What to do next so as to increase our wealth...?

Question

Just looking for opinions. I don't think I have the stomach for the rental business and risk in general but also understand that you cannot get ahead in life without taking some risks. As of right now, it seems as if we are at a standstill, with the exception of our home equity growth. I guess my question is what should we do next? We have no other debt other than our mortgage. Combined annual income is $75,000. Thoughts?

Age: 37, 34 Married

Cash in bank: $60,000

Retirement Index Funds: $23,000

Mortgage Balance: $250,000

Fair Market Value: $570,000

Age: 37, 34 Married

Cash in bank: $60,000

Retirement Index Funds: $23,000

Mortgage Balance: $250,000

Fair Market Value: $570,000

David Barnett · Answer

@Aaron J. Quick clarifying question, are the retirement index funds in a 401k, 403b, or the like?  In taking a quick look at the numbers, I would start socking away money for retirement.  Not to be critical, however, it looks a bit light based on the numbers and ages, especially if you don't want to be in real estate.  I prefer real estate over the stock market, however, I have money in both vehicles.

I would very much stay away from Bitcoin.  I have a general philosophy that if everyone is talking about something (such as Bitcoin), then there is a bubble and nothing good can happen.  I'm starting to feel the same way about real estate until there is a correction.  Best of luck.

Steve Vaughan · Answer

Congrats on having no consumer debt and cash in the bank.  You are doing better than 90% of America. That needs to be said.

You've obviously seen the growth real estate can provide.  Need to do what you know, though.   Are you in an industry you know a ton about?  Set some buy limits on the best in class stocks in your wheelhouse. Buying index funds is easy. So is a MF in your 401, but it will rise and fall with the tide and is for novices IMO. Use any advantage you have in an industry you know well.

I have very little in retirement funds relative to wealth as well because I haven't had a JOB in a long time and $5k per year max in IRAs is what it is.  But I'm not worried because I am specializing into what I know well and it provides income and appreciation. Cash is earning little but has a purpose as an opportunity fund.  An extra $x per month to me is just an extra x well-purchased properties.  Then reverse engineer into shorter term goals.

Figure out what you like and what you are good at and invest in that.

Account Closed · Answer

Max out his and her 401k and Roth IRA.  That's ~ $48k right there.

If you have leftovers put the rest in taxable accounts.

Andrew S. · Answer

Read Jim Collins Simple Path to Wealth

Tyler Kaye · Answer

Account Closed is that still working for you or was it base off of last year's spike?  I don't see that as the same wealth building vehicle as REIs.

Mary M. · Answer

Rental property if bought correctly is fairly low risk.  I would not do BRRR or flips - those have risk. I would however invest in a nice duplex triplex or fourplex that cash flows (even if marginally) as it should appreciate if you invest in the Bay Area. I am not sure about San Jose, but Oakland would be one place I would look.

Find yourself a GOOD commercial agent or a regular agent that knows about cash flows etc and then start looking. But only buy what is solid on paper and that does not need a lot of work.

Mark Gibbs · Answer

If you live in San Jose I’ll assume local real estate investing is out of the question. How about something like crowd street to take a passive investment role? You can diversify across property types and locations that you like. and crowd street is one of many platforms so just choose the group you feel most comfortable with.

Craig Jeppesen · Answer

You definitely need to ramp up your retirement. Your mtg is a little high for your income but probably manageable. You have too much cash sitting around doing nothing. I would keep $10-12 k in cash for reserves and invest the rest in real estate. I know you say you don’t want to be a landlord but that is the best long term option especially since you don’t have much in retirement. You would have a nice down pmt on a fourplex or a couple sf homes. You can hire a good property manager if you don’t want to be involved. There are other options to invest. You can buy mtg notes, or partner with a flipper and you provide the funds and learn how they do it before starting doing this yourself. Using your equity in your house could help you become a private lender. Sacrifice now and be frugal and invest more money every month so you can have a comfortable retirement.

What to do next so as to increase our wealth...?

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