A discussion of what to do with a windfall, a review of turnkey real estate investing, and a meditation for stock market investors when the market is falling.
Fincon In Main Stream News
In last week’s episode, Brad and Jonathan discussed their experience at Fincon. This week, Brad found two articles about Fincon in the mainstream news.
One journalist felt that Fincon needed to be more political. J.D. Roth wrote a rebuttal on Get Rich Slowly, check that out here.
The second was by Chuck Jaffe, “Make Gaining Choice And Not Early Retirement Your Real Goal.” At Fincon, a 20-something FIRE blogger told Jaffe that he was not FIRE. However, by any standard, Jaffe has the means to retire. He chooses to continue working because he enjoys his line of work.
He went on to explain that most people in the FIRE movement don’t really retire. Instead, they find more meaningful work with less emphasis on the pay. The choice of FI should be choices not necessarily retiring forever. The intermediate timeframe of FI allows us to map out our passions for post-FI.
There’s no downside to having more options in your life. And Financial Independence, that’s what it gives you.
Many people hope to find something that they love to do. Some already have. For example, someone posted in the Facebook group about someone with a great side hustle on South Padre Island. They teach people how to build elaborate sandcastles on the beach. As it turns out, that is Brad’s cousin!
Dennis himself also posted about it and included a video. Check that out here.
What To Do With A Windfall?
Recently, Jonathan sold his home and received a significant amount of cash from the sale. Now, he is left to consider where it is best invested. Brad and Jonathan go through their thought process of where to place a windfall sum. In this exercise, they are working with $100,000.
Their first thought is to max out any pre-tax buckets that you can. Make sure your 401k, HSA, and IRA are maxed out for the year before considering your next options.
Control what you can control.
By choosing to maximize pre-tax options, you can limit your tax liability for the current year.
Next, there are a few options to consider.
You could put the money towards your mortgage. However, this option will be more attractive if you are looking to eliminate your mortgage payment or if you want to eliminate your PMI.
You could put some of the funds into an emergency fund. A few good options for your emergency fund are Ally and CIT Bank. Both will earn you a reasonable return in the range of 1.5% APY. CIT Bank has flexible terms that could get you up to 1.30% APY for your emergency fund. Most of us would sleep better with a fully-funded emergency fund.
After a fully-funded emergency fund, Brad and Jonathan would look to invest the rest of the money in a taxable account. Likely, they would use Vanguard for this large lump sum investment. If you couldn’t fathom putting all of the money in the market on a single day, then make a plan and space it out. Don’t get caught up in your own head.
Of course, the way you deploy your windfall will depend on your situation. If you have any outstanding debts, then you might want to tackle those first. If you are nearing retirement, then you might want to eliminate your mortgage payment for more flexibility.
FI 101 Refresher
A quick tip for this week! Make sure to contribute enough to your 401k to receive the full match from your employer. Check to see what the rules are surrounding your company’s 401k. If you don’t contribute the full match then you are basically giving up free money.
Don’t forget to sign up for our FI 101 course waitlist. Currently, it is in beta review, but it should be ready soon. It is an entirely free resource for our community to share this foundational information.
Mediate With J.L. Collins
J.L. Collins recently created a guided meditation for investors of the stock market. You can find the video here.
This week’s episode was a deep dive into turnkey real estate investing and building a team.
Real estate offers a way to diversify your portfolio because of the general lack of correlation with the stock market.
Turnkey investing means different things to different people.
One example is deal syndication which is similar to accessing a mutual fund that it focuses on real estate. However, it also includes single projects. With this, you’ll need to do your due diligence on both the projects and the people involved. It can be an incredible about of research to ensure you are investing in a solid proposition. With several thousand dollars on the line, it is critical to do your research.
A second example is someone that agrees to do all of the work upfront. However, their interests are not aligned with yours so it is important to do your research. One place the Brad and Jonathan have looked into is Roofstock which vets homes before putting them on their marketplace.
Seek out third party sources of information.
No matter which route you choose in turnkey investing, it is vital to seek out your own information.
We had some interest in learning more about Fundrise this week. Brad has used Fundrise to invest around $14,000 but could not offer too much information on the company. Overall, it was a way for him to start diversifying his portfolio before he bought his two single-family homes. Fundrise offers REITs for different regions and pulls together investment capital from many investors. Fundrise is not FDIC insured. It is an interesting way to invest, but it requires more research before you dive in.
We recently reached out to the community to find out how we can better serve you. Overall, two messages seem to come through.
First, people love that this message reaches them where they are in the journey. The message has helped many people feel unstuck and allowed them to move forward.
Second, only 35% of people feel that they can share their FI goals with someone else. We want to build the resources to address that. We want to help you feel that you can share your FI goals with someone. Please let us know what information you need from us to help you.
If there is something you’re stuck on, send it in. And that’s going to help us inform the future of what we do here at ChooseFI.
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Shout Out to Eva
She paid off her student loans as a 40th birthday present. Congrats!!