Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
sitting on cash and home equity
Old 05-12-2013, 06:57 PM   #1
Recycles dryer sheets
 
Join Date: Feb 2011
Location: columbus
Posts: 100
sitting on cash and home equity

Hello! I was hoping to get some ideas and opinions on my situation. I'm 33 and married with one baby. We have about $50k in cash not earning more than .5% or so and another $250k or so in home equity spread across our personal residence and 3 rentals. Any thoughts on how to put this money to work?
__________________

__________________
columbus is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-12-2013, 07:06 PM   #2
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: Jun 2005
Posts: 8,619
The home equity is working, so nothing needed to do with it.

The cash ... is it your emergency fund or do you already have an emergency fund? I've read about 2% CD's nowadays. There are I-bonds from Treasury Direct. There are short-term bond funds.

If it is not needed for an emergency fund, then there are lots of possibilities, but one should have a long-term plan first. What's your plan?
__________________

__________________
LOL! is offline   Reply With Quote
Old 05-12-2013, 08:01 PM   #3
Recycles dryer sheets
 
Join Date: Feb 2011
Location: columbus
Posts: 100
I was thinking if I could get a cheap heloc then that could be my emergency fund if money was tied up in an investment earning more than the heloc rate? I was reading about lending club and double digit returns but that's not a sure thing. What do you mean by the equity is working? Just that its thay much less interest I'm paying? Thanks!
__________________
columbus is offline   Reply With Quote
Old 05-12-2013, 08:36 PM   #4
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
brewer12345's Avatar
 
Join Date: Mar 2003
Posts: 16,391
Quote:
Originally Posted by columbus View Post
I was thinking if I could get a cheap heloc then that could be my emergency fund if money was tied up in an investment earning more than the heloc rate? I was reading about lending club and double digit returns but that's not a sure thing. What do you mean by the equity is working? Just that its thay much less interest I'm paying? Thanks!
Uh, don't you remember just a few short years ago when lenders were cutting off HELOC borrowers even when they had lots of room left on their lines of credit? You need a cash emergency fund, not a line of credit that can be cut off at any time for any reason.
__________________
"There are three kinds of men. The one that learns by reading. The few who learn by observation. The rest have to pee on the electric fence for themselves."



- Will Rogers
brewer12345 is offline   Reply With Quote
Old 05-12-2013, 10:36 PM   #5
Dryer sheet wannabe
 
Join Date: May 2010
Location: Smoky Mountains
Posts: 23
NEVER EVER take money out of your house to put in the market. The financial advisors want you to do it, in order to make fees off your money, at no risk to them. Your best investment is your debt, retire it.
__________________
oldnews is offline   Reply With Quote
Old 05-13-2013, 12:27 AM   #6
Thinks s/he gets paid by the post
 
Join Date: Sep 2009
Location: Hong Kong
Posts: 1,575
When I was at your stage in our financial journey, our primary objective was to save up enough deposit for our next property purchase.

If no asset class looks like a good investment to you right now, then paying down some debt may be a safe default option.
__________________
Budgeting is a skill practised by people who are bad at politics.
traineeinvestor is offline   Reply With Quote
Old 05-13-2013, 06:36 AM   #7
Full time employment: Posting here.
 
Join Date: Jan 2010
Location: dubuque
Posts: 618
I think getting rid of high interest debt is always a good idea. if your paying 4% on debt and getting .50 percent on interest. it a no brainer.
__________________
frank is offline   Reply With Quote
Old 05-13-2013, 07:09 AM   #8
Recycles dryer sheets
 
Join Date: May 2011
Location: Twin Cities
Posts: 434
I'll take a little different direction - what has been your experience with the rentals?

Do you have a track record on them of earning 10%+ and can you find more?

As a real estate investor my biggest issue is that my market has few listings, rising prices and lots of investors so what was easy to find 1-2 years ago is getting really hard to find right now. That said, if your market still has opportunities and you have a strong track record of real estate investment success it can be done. We moved a year ago and instead of paying cash for our house we got a loan so I could buy more properties and the 4 places we've purchased are turning out enough money to pay the loan and then some.
__________________
Fishingmn is offline   Reply With Quote
Old 05-13-2013, 10:02 AM   #9
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,434
Quote:
Originally Posted by columbus View Post
Hello! I was hoping to get some ideas and opinions on my situation. I'm 33 and married with one baby. We have about $50k in cash not earning more than .5% or so and another $250k or so in home equity spread across our personal residence and 3 rentals. Any thoughts on how to put this money to work?
I would determine how much you need for an emergency fund (typically 3-6 months of living expenses) and put that amount in an online savings account that will earn 0.8 to 1.0% rather than 0.5%.

Do you have access to any tax-deferred accounts (401k, IRA, etc) or tax-free accounts (Roth IRA and Roth 401k)? If so, you could start contributing to them and use any excess of the 50k over what you need for emergencies to fill the gap.

The equity in rentals are already working - they are bringing in rental income. If you really want to you could borrow on the rentals if you have any borrowing capacity on them and use the proceeds to buy another rental, but I would try to keep the borrowing modest (say 65% or less of value for each property).
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 05-13-2013, 09:09 PM   #10
Recycles dryer sheets
 
Join Date: Feb 2011
Location: columbus
Posts: 100
Thanks all! I do have access to roth ira abd traditionsl but no employer 401k. Its hard to calc after refis and mortgsge pay downs but I think we probably avg around 20%. I dont thimk we can get a fifth property with conventional financing so would have to look at other options.
__________________

__________________
columbus is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


 

 
All times are GMT -6. The time now is 12:10 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.