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Where should I put this extra money
Old 11-27-2019, 12:23 PM   #1
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Where should I put this extra money

Hi All

I'm 28 years old and have $215,000 in a high yield savings account which yields 1.7% right now. I already have an emergency fund as well. Right now I am in the process of looking at a property that would be my primary residence and would like to start a wedding venue business. I'm not sure if that will happen but I am getting quotes and seeing if it would be a wise decision and make financial sense.

I seem to couple up with these small businesses ideas but never seem to go through on the entire process usually because they are too risky or dont yield enough to make it worth it. But maybe this time it will be different. I guess I'm just holding out for a good deal.

Anyways where should I put this money? I would like to have access to this money in case a good deal comes up but it would also be nice to be making more money off of it.

If anyone has any input on where I should put these funds or any input on wedding venues or small businesses, it would be much appreciated!
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Old 11-27-2019, 12:52 PM   #2
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Think you are doing just the right thing. You might get a tad more, but have trade-offs in accessibility. For instance, Andrews FCU has a short time offer of a 3.01% 3 month CD. Realistically you have the money locked up for 4 months but you make a little more.
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Old 11-27-2019, 12:53 PM   #3
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Donít use the money as a proxy for your effort in selling your product or service
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Old 11-28-2019, 02:24 AM   #4
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Personally, I would sock 50% of the $215,000 away into a longer term investment/plan that you don't put at significant risk, and then keep the other 50% liquid for the business or house - I doubt that you'll have enough to do both the house and business idea while keeping a sufficient amount as a comfortable backstop. $100k would give you a maximum $500k house with 20% down.

As far as the wedding venue idea, it's risky. Business will likely ebb and flow with the (local) economy's strength. It will likely require a pretty hefty initial investment - easily in to the millions. However, right now is likely the best time to take out a business loan - rates are as low as ever, and there is plenty of money floating around the system looking to be invested. We've seen a few wedding venues go out of business over the years. The place where DW and I had our wedding went out of business, and then a few years ago came back under new management - it's name, reputation, and location are all very good. If you are heading in this direction, be sure to do a lot of research first.
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Old 11-28-2019, 09:11 AM   #5
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Personally, I would sock 50% of the $215,000 away into a longer term investment/plan that you don't put at significant risk, and then keep the other 50% liquid for the business or house - I doubt that you'll have enough to do both the house and business idea while keeping a sufficient amount as a comfortable backstop. $100k would give you a maximum $500k house with 20% down.

As far as the wedding venue idea, it's risky. Business will likely ebb and flow with the (local) economy's strength. It will likely require a pretty hefty initial investment - easily in to the millions. However, right now is likely the best time to take out a business loan - rates are as low as ever, and there is plenty of money floating around the system looking to be invested. We've seen a few wedding venues go out of business over the years. The place where DW and I had our wedding went out of business, and then a few years ago came back under new management - it's name, reputation, and location are all very good. If you are heading in this direction, be sure to do a lot of research first.
Thanks for your thoughts. I have considered putting around half in to the market but was hoping to get in when the market is down. I know timing the market which is impossible to do.

I'm at that age where a lot of my friends are getting married and it's crazy how much some of these places get and how booked they are. Right now we are looking at a property and building a barn. I called some local creditors and would be able to get a mortgage that would cover the property and the cost to build the barn. I would just need to provide 20% down with interest of 5%. I estimate the total cost to be around $700k. But yes pretty close to 1 mil.
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Old 11-28-2019, 11:29 AM   #6
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... I estimate the total cost to be around $700k. But yes pretty close to 1 mil.
(sorry, I can't resist) If you were looking at a new television and one place had it for $3K and another had it at $303K, would you say that they were "pretty close?"

Our human tendency to forget that all dollars spend the same is one of many useful facts discussed in Richard Thaler's "Misbehaving." Though strictly speaking it is not an investment book, IMO it is a worthwhile read for any investor.
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Old 11-28-2019, 12:07 PM   #7
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I'm at that age where a lot of my friends are getting married and it's crazy how much some of these places get and how booked they are. Right now we are looking at a property and building a barn. I called some local creditors and would be able to get a mortgage that would cover the property and the cost to build the barn. I would just need to provide 20% down with interest of 5%. I estimate the total cost to be around $700k. But yes pretty close to 1 mil.
I would do a tremendous amount of research on this if you've not already had a wedding business. Licenses, insurance alone. How to handle issues, cancellations - how many weekends per year is the location viable for outdoor wedding, etc. If it's that cheap to setup, and the profits are that high, why isn't this already saturated? Etc. What happens in 3-5 years if there's a recession and budget-weddings are back in style, or this younger generation, post-millenials, that are less into marriage, etc.? How will you staff arrangements? (you'll need at least 1-2 people on bookings and bride-hand-holdings full time).
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Old 11-28-2019, 03:45 PM   #8
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(sorry, I can't resist) If you were looking at a new television and one place had it for $3K and another had it at $303K, would you say that they were "pretty close?"

Our human tendency to forget that all dollars spend the same is one of many useful facts discussed in Richard Thaler's "Misbehaving." Though strictly speaking it is not an investment book, IMO it is a worthwhile read for any investor.
I have done a good amount of research and I guess I should have worded my statement different... for 700k I would be completely ready to go. But if I was to purchase a $500,000 property and have a $400,000 building build it would be close to 1 mil after all said it done. Sorry for the confusion.
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Old 11-28-2019, 03:52 PM   #9
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I would do a tremendous amount of research on this if you've not already had a wedding business. Licenses, insurance alone. How to handle issues, cancellations - how many weekends per year is the location viable for outdoor wedding, etc. If it's that cheap to setup, and the profits are that high, why isn't this already saturated? Etc. What happens in 3-5 years if there's a recession and budget-weddings are back in style, or this younger generation, post-millenials, that are less into marriage, etc.? How will you staff arrangements? (you'll need at least 1-2 people on bookings and bride-hand-holdings full time).
All very good points and have done a fair amount of research on these topics. One thing you that scares me is that the economy has been going strong for a while but I am curious as to how a weak economy would effect business. From what I have seen people dont seem to hold back too much for weddings.
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Old 12-01-2019, 08:07 AM   #10
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Thanks for your thoughts. I have considered putting around half in to the market but was hoping to get in when the market is down. I know timing the market which is impossible to do.
If you are worried about the market going down after your initial investment then how do you think most people will respond to spending money for an expensive wedding in a down economy? How much would it cut into your potential business when so many young are being saddled with college loans, etc.? That may eliminate that demographic and possibly others. Similarly would your choice of town or city support a business for your only source of income? Best of luck what ever your final decision.


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Old 12-01-2019, 10:03 AM   #11
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If you are worried about the market going down after your initial investment then how do you think most people will respond to spending money for an expensive wedding in a down economy? How much would it cut into your potential business when so many young are being saddled with college loans, etc.? That may eliminate that demographic and possibly others. Similarly would your choice of town or city support a business for your only source of income? Best of luck what ever your final decision.


Cheers!
Yes and I am not sure how I would be able to estimate or predict how a down economy would effect a wedding venue business. The venue I would open would be a nice place but nothing over the top and the price would reflect that. I think some of the places that are asking $10,000+ for a venue would be the first to suffer from a down economy. Similar to the housing market. I'm not sure if I could just plan for 20%- 30% less venues like a multifamily rental would.
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Old 12-01-2019, 10:07 AM   #12
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Yes and I am not sure how I would be able to estimate or predict how a down economy would effect a wedding venue business. The venue I would open would be a nice place but nothing over the top and the price would reflect that. I think some of the places that are asking $10,000+ for a venue would be the first to suffer from a down economy. Similar to the housing market. I'm not sure if I could just plan for 20%- 30% less venues like a multifamily rental would.
What you are talking about here is defining your target market and also identifying your competition in that market. If there is a SCORE chapter near you (https://www.score.org) they have highly experienced marketing people who can help with this and it is all free.
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Old 12-01-2019, 10:17 AM   #13
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What you are talking about here is defining your target market and also identifying your competition in that market. If there is a SCORE chapter near you (https://www.score.org) they have highly experienced marketing people who can help with this and it is all free.
I will definitely look into that. Thank you very much for the link.
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Old 12-01-2019, 10:29 AM   #14
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I will tell you a funny story about target markets. As a SCORE mentor I had a client one time who wanted to go into the laundromat business. He had done a phenomenal job of studying census tract demographics like population density, household size, income, etc. and had identified a number of neighborhoods that would be perfect for a profitable laundromat. He and his partner then jumped into the car to take a look. Every single one of those neighborhoods already had a laundromat!

Subsequently he talked to a laundry equipment supply company and was told: "Yeah. About the only way to get into the laundromat business in this town is to buy one."
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Old 01-22-2020, 06:18 PM   #15
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Buy some crypto currency. I have a lot of CasinoCoin.
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Old 01-24-2020, 09:22 AM   #16
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Hi All

I'm 28 years old and have $215,000 in a high yield savings account which yields 1.7% right now. I already have an emergency fund as well. Right now I am in the process of looking at a property that would be my primary residence and would like to start a wedding venue business. I'm not sure if that will happen but I am getting quotes and seeing if it would be a wise decision and make financial sense.

I seem to couple up with these small businesses ideas but never seem to go through on the entire process usually because they are too risky or dont yield enough to make it worth it. But maybe this time it will be different. I guess I'm just holding out for a good deal.

Anyways where should I put this money? I would like to have access to this money in case a good deal comes up but it would also be nice to be making more money off of it.

If anyone has any input on where I should put these funds or any input on wedding venues or small businesses, it would be much appreciated!

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Old 01-24-2020, 10:12 AM   #17
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Read an article a couple of weeks ago suggesting looking for stocks with low volatility instead of high-interest savings or CDs. The logic behind that is that the stock varies by pennies over the long haul and still pays monthly dividends. If one needed to sell at anytime in the future, the price is about the same as what one paid for it but would have collected dividends every month up until the money was needed. The only one I remember is VNLA, Short Duration Income ETF, pays monthly and is sitting at 3.11% annual returns. There are more out there with low/no volatility but this is the only one I'm watching.
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Old 01-24-2020, 01:05 PM   #18
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How about bond etfs?
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Old 01-24-2020, 02:59 PM   #19
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Given that you may need access to those funds at a moment's notice, your 1.7% online savings account is a good choice. You might be able to squeeze a little more juice by shopping around for a higher yielding online savings account or put half in a one-year CD but at best they only pay abut 2%.
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