Need Help Investing A Lot Of Liquid Cash

[firehawkocean]

1st, have you had any experience as a landlord? This is not a simple role, you need to be able to chose the right tenant,negotiate effectively with difficult people, maintain the property, do basic repairs on plumbing & electric, be prepared to respond to problems beyond traditional business hours and have a long list of tradesmen you trust. I hope you can tell I am speaking from experience!

Investing in the traditional sense requires elements of risk. With interest rates so low, you are losing buying power to inflation. With interest rates more likely than not to s-l-o-w-l-y increase, bonds will fall significantly. With turmoil in various parts of the world Equities caan drop on loss of consumer confidence. Government decisions to act/not act can decimate a portfolio in a couple of months as you have recently seen. Doing nothing is even worse. Finally, no one cares about your money as much as you do.

As a 26 y/o student in a Master Program with liquid assets of $400.K you need to learn about the basics of investment and become familiar with asset allocation PDQ. Financial planners are fine when the economy is on an upward trajectory. I don't know anyone who was told to sell out and bite the bullet on tax consequences when the 2008 -2009 c*** hit the fan. The GWB administration decisions vibrated around the world.

If you were my son, I would recommend asset allocation in Exchange Traded Funds suitable for your age and your assessment of the risk level you can manage...and still sleep at night.

Thank you all so much for your recommendations. And YES I DID RUN LIKE HELL WHEN THAT "FINANCIAL ADVISOR" SUGGESTED 200K IN ANNUITIES! JERK! He even sent us a housewarming gift and sent his wife to get her hair done by my wife when I did not call him back.

I have definitely decided that I will consult with my CPA first, find out my options from a tax standpoint and ask his opinions on investing. Then I will consult an attorney about the LLC thing if necessary.

A professional in investing, who I did not employ, recently suggested the following mutual funds. again, I am not working with him:

VFINX
NAESX
VGTSX

what you guys think? he also recommended reading "the only investment book you will ever need".

[scfr]

A professional in investing, who I did not employ, recently suggested the following mutual funds. again, I am not working with him:

VFINX
NAESX
VGTSX

what you guys think? he also recommended reading "the only investment book you will ever need".

Very sensible suggestions. Vanguard Index funds, and one of Dan Solin's books (I've read the book). Nice solid advice. This person is night & day from the advisor who tried to sell you the annuity. If you'd like to get a taste of Dan's writing to see if you want to read the book, just Google him. You can read many of his articles on-line. He writes for The Huffington Post, AOL Money, and I'm sure others.

I think the first decision you need to make is whether you want to invest in the rental property/properties or some other hands-on business, or if you want to be primarily a passive investor. You can do both, but you'll probably find that you end up focusing more of your energy on one or the other. For the time being, it's OK to leave the money parked in the high-yielding savings accounts.

Have you read "The Millionaire Next Door" or "The Millionaire Mind"? You might enjoy them.

[Robert742]

Talking to your CPA is a good first step because you make a good income (I assume) and you live in a high tax state.

If you can get a good deal on a new home, renting out your old home that is paid for, is a good idea, and should get you tax savings. I would not buy any other properties until you get a taste for being a landlord. Also, I don't think it is a good idea to tie up all your savings in illiquid real estate holdings. As mentioned by another poster, owning rental property can be a hassle and a money pit, if you are not careful. Even buying condos can be a disaster if you buy into a condo complex that is poorly run or has an incompetent condo association.

I'm not a big fan of sinking a big pile of money into the stock market at once. Talk to your CPA about a SEP-IRA to start a retirement savings plan. You can dollar-cost average into the stock market and save on your taxes. This should be for your long-term money you will not touch until you retire.

If you want access to your 400k in a few years, and want safety of principal, you want to avoid stocks and real estate.

Even if you decide to work with a financial advisor, you need to understand the basics of stock and bond investing, mutual funds, your risk tolerance, etc.

Here are 2 sources for fee-only investment advisors:

Find an Advisor - Locate a Fee-Only Financial Advisor

Garrett Planning Network - Fee-Only, Hourly Financial Planning and Investment Advice

Your CPA may do financial planning, too, or recommend someone to you. Even with a recommendation, get an opinion from a fee-only planner. You know enough to be skeptical of the annuity salesman you met. Beware fee-based (different than fee-only) planners, too. You may wind up paying a fee for a sales pitch you could get for free from an insurance agent, instead of unbiased financial advice.

[Robert742]

Oh, I forgot: you have assets to protect and live in a litigious state -- make sure you have high liability limits on your auto and home insurance, and buy at least a million dollar liability umbrella policy.

Add an optional coverage on your home insurance called personal injury coverage. It usually costs under $30 a year, and usually expands your liability to cover libel, slander, wrongful eviction, etc. It is a must-have coverage for any landlord. This coverage is also provided by most umbrella policies, too. Umbrella policies vary a lot from company to company, so you want to shop for the best coverage.

Contact your agent for a policy review to see if you have any gaps in your insurance coverage. I recommend getting a second opinion from an independent agent whom specializes in personal insurance. Policy reviews are free and you should have one once a year, or any time you have a life change, for example, becoming a landlord and owning a rental property.

This may be off topic from the advice you seek, but it is definitely relevant to your situation.