smurf2k

amex high yield savings is at 1.25% if you need access to cash

mingster

yes exactly - the stuff i listed are done...

cthree

Rich, you are is a very good spot, congrats and respect to you sir.

what about some real estate with all the cash and equity you've got? Prices are very low, it's a buyers market, there has to be lots of multi-tenant rental properties on the market at great prices. That has to be my #1.

The economic pendulum is swinging back, you are in a great spot to take advantage, forget stocks, buy investment property. With your free cash flow and equity you should have no problem leveraging into fantastic long term mortgage rates of 4-5% on rock-bottom priced income properties.

You are on the cusp of real wealth, go for it.

s.hasan546

Exactly what me and my family are currently doing. There are tons of foreclosures and short sales out there.

cthree

don't forget too that interest rates are likely as good as they are going to get for the next 20 years or so. Once the econ starts to click, and it is starting, those rate are going to shoot up to 8-9-10+%. My first mortgage in the early 90's was 9.75% and that was considered pretty damn good. You are getting 4-5%ish now, there is no sweeter time to pour your money and equity into cheap income property (strip malls, plazas, fourplex, triplex, ...).

Don't forget when those rates go up so will the rental market as people consider the +/- of buying vs renting which slopes toward rent as rates go up. With your 5% 30yr rate you are going to make bank with costs so low and rents so high and in demand.

We've got 1 year left IMO before rates really start to move in an upward direction and the economy gets up to full clip. It's also a fantastic time to put your money into the US, first in, first out. The US will rip while asia sags and money starts to flow west again.

Having your mortgage paid off on your primary residence is an incredibly strong position to be in. I'm envious bro, WTG.

cthree

^ Ignore this. That was the last market trend.

The next trend is tech in the USA, a shift that will eclipse the PC era by orders of magnitude. Everything connected everywhere and it starts and ends in silicon valley.

If you are still in metals you might want to consider an exit strategy. Oil too.

TypeSH

With your projection of a strong US rebound wouldn't energy prices, including oil, also be strong?

rob-2

Do share..

What's going to put a cap on oil prices?
What's going to reduce inflation?

Not sure what you're experiencing up there in Canada but here we're seeing produce, and fuel at the pump rising while we hold 10% unemployment. Both stay outside our CPI.

rob-2

You know the major problem with this?

It's an active investment. Rich either needs to get a property manager or manage the property himself.

Being a landlord isn't fun, it's a lot of work and on a small scale hardly the next best investment option. Rates may be low on homes right now, but there is a trend pushing 30 year fix, national average up now 5.05%.

As rates rise, how to you suggest unemployed people are going to manage to pay more for homes? New home sales are down. Prices flat.

As borrowing rates rise pricing falls. The only way the fed is going to control run away inflation in the near term is to run up the rates, thus putting pressure on pricing. If the plan is to get a cash investment, he'd be better to wait until rates do rise and lock in some CDs.

How do you expect to get tenants into your properties who will pay regularly?
What is his position if he must sit on an empty home?
What is his position if he must insure an empty home that gets damaged/burn etc and must file a claim? What will happen to his cost to carry that policy?

This all sounds very nice, but in real world situations being landlord is another job. If you run the numbers, you need enough properties to employ a management firm to do it for you. FYI we looked into buying a home for cheap $280K, but it rents for $1200-1300/month and carries for $1500-1600. Assuming you always get 12/months a/year it still costing you to carry the home. It's no 'investment'. Wait 6 months to get a renter and it's really unattractive. You've also tied up a $280K commitment in one property, one location that is and will be slow to convert to cash for the next 5-10 years.

He'd be better to get his extra money into international investments, say in banks in Germany, China or even Canada. He can pick investment vehicles with his risk appetite and as rates rise enjoy solid returns protected (some what) from the devaluing dollar. RMB shows the greatest potential to rise against USD of any currency, with EURO not far behind, though they (eurozone) have short term troubles our credit worthiness is coming under question. Unfixed it tanks. Current 1.35EURO has much opportunity to rise.

cthree

10% unemployment means shit. That is a measure of PAST unemployment, not future unemployment. You are trying to infer the future by looking backward. Economic indicators are TRAILING meaning they tell you where you have already been. Calling them indicators at all is misleading, they are reports of past activity not indications for future trends.

If you want to intuit the future you need to look forward, way forward. Have you seen the S&P lately? it has regained half of its recent losses. When the S&P tanked, what was the unemployment rate? 5%? 6%? Either people are going to stop investing capital and the S&P is gong to go down again to a level you would expect for 10% unemployment or that capital flowing back info the markets is going drive hiring which is going to drive unemployment down to 5-6%. First you get the money, then you hire people to spend it. Hiring people with a hope that money will be available to pay them just isn't done so you aren't going to see a drop in unemployment BEFORE an inflow of capital to the capital markets.

Oil prices are going to be capped by 3 things. First, reduced demand from Asia. Second, cheap oil and gas from Canada in exchange for security, intelligence and most importantly a more open border. Third, new energy efficiencies.

Interest rates are going to go up, a lot, but inflation won't be a major issue in the US/west because on average a very small percentage of our incomes goes to pay for basic needs like food, shelter and warmth. If the price of food tripled would you starve? Unlikely. Inflation will be modest and manageable; something to bitch about but little more.

That's my take, seeing as you asked.