There is a ridiculous percentage of folks who have received a windfall, either inheritance, lottery winnings, or settlement… that have blown throgh the windfall in record time. There seems to be a lack of knowldege and more importantly discipline, to handle matters such as these.
In your example windfall above, you didn’t mention what would deter someone from latching onto, and spending some fo the windfall prior to the end of the 10 years… Reality says that a alawmingly high percentage of folks couldn’t do it… period. Then if they could, the temptation to invest in “get rich quick schemes” would do in a large percentage of the rest of the folks… I would be willing to bet that you could offer this challenge, in real life, to 1000 people, whoi have never dealt with that type of wealth before… and I would be betting on the side that fewere than 15% of the folks would even have 1 mil left, at the end of 10 years… let alone some investment retruns… Call me a pessimist, but I see it as being a realist. Too many folks just don’t have the accumen and the discipline to do what you suggest…
Posted by John V, FL on October 23, 2003 at 15:49:34:
Robert you are too kind. Lots of people have made killings and also truly understand the dynamics of investing in either the stock market or real estate. I’ve yet to hear of one that has been a highly successful investor and clearly understands both. I truly believe housing, stocks and bonds are linked over time. For instance you could have bought stock in say Lennar Homes, Fidelity Title, Washington Mutual, Home Depot and Fannie Mae in 1991 and made an average of 40-75 times your money just by buy and hold. All have been great beneficiaries of our record credit and housing bubble. Thus these returns are comparable to what aggresive investors on creonline (like me) probably did anyway in their real estate dealings. Most real estate investors don’t realize it was the tech wreck where everyone fell for the story and was overweight the wrong industry that was the true stock market disaster. One thing I learned is always follow the message of the markets.
Posted by Anne_ND on October 23, 2003 at 14:56:58:
that I had to stretch to come up with ways to spend the money- for instance, it would take me a looooong time to burn through $100K on Lonnie deals.
What this exercise showed me is that I continue to need to streamline my business so that I can spend more time doing deals and less time shuffling paper or showing homes AND that I need to continue to work on thinking BIG! I’m not thinking big enough yet.
Re: Interesting, and boy oh boy do you love … - Posted by Anne_ND
Posted by Anne_ND on October 23, 2003 at 14:52:01:
Hi Robert,
Yes, I love real estate, and it’s also what I know best, hence the decision to ‘diversify’ the money into many different kinds of real estate, and the really risky stuff is involved with starting businesses. I’m in the growth phase of my investing where I’m less concerned about protecting my capital than making it grow aggressively.
One thing about my part of the country- which is very different from Japan- we didn’t experience the highs of the 90s and we aren’t experiencing the lows of the 00s. It’s one of the few states whose budget is not operating in a deficit, and we have very low unemployment (admittedly, the jobs that are available tend to be low-paying service jobs).
I’ll admit that I have a high tolerance for risk- this is probably a bad thing. But for someone who knew nothing about investing of any kind 6 years ago I’m bound to have some blind spots. When that $1M appears in my mailbox I promise that I will strongly consider putting some of it into 5 year notes (but not $500K, more like $200K).
Well Robert I’m not a financial advisor, but from what I’ve read over the past 3 to 4 years is that having a balanced portfolio in stocks and real estate is significant because you don’t have so to speak, all of your eggs in one basket. I’m reading the One Minute Millionaire book which notions that one should invest their monies not only into real estate, but also a business, stocks, and etc.
I’ve even watched one of the Fox News shows that mentioned investing in real estate while the stock market is down is a great way to balance yourself and vice versa when real estate sales are slower.
Generally, if I had a million dollars at my disposal I would spread the money into different avenues and watch to see which markets are doing well and so forth.
The main thing you will have to watch is those people who are looking at you for their windfall. In other words, don’t be suckered into things that go against your gut feelings. People will try to make money off of your money, it’s the American way, however, don’t allow yourself to be taken!
Re: Yes you can actively manage the money NT - Posted by jasonrei
Posted by jasonrei on October 22, 2003 at 17:21:53:
I’d use it on rehabs for the next few years. As it grew (and my funding sources got cheaper) I’d put more of it into notes, multis, and hard money loans.