sponsored retirement account, (which you should be taking full advantage of if you do) you may want to consider putting some money in a brokerage account and have a money manager/financial planner assess your financial risk tolerance and invest in mutual funds based on whether you want to be aggressive or low-risk.

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"I don't own any watches, I just lease them"

or look into a higher interest checking account. My credit union offers 3.51%. Open a vanguard account and throw some money into a mutual fund.

Rio224,

First of all, congratulations on your interest in long term investing. Investing is a personal knowledge development challenge and not quite as simple as asking on a watch forum.

Nevertheless, here are some general thoughts......

First, sequester emergency funds for rapid access & secure principal, pay off all high interest credit cards, take full advantage of tax deferred investments and employer retirement fund matching, take a course in basic investing and then step into mutual funds and ETFs as your knowledge and comfort builds.

In the USofA, success at rental properties requires a lot of experience in multiple areas: the property market, tax planning, insurance, property management, tenant selection, financial analysis, etc. There is also a range of serious risks: liability, bad tenants, property repairs, neighborhoods, market value drops, etc. Rental also requires capital to manage leverage/gearing. It's best done in a multiple property portfolio to spread the risk of a problem on an single property. Rental is not a place for novices, absentee owners, the faint of heart or someone who may need their capital back out in a hurry. To be sure, fortunes have been made in real estate but fortunes have been lost as well. It's best to be a understudy before stepping into real estate.

Good luck!!

Desert Hiker

Hmmmm, it sounds like renting out properties in the States is potentially far more problematic than here in the UK. Yes you still need to be aware of taxation, insurance, tenant selection, liability, property repairs, and a whole raft of other things, but none of it is rocket science to be honest..... at least, it isn't here in the UK! (For once I'm actually pleased to live here! )

I've never had any issues myself, and neither have four of my friends who also own one or more rental properties. Sure you do hear the occasional horror story in the press, but they are few and far between, and if you are "hands-on" in terms of tenent selection then you can minimise the risk in that area considerably.

Again, I don't know where the OP is based, but if you are in the US, then I bow to the greater knowledge of the stateside "locals" in that area.

Plus (and I should probably say this as a disclaimer!), I am not a financial advisor and you should seek advice from a professsionally qualified individual before making any decisions on investments. (i.e. Don't trust a bunch of random characters on a watch forum, 'cause we spend lots of our hard-earned on expensive watches that no-one really needs, so we clearly can't be trusted to know how the hell to save a damn thing! )

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Driver8

Site Moderator

We all did something right to be able to afford a nice watch...no??

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"I don't own any watches, I just lease them"

Driver8,

Renting here in the states isn't that bad with some analysis, experience and time to mind the rental(s). In some states, like Arizona, eviction is a quick admin. process, not a long lawyerly judicial process. However the OP sounded like a relatively young person and specifically asked for a "low risk" way to get a better return. In any case, good investment advice requires some info about the investor and his/her personal situation.

Desert Hiker