18yo needing unique financial advice

Thu 31 Jan, 2019 10:19 pm
Yep glitter, that's another point I was thinking of.

The idea that the property must be sold and monies invested in something else quickly.

In fact, unless you know about buying and selling stocks, not just what to buy, which takes research, but setting stops so that you limit your losses, you can literally overnight lose a significant amount of what you invested, and it could take years, or maybe never, to recover.

Your property, even if some bubble "bursts" is not going to plummet to zero overnight.
Mostly, you would keep the property, continue to rent it and maintain it, and you'd then have the time to wait for any downturns to reverse.

I feel like I have a little advantage in talking about the values of homes here, since I've lived and owned in Austin about 25 years. Builders cannot keep up with the demand.

The inventory for housing is tight, and is bound to stay that way in the foreseeable future. employment is low, people will continue to want to move here. Unless this house is in some crack neighborhood, it will be easy enough to rent, and the owner will have relatively little stress if they are willing to pay a property manager. I believe it is well worth it. They screen applicants, take care of issues, maintain the place, keep records for taxes, and more. The owner would need to make sure they have enough to pay the property taxes, insurance, and other expenses. You have an asset that is not only appreciating in value, but earning income as well. That's like owning stock whose value is going up, and also pays monthly dividends.

To the OP, some questions...

Are you currently living in the house?
You have some vaguely stated desires about "wanting to invest". Invest in what? Are these investments you know anything about? As glitter said, beware of investing in friends business, or have someone talk you into the next big thing.
Your education....what are you looking to go to school for? What type of work do you want to do?

I don't get why you seem so all fire hot about selling a place when you have time to figure things out. It's not like you're going to wake up tomorrow and be the owner of something worthless. Over time, you're going to likely be the owner of something worth more.
Have you actually talked to anyone who is experienced in this sort of thing, or is this fear of losing something you were freely given come from some misunderstanding of long term economic trends? Long term as in 40 or 50 years, not 3 or 4.

Thu 31 Jan, 2019 10:30 pm
Can we at least agree that our OP should seek the advice of a real financial adviser?You two seem to be going off again, contradicting what seems to be a consensus among the experts that housing isn't the best investment.

This young person needs real financial advice from an professional. I am not pretending to be an expert, I am just pointing out the facts... and suggesting that a real professional would be able to give real sound advice rather than this nonsense these two ladies are flinging.

Talk to a real financial professional. You are talking about $100,000... not an insignificant sum of money. Spending a little to get sound advice (rather than random people on the internet) will be well worth the money. I suspect (based on what I have read) that a real professional would tell you to sell the house and invest elsewhere. But I am not a professional so I could well be wrong, and that is my point. I do think that education is a very good investment, but I am biased and again... talk to a professional.

That is my only real advice.

Thu 31 Jan, 2019 10:54 pm
Just to further debunk Chai's nonsense. The easiest way to invest in the stock market is an index fund. There are other ways... you can go over that with a professional financial adviser.

$10,000 invested into an S&P index fund in 1980 turned into $760,000 in 2018. Compare this with Chai's bogus chart. Chai's chart is showing the average price of a house. Assuming that houses got bigger during this time Chai's chart underestimates the actual increase of value of actual houses during this time. The S&P still comes out the winner. (https://www.fool.com/investing/2018/02/08/heres-what-a-10000-investment-in-an-sp-500-index-f.aspx)

But my point is that you should talk to a professional financial expert. I don't pretend to be a professional financial expert... Chai and Glitterbag should stop pretending too.
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Thu 31 Jan, 2019 11:04 pm
Well of course you're wrong. You assume that 2 women you don't like would intentionally mislead a young guy about money. Neither Chai or I told him what to do with his money or property, we both recommended caution, advised patience, and expressed concern he not be taken advantage of by folks who have no skin in the game.

I'm not sure what you consider to be a "REAL PROFESSIONAL', but $100,000 grand is the appreciated value over 6 years. By all means, he should consult 'professionals' but on a leisurely schedule so he understands the info he's given and can sort the bullshit advice from the sound advice.

Neither Chai or I steered him into investments, we both urged him to think long term.......and all the financial advisers I've dealt with over the last many years told me to play the long view. I've lost a crap load of money in conservative investments and I've rebounded. But it takes time, and I've been pitched some really stupid investments, it it makes me uncomfortable I pass.

You provided a choice that would have been extremely helpful if you didn't find it necessary to blow off the other member's advice. He needs to hear all of it, and he needs time to digest and process it. You didn't do him a favor and I';m puzzled why you feel compelled to sweep in and 'negate' any comments made by women. I might know, it's sticks out of you like quills on a porcupine but I can't be entirely sure.
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Wed 6 Feb, 2019 09:48 pm
Thank you guys for all of the advice. They've all been giving me more clarity. And thank you Chai for taking the time to write all that you did and even providing charts. I think I'd have to agree though that hundreds of thousands of dollars like that is serious and a lot of money. If I lost it all, I wouldn't be thinking, "Oh well, it's not like I earned it myself anyways." I'd be devastated. I'm still talking about different types of investing with the friend.
I can tell reading back I overreacted about the whole Trump thing. Trump's presidency has just affected my life so much personally, and it's only been 2 years in. The friend I mentioned is such an avid Trump supporter, the whole thing just made me nervous for some reason I guess.
One thing is for sure, I don't want to be kicking myself with whatever decision I make, so I will certainly take it all slow.

Thu 7 Feb, 2019 12:00 am
You're not going to lose hundreds of thousands of dollars. You would have plenty of time to sell before that happens.

So where abouts is this house? I keep asking, and if you don't want to say, at least tell me so.

Honestly, it's not like anyone can track down your address if you give the neighborhood.

I'm curious if it's in a super growing area of town.

Of course I haven't spelled it out you should talk to someone experienced in real estate, and a property manager, to see what the house can be rented for, and how much of the time it can be rented. I figured you were smart enough to figure that out. Then of course that is income you pay taxes on, minus all your write offs.

You don't really say if you have been doing any research on how that all works. Hard to determine what exactly you have done, talked to besides a bank friend, who may or may not have any expertise in real estate.

Drive around and look at the for sale signs in your neighborhood, and check out the price on the realtors sites. Then look up what the house is appraised for on traviscad.org (that's the travis county central appraisal district) and see what the house is worth.

Take it slow, but make sure you have enough to pay your property taxes, or you really Will lose your house.

Tax bills, receipts and payment plans are available online. January 31, 2019 is the 2018 property tax deadline. Penalty and interest, beginning at 7% of the unpaid balance will be added on February 1, 2019.

With all this talk about being afraid of losing everything, you haven't expressed any concern about being to able to come up with your property taxes, insurance, etc.
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Thu 7 Feb, 2019 07:17 am
I still think you should talk to a real financial adviser (rather than random people on the internet). That's all I will say.
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Thu 7 Feb, 2019 07:43 am
The last housing bubble didn't hit Austin nearly as hard as other areas <cough>California<cough>.

The relatively high property taxes keep the values down...
Thu 7 Feb, 2019 07:53 am
Bite the bullet and talk to a certified financial planner. They won't tell you what to do, but they'll give you options and will be able to educate you on the risks associated with each strategy. They deal with beginning investors all the time; you don't need to be embarrassed about what you don't know.

If you decide to invest, I suggest you do so with a fiduciary. Not all financial advisors or "wealth managers" are fiduciaries. Fiduciaries are obligated to advise you on what's best for you, not best for them.

Go understand the power of compound interest, too. For an expected return of 8%, every dollar you invest today will be worth $21 and change 40 years from now. That assumes you leave it alone, though....

UT has a bunch of informal classes on investing.


Pay attention to the parts about designing a portfolio, and rebalancing....
Thu 7 Feb, 2019 07:56 am
And for god's sake don't "invest" in anything like Bitcoin or some other snake oil.
Thu 7 Feb, 2019 09:23 am
Drewdad, you give excellent advice all around.

Obviously about speaking to the proper type of financial planner, but also about taking classes and educating yourself.

I’m winding my financial exploits down at my age, and have sound reasons for what i’m going to do in the next few years. It wouldn’t be attractive to someone younger, with a lot of time to invest, but it works for me.

The point of my saying that is that years back when I learned about stock trading, one of the things that was important for me to recognize was that I was my only customer, and could concentrate on my goals, not what someone else wanted me to do, and make money off of me regardless if I lost or gained.

I know investing isn’t everyone’s cup of tea, but fortunately I not only had the knack for it, but the confidence to realize I had the brains to do exactly what many so called “experts” were doing, many times better, because again, I am my only customer.

Blackbear taking classes, learning and implementing what he learns is a road to successful.

Also, if there are times when money is lost, and there will be, you can’t blame some “0ther”, but you learn from your mistakes, and move on.
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