preparing for expenses:sinking fund - Posted by milNC

Posted by Laure on March 20, 2000 at 23:07:53:

I allow 1000. per year per unit or house. Sometimes it’s not enough. Kitchen and bath replacement screws that number up.

Laure :slight_smile:

preparing for expenses:sinking fund - Posted by milNC

Posted by milNC on March 20, 2000 at 21:53:57:

Sinking fund:
You determine future expenses, for example, repairs or appliance replacement, and determine what amount of money you need to
invest, so that if you need,
some amount of money in 5 years to replace an appliance,
or when the AC or maybe the roof, goes out, how much do you need to put into the fund monthly and at what interest rate,
so that in 5 years, that fund, by whatever vehicle of investment, will grow to meet that need, at that due date.

Haven’t seen this discussed here.
This was told to me as “sinking fund factor” as part of
IRR-- internal rate of return. But still applies to
single family residence investement if held for
long term. Things will break down. Shouldn’t be a surprise.

What is a good way to do this? Mutual funds? Bonds?
To cover short- to mid-term investment.

Comments appreciated. No expertise here, just asking
for discussion–update my my knowledge.