Ok, so I have around $1000 burning a hole in my bank account that I'd like to invest somewhere. This is sort of my "emergency fund", so I need it in something that is basically guaranteed to not lose value. Anyone have any ideas?

Well, I don't really have any ideas, but there is no such thing as guaranteed safe investments...and the ones that are won't really get you any big reward. To make money you have to take a risk...otherwise my recommendation is to leave it the bank to collect interest. Thats really the only 100% safe investment. (and of course it gets you hardly any money back)

A bank. Pretty much the only way you're guaranteed not to lose any money.

Certificate of Deposit

lol depression

lol FDIC.

Anyway, there is no investment that provides guaranteed growth and liquidity. Your best option is to open an Orange Savings account at ING; fee-free, FDIC-insured, and 3.0% APY.

If you seriously want to invest, save up some extra cash first. An emergency fund is useless if it's tied up in something that can lose value or is difficult to convert to cash.

A bank account is only good for temporary storage. You're not going to get an interest rate that will keep up with inflation, so in a sense if you put the money in a bank, you *are* losing money. The $1000 you put in there now is not the smae $1000 you'll take out later. I would reccomend investing in stock. You'll need to do some research, but if you find a good stable company, you know it'll be around for a while. Odds are good you'll make money.

The stock market isn't like... put money in and pull it back out ten seconds later, though.

Bonds will give you the best return, but they have to sit for a long time.

Sarn_Cadrill is right about savings accounts. You can't really save $$$ anymore long-term because of inflation. If you leave that money in there long enough you will find its worth a lot less in tommorrow's dollars when you go to pull it out. Savings accounts are good for stashing cash for a relatively short term (no more than a few years) or else inflation will begin to eat it. The interest banks pay is currently negligible-- don't even worry about it.

If you invest in the market, be careful though, as some stocks don't pay dividends, and you will only make a profit (hopefully) when you sell. Diversify, but don't over-diversify.... if your cash is too spread out, you won't have as many shares for each company and if one really goes up, your yield will be minimal compared to as if you had diversified less and put more shares into that company.

Sell stock when it's high, and buy when it's low. When the economy slides, most people sit tight and don't invest b/c they are scared s***less that the market will drop lower and that they would lose their investment---but you should do the exact opposite. Buying stocks when the market is bad is like getting them on sale.... that's in part what helped the Kennedys to get rich during the Great Depression. Think of it this way... most likely, it will go back up and you profit. Even if it doesn't, you still won't be out too much.

If you try to play it too safe, you will not get very much for your troubles. If you are willing to take risk, you will do well in investing. Granted, you will have losses and will probably be kicked in the balls a few times, but over the long term you will definitely come out ahead.

My investment vehicle of choice will be mostly real estate, but that's just me talking. If you want to learn more about real estate investing, read Rich Dad Poor Dad by Robert Kiyosaki and then Building Wealth by Russ Whitney.

I am kicking my own nuts for not buying in to DJ Orthopedics (NYSE: DJO) on their IPO. They made it somewhere around the teens. Now it's damn near close to their 52-week high (28.75). Last close was down 0.38 to 27.62.

Here's the thing. My dad has done work for them ever since they were a warehouse no bigger than your high school gym. Now they are two BIG buildings with a plant down in Mexico. I have seen the inner workings of this corporation and it is solid. And I am a ****ing moron for not investing in this company.

Aye, pagewizard seems to know what he's talking about here..

Send me some money once you make the cover of Forbes.

Some people joke that IPO is short for Instant Profit Opportunity. Sometimes you get it, sometimes you don't. IPOs can have big yields, but you have to stay sharp and choose wisely. Other people (mostly cynics) have IPO standing for "It's Probably Overpriced". Don't forget, IPOs can go down, too. I know several things that I was thinking about buying turning into junk stocks not long after their IPO, and i was glad that I didn't buy. I've had the opposite happen, too, and I end up wishing I had gotten in. (Just like you did). (For example, I wish I'd grabbed Google on their IPO-- I would think about selling it right around now if I had. Sooner or later, it's going to plunge. )

It all comes back to risk. Either you take it or leave it.

If you need investment cash, borrow it. Put up what you have as collateral, and borrow against that if you are not able to get a signiture loan. The bank will most likely give you the loan if you have it 100% backed with collateral-- that means it's no risk for them. (this is called a passbook loan--- or at least that's the generic term. Ask your banker and they will probably know what you mean. Better yet, talk to the president of the bank-- most bankers will be happy to talk with you b/c you are the bank's valued customer.)

In short, it's easier to borrow cash and pay it back than it is to save it. Opportunities come and go fast, so loans are your best friend. Your ability to borrow large amounts of cash is absolutely critical, so protect your credit with your life.


(I would not recommend this for stocks, but for more long-term things like real estate that give a perpetual positive cashflow. I don't consider stocks to be a long-term investment anyway)

I would agree, but so there's no confusion, it might be important to mention that a 15 year investment could be considered short term. Typically you don't want to jump in and out of stocks.

True, but there are exceptions. I would only hold a stock until it begins dropping signifigantly. You don't even have to watch it close to see when it begins to fall... For example, you can even leave instructions with your broker to automatically sell a stock when it drops to or below a certain level.

could you give me an example of a short-term 15 year investment? I'm curious as to what that might be, b/c it seems almost like a contradiction to me. The main thing I might hold that long is real estate, and i would definitely consider that to be long-term if I was planning to use it as an income-producing asset property.

Did you know it's possible to buy a house without ever having to pay a penny for it? Did you know that you can also live in it payment free for 3-6 months? Did you know that you can sell that same house for $10k, $20k, or even $50k+ profit before that 3-6 months is up? Did you know you can do it with almost 0% risk to you by including special legal conditions in the contract?

I'm not going to tell you how to do it. I can't teach you everything you need to know. I'm sure I'd forget something important to remember during the process, then you'd be mad at me. So I encourage anyone interested to research it for themselves. I will tell you though that the first house is the hardest to get. After that, you can use the profit you make off of that house to buy each house after that out-right, there by maximizing your profit and reducing your risk to 0%!

Requirements:

- 18 yrs of age or older.
- Credit* (good or bad, it does not matter as long as you have it).
- A steady job. Perferably one you've have had for at least a year.

*If you don't have any credit, you can't get a loan. So start looking for something now that you can get on credit and make payments on. If you have a Kay's Jewelers in town, get one of their member credit cards. The first purchanse you have a spending limit of $300. You have to pay 10% of front. For you to get credit, you have to make payments for at least 6 months. Ussually the payments are around $25 a month (6.25 out of your weekly paycheck and you're girlfriend or mother will love you for life on top of it). You'll need to spend close to $200 after taxes to have enough to make 6 months worth of payments. I got a ring for my wife that was on sale for $150.00 for Mothers Day. I got the Insurance on top of it which brought the ring (tax and all) to $194.00. I payed $46 down on it, leaving me with a $148.00 balance. After the first 3 months, they'll start charging me interest. So I'll easily get 6 monthly payments out of it.

*If you have bad credit you can contest it with the credit bereu. This is going to cost you. You'll most likely need some legal expertise help with this. Basically how it works is that you have the court send them a letter saying that you would like to contest your credit rating in court. They'll call you and ask you if you'd like to settle the dispute out of court. Accept it and they will disolve your bad credit and adjust your score to what it would of been if you made your payments on time. Why do they do this in 99% of all cases? Because they have nothing to gain by going to court. Additionally, they have nothing to lose by adjusting your score. If they go to court, rather they win or not, they'll still be out court costs and attorney fees. Pretty cool, huh?

Anyhow, I'll let those interested figure out the rest.

"Don't save money to invest. Borrow it. But don't borrow unless it's for real estate."

...what?

For stocks, front your own money, (That way, you don't have to recoup your own losses while at the same time struggling to pay back the loan) but for larger investments, borrow. There are tons of multimillionaires out there who built their fortunes and their empires with someone else's money. There is a very good reason for this.... saving up enough money can take decades (literally) but loans allow you to get cash in days, if not hours. Once your investments start paying off, paying back the loans is no problem. This is why I like real estate... The cashflow is constant.

I know that you can buy property with $0 down, if you manage to find a motivated seller who wants to get out of the property bad enough that he will accept your $0 down offer.

In regards to loans, there's a way to build good banking credit fast---within a year or two. It goes something like this, but Whitney explains it better than I can:

Step 1- Borrow $1,000 on your credit card. You have $1,000 in your hand.
Step 2- Deposit this $1,000 in a bank account. Go back a week later and borrow AGAINST your bank account. You OWE $1,000, but you have $1,000 on deposit. You walk out of the bank with $1,000 again.
Step 3- Repeat step 2 at a different bank. Again you walk away with $1,000
Step 4- Make a few payments on both loans (you made sure you can afford to cover these payments before you signed the papers!)
Step 5- You still have the $1,000 you borrowed from the last bank. Take this to bank #1 and pay off the first loan. Remember, you still have a $1,000 account at this bank!
Step 6- Use the money in the account at bank #1 to pay off the loan at bank #2. You still have an account at bank #2 that contains $1,000.
Step 7- Use the $1,000 that is in bank #2 account to pay off your credit card. Everything is paid!


Everything is settled up to zero. Your only costs are interest and any fees incurred.

So, what do you do when you finish this process? Do it again, but with larger amounts of money. and again, and again, upping the ante each time. Do it until all the banks involved are willing to give you a signature loan, which is a mark of high banking credit and reputation. In a signature loan, you can walk into one of your banks, and borrow cash with only your pen. No collateral is required.


It's a little confusing at first, b/c it is so unorthodox. It's really a very old trick that smart investors have been using for years.

...did you seriously think that I was telling him to save up $400,000 to buy real estate?

And really, would you get off the "real estate investing is easy and always has a positive cash flow" bandwagon until you've actually purchased a property? I've actually owned personal and rental real estate, and I say that you're full of crap.

I was wondering when the naysayers would show up.


I never said it was easy. Rather, I will have to work my a** off to get this established, but the alternative of working a 9-5 job like everyone else until I retire and die is a whole lot worse to me.

I plan to start in the next few years. Right now, I'm laying the foundation by building good credit.

Then maybe you should keep your comments to youself until you've actually accomplished something. Or at least warn people that your 'expert advice' is simply regurgitated from whatever trendy investing book you read this week.

I'm not saying that real estate is a bad investment, but the fact is that there are markets where a quarter of all purchases are made by investors. Plenty of people own rental properties, but very, very few of them are or ever will be independently rich. You have no special knowledge--and no experience, period--so I'm not really seeing why you think you're going to do so much better than the millions of other investors out there.

Argath, come off your high horse. The guy asked for advice, Page provided it. He didn't ask for qualifications. If you don't agree with what he's saying, then fine. But that doesn't mean you have to attack his reputation.

I would think about it this way. A long term investment to me is something you're saving for retirenment. It's not going to be giving you anything in the meantime, but long term, it will pay off (example, 401k). A short term investment is some stocks, things that you'll buy to turn a profit in the near future. Now you could hold onto stocks for 15 years and still consider it a short term investment, if you're mainly holding that stock for the dividend. It's something you're getting a return on almost immediately, thus, short term. That's kind of what I'm thinking here.

I see where you are going with this.


With that logic, real estate investing is also short-term (Since I start getting returns in the form of rent almost immediately) even though I'm in it for the long term (I'm one of the buy-and-hold people, although I'm not against buying a place that is very cosmetically distressed, rehabbing it, and then selling it for a profit.)

Let's put it this way: I'd trust Argath's financial advice over Page's any day of the week.

Yeah, free. I'm not saying Argath can't give good advice, just that he doesn't need to jump all over Pagewizard for offering his.

From the sound of it, Argath seems to of just been figuring things out as he went along. Page, however, seems to have done some research, but still hasn't hit the true area of profitability in real estate. Let's just say, you don't have to do rehabs to a house to make a profit. The only times I've done rehab is when my Wife's grandfather (a general contractor) needed work. Otherwise, I've stayed away from it because unless you do the work yourself, you really don't make a significant profit from it to justify it. When I buy a house, I turn around the next day and put it on the market. In the area I'm living in now, it's growing very rapidly, so turn-over is around 3-weeks on average. Which, after the first house, it doesn't really matter how long it takes to turn over because the house will only appreciate with time (as long as you perform regular *PM's on the house). Remember you don't buy real estate to live in, you buy it to resell. The trick ito surviving between sells is to establish a salary to pay yourself a month (regardless of how many houses you sell). Then figure your monthly bills out of that being sure not to exceed your salary. Whatever is left over should go into a saving account. You can always take out mortgages on the houses that aren’t selling and rent them out if you have too. There’s several different way’s you can rent out a house, each with their advantages and disadvantages. But try to stay away from it when possible.

*PM stands for Preventive Maintenance.

It looks like you and me are trying to do two very different things with real estate. There are people that buy and hold, (like I plan to do) and there are people that buy, rehab, and sell. Both have their advantages and disadvantages.

the profit that you make by buying and reselling real estate depends vastly on the time you do it, and what kind of market you are in. Right now, prices are at an all-time high where I live, so it is definitely a seller's market. In a few years, that will change and prices tend to drop and then rebound to higher than they were before. When they are low, that's a buyer's market, and the next buyer's market is probably when I'll jump in and get the ball rolling.

Buying and holding has its advantages, too. Your properties appreciate in value over time, and you get steady income through your rental properties, thereby making them true assets. You get steady money out of them no matter how the market is doing, b/c people always need places to live. The same principle can be applied to commercial real estate, too. You can buy a commercial building and lease it out to businesses.

You're more likely to be able to quit your job and live on your investments the more rental property you acquire. This allows you to live life at your own pace, which is something that I definitely want. (Who wants to spend the better years of their life sitting in some damn cubicle someplace working to make other people rich? ) However, if you buy properties, rehab them all, and sell them, what you've done is liquidate all of your potential income-producing assets, and all you have left are the big liabilities that cost you money, like your car and the house you are living in. At that point, you just have the cash you made from the sales, but you have no real way of adding to it, so before long it will be diminished if you leave it in the bank until retirement like you said you plan to do. Your job certaintly won't make you rich in and of itself.

Actually, there's a secret real estate gold mine that few people ever realize even exists.

I can literally buy a 3BR/1BA house for 10k today and turn around and sell it for 40k tomorrow. Why? Because the house appraises at 50k but the market value is actually more like 55k. Sure, I could wait it out and sale it in about a month or so for 55 or 60k, but I could have made 1 or 2 more sales by then.

Salary vs Saving

Here's how my system works.

I have a checking account set aside specifically for investing.

I have 10k in this account which I buy a house for. I sell it for 40k. I made 30k profit, correct? I take this value and divide it by 2. I put 15k back into the investing account, 5k I put in my personal account for my monthly salary and I put the other 10k in my savings.

I now have 15k in my investing account to work with and a +10k in my savings/salary account.

Let's say I do that again. Accept this time I buy a 15k house and sell it for 40k (let's say it's in a neighborhood that isn't as good). I made 25k profit, correct? Well, since I've already made one sale and earned my salary, I'll put 20k in my investing account and 5k into my savings/salary account.

Okay, let's say that I don't sell any more houses that month and let's also say (for the sake of example) that even though I turn around and buy a 20k house (or two 10k houses), I don't sell them that month. That's okay. Why? Because I have 15k in my savings/salary account. I have enough in there to pay my salary for 3 months.

Have I saved anything for the long term? No, but this is just an example. Typically I can turn 2-4 houses in a month. As my investment account grows, so does the number of houses I can buy and any one time. I would love to get to the point to where I spend at least 1 hour a day, 20 days a month closing deals. That's 20 houses in one month! Let's say I only make 10k profit off each one. That's still 200k a month. Which is 2.4mil a year!

I'm not greedy. And I'm not interested in having the biggest house, the fastest car, ect. I just want to make enough money by the time I'm 30 to not ever have to worry about having enough money to continue living modestly off of. That goal is easily obtainable and doesn't even require me closing the deal on 20 homes a month (btw, if I ever had the opportunity to buy and sell 20 homes a month, I'd have employees doing it for me while I played video games all day).

[edit]The Errors, THE ERRORS![/edit]

...where the hell are homes selling for $10,000? The land on which my home is built could sell for twenty times that.

Really, Friend14...er, I mean CaptBewil...you're not making any sense. Are you claiming that you consistently find deals in which you can purchase a home for a fifth of its value?

Like I said, it's a real estate secret. If you want to learn more about it, you're going to have to research it a little. If you think about it very carefully, it'll become very obvious to you what it is that allows these low under appraised homes to be available to investors.

hint: You can't find these homes in a real estate pamphlet…

A real estate secret!--how intriguing.

There are so very many real estate infomercial scams, but I'll go out on a limb here and guess you're pitching either the bank foreclosures or HUD homes one. But feel free to surprise me with the Theory of Velocital Investing or whatever.

I would very much like to know, too. Out here in Cali, you currently can't touch a 3B/1B house for less than $350,000. The price will go back down eventually, but $10,000 is still unheard of. You can find great deals on foreclosures/distressed properties, but $10k? Come on.

I'm not as intested in houses as I am in buildings. (by building, I mean duplexes, 4-plexes, 6-plexes, apartment buildings, etc.) The reason is simple--- with houses, you just have one rent, which may or may not offset expenses. With buildings, you have multiple rents, netting a much higher yield each month which offsets expenses with a lot to spare.

The average national cap rate is only something like 6%, with sub-5% rates in hotter markets. That isn't exactly conducive to huge monthly surpluses unless you provide a substantial down payment or buy at a significant discount.

Neither Russ Whitney or Robert Kiyosaki said much about cap rates. Perhaps you can clarify.

I've never researched one of those infomercials. I drew off of over 10 hours of research between the internet and real estate agents.

Yes, Bank Foreclosures, HUD (FHA insured) homes, and VA foreclosures make up the 3-types of real estate gold mines. There's also Freddie-Mac, Fannie Mae, & OCWEN agencies. But I never researched into them, much. Bank Foreclosures are the best once you get the ball rolling. There's numerous places on the internet where you can find out exactly how much was owed on the house and use that to your advantage in your bidding. Typically, you can only get 5% less then the asking price. However, if the house has been on the market for a long time, say a year, then the bank is just looking for a way to get their money back, so it becomes much easier to negotiate the price even further down.

The debate over $10k for a house. It depends on where you live. I live in an area where land goes for 1-3k. Houses are equally as dirt cheap. The lowest I've see a foreclosed house is for 6k. There's about 10 or so houses in my area that are all under 10k. There's some great articles on the internet that explain why this is. Basically, during and following periods of dips in the economy, a lot of houses are foreclosed on. Appraisers are then tasked with appraising all of them. Fortunately, they don't have the time to go to each and every house. You can ussually tell the ones they actually went to and the ones they didn't. The ones they went to are generally over appraised. On the other hand, the ones they did not go to are under appraised. The ratio is about 1:5, over to under, in my experience.

http://www.foreclosureway.com/
This is a great starter point for finding foreclosed homes. Don't miss out on viewing their articles:
http://www.foreclosureway.com/article-list.html

Don't pay their fee, either. You can find the address and other information on houses by writing down the code that they provide for each house, then contact the appropriate bank or agency. However:

http://areaplans.com/areaplans/

Will have a fair amount of info for you (including what a bank actually is owed on the house).

Select your state, county, then city. This will take you to a "You MUST be prequalified before buying a Government Foreclosure" form. Don't fill it out (unless you want to, it won't hurt anything). Scroll to the bottom, and click on the 'continue search' button. Your in. Happy hunting!

Keep in mind, this is only a starting ground. To understand how to actually do it step by step, you need to do more research. FHAtoday.com and HUD.gov will help with help further your search.

As for your last bit Jon'C, er..I mean Argath, I don't see how velocity can have anything to do with investing or real estate. But feel free to enlighten us.

[Edit]Here's a link that'll tell you how to "fix" your bad credit legally: http://www.sitesandsounds.com/money/fix-credit-report.html[/Edit]

Cap rate is one of the most common terms and most basic concepts in real estate investing. Look it up, and then use your critical thinking skills to ponder why your investing guru idols didn't mention it.



"Yes, I'm pitching the foreclosed homes scam," would have sufficed.

And exactly why are you calling me Jon'C? Are you suggesting that I'm a Jon'C alias?

I specifically stated that I haven't. I've never ordered anything of TV in my entire life.

What I posted isn't a scam. It's completely legal and legitimate. I'm sorry your pride prevents you from seeing that amongst the wealth of information I've provided for your benifit.



No more than you are suggesting that I am a Friend14 alias.