What would you do right now with $500k in cash?

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Greenbayslacker

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Four years out of training, have a decent amount of cash waiting to be deployed, currently in HYSA earning 5-6%.
Already have $250k in stocks/crypto/bonds and $250k in retirement. $10k/year into 529 for our toddler. Halfway through the mortgage on our primary residence. Wife has $100k in retirement accounts as well.

My thought is to deploy into real estate with STR, and take depreciation against W2 income while generating rental income.
I have a small plot of land nearby to build on, and I am also eyeing properties near Killington, VT.
However the world is in upheaval right now and the general financial state is unknown going forward.

Keep saving and holding, deploy more into index funds, or take a jump into real estate?
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masterPain said:
Do you guys put money in index fund now or wait for correction?
Click to expand...
I have 2 different accounts, one is ETFs I picked, invested at times I believe to be advantageous. The other one is a fixed amount that goes into a three fund portfolio each month. The automatic account has a rate of return 1% higher than my picks.
 
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ambiturner said:
I have 2 different accounts, one is ETFs I picked, invested at times I believe to be advantageous. The other one is a fixed amount that goes into a three fund portfolio each month. The automatic account has a rate of return 1% higher than my picks.
Click to expand...

That's pretty fun. Over what time period have you been doing this?
 
ambiturner said:
I have 2 different accounts, one is ETFs I picked, invested at times I believe to be advantageous. The other one is a fixed amount that goes into a three fund portfolio each month. The automatic account has a rate of return 1% higher than my picks.
Click to expand...
What are the ETFs/funds if you don’t mind me asking
 
Blow it on hookers like trump. And write it off. Jk

Just dollar cost average into the market. ETF low cost index funds.

Everyone is trying to time the market. There are those who pulled out of market in late 2008 and I missed the bounce back in 2009-2010

Some of my friends pulled 50% out in April 2020 than miss the rebound

Some sold their homes in May 2022 (when the real run up happen) and rented and still renting Waiting for housing market to correct but the wasting $4000 a month on rents.

I do think with some leftover money. Try to find a duplex. You may be negative for a while but it’s a long term investment. 4 units are the better find hit many are in undesirable areas.

Avoid real estate rentals properties in blue states that have strict renters rights as your first investment. A renter not paying for 3-4 months will destroy any profit since it’s takes much longer to in them out.
 
rowsdower88 said:
That's pretty fun. Over what time period have you been doing this?
Click to expand...
Going on 8 years, all in index funds but the main drags on my picks have been 1) letting cash sit undeployed waiting for drops when interest rates were near zero and 2) more value and emerging markets in my picks which, while the nerds can explain why they’re better and they’ve have had some better years than the total market, have otherwise had worse returns for my entire investing career.
 
Greenbayslacker said:
My thought is to deploy into real estate with STR, and take depreciation against W2 income while generating rental income.
Click to expand...
While I like real estate, I need to caution you here. For the IRS considers rental income as passive, which means you can only deduct 3K and losses from your W-2 income. There is a workaround for short-term rentals, but there's a bunch of conditions which include not having a property manager. Just something to keep in mind and make yourself aware of before you jump into real estate.
 
If you want to be safe and have little worries, put the 500K into the index funds and never touch it.

If you want to retire early, enjoy this "side gig", and willing to put some work in, then I would put it into RE or a business.

If I put 100K/yr into an index fund since being an attending, I would probably have 7-10M in retirement then when I retire, draw down from those.
I instead put my money in RE and business ventures. Now I have 10M and will never need to touch any retirement money to let it grow.

So I am close to where I would be either way but I enjoy running a business/RE and will have passive income to never touch my retirement letting it grow forever.

The difference is when I quit medicine, I will always be making $$$ instead of depleting my 401K

You will be fine whichever path you choose.
 
ASA6 said:
While I like real estate, I need to caution you here. For the IRS considers rental income as passive, which means you can only deduct 3K and losses from your W-2 income. There is a workaround for short-term rentals, but there's a bunch of conditions which include not having a property manager. Just something to keep in mind and make yourself aware of before you jump into real estate.
Click to expand...
Yup, you deduct from the income/RE business entities is where the benefits are.
 
Greenbayslacker said:
How do you manage this with a full-time job? Do you let someone take a cut?
Click to expand...
You purchase a property. Then you hire a management company to manage the property. Set it and forget it. Rinse and repeat. Obviously, you want to do your due diligence in evaluating a property, etc., but you get my point.
 
www.hartfordfunds.com

Timing the Market Is Impossible

In times of volatility, timing the market may seem tempting. But doing so could cost you.
www.hartfordfunds.com www.hartfordfunds.com

“Avoiding the market’s downs may mean missing out on the ups as well. 78% of the stock market’s best days occur during a bear market or during the first two months of a bull market. If you missed the market’s 10 best days over the past 30 years, your returns would have been cut in half. And missing the best 30 days would have reduced your returns by an astonishing 83%.”
 
Greenbayslacker said:
Four years out of training, have a decent amount of cash waiting to be deployed, currently in HYSA earning 5-6%.
Already have $250k in stocks/crypto/bonds and $250k in retirement. $10k/year into 529 for our toddler. Halfway through the mortgage on our primary residence. Wife has $100k in retirement accounts as well.

My thought is to deploy into real estate with STR, and take depreciation against W2 income while generating rental income.
I have a small plot of land nearby to build on, and I am also eyeing properties near Killington, VT.
However the world is in upheaval right now and the general financial state is unknown going forward.

Keep saving and holding, deploy more into index funds, or take a jump into real estate?
Click to expand...

If you have the desire for real estate, go for it. Some risk but definitely a fair amount of reward. The challenge is there is more legwork with being a landlord. You are also at the whims of local and state government regarding raising rents and evictions. Even in landlord friendly states, an unruly tenant can wreak some havoc.

If you want to minimize risk, basically VTI with OR without BND.

The question with investing is lump sum vs dollar cost averaging.

Statistically, lump sum wins out 2/3 of the time compared to dollar cost averaging.

As to timing the market:

Nobody knows nothing

He who lives by the crystal ball will eat shattered glass
 
emergentmd said:
If you want to be safe and have little worries, put the 500K into the index funds and never touch it.

If you want to retire early, enjoy this "side gig", and willing to put some work in, then I would put it into RE or a business.

If I put 100K/yr into an index fund since being an attending, I would probably have 7-10M in retirement then when I retire, draw down from those.
I instead put my money in RE and business ventures. Now I have 10M and will never need to touch any retirement money to let it grow.

So I am close to where I would be either way but I enjoy running a business/RE and will have passive income to never touch my retirement letting it grow forever.

The difference is when I quit medicine, I will always be making $$$ instead of depleting my 401K

You will be fine whichever path you choose.
Click to expand...
What business do you have and what kind of RE? STR, long-term, multi family, etc
 
emergentmd said:
If you want to be safe and have little worries, put the 500K into the index funds and never touch it.

If you want to retire early, enjoy this "side gig", and willing to put some work in, then I would put it into RE or a business.

If I put 100K/yr into an index fund since being an attending, I would probably have 7-10M in retirement then when I retire, draw down from those.
I instead put my money in RE and business ventures. Now I have 10M and will never need to touch any retirement money to let it grow.

So I am close to where I would be either way but I enjoy running a business/RE and will have passive income to never touch my retirement letting it grow forever.

The difference is when I quit medicine, I will always be making $$$ instead of depleting my 401K

You will be fine whichever path you choose.
Click to expand...


If you live long enough and hopefully you will, you’ll have to touch a nominal amount of your retirement funds due to RMDs.
 
Lecithin5 said:
You purchase a property. Then you hire a management company to manage the property. Set it and forget it. Rinse and repeat. Obviously, you want to do your due diligence in evaluating a property, etc., but you get my point.
Click to expand...
The problem is that until you get scale, you lose any sort of reasonable risk adjusted return if you hire management. If you don’t, you have a job as much as an investment.

Once you get to scale (I would estimate 30+ units minimum but really hundreds are better), then these managers/maintenance people that you can hire full time factor into the return more sensibly.

I’ve always been of the opinion that if you want a job as a property manager, go ahead and invest in real estate. Maybe you’ll even be so successful that you’ll own 400 units one day and you’ll truly be just managing the assets. Otherwise, real estate is really for the middle class taking a swing at wealth, not physicians who can plug their money into the market and ride it into the sunset of wealth without lifting a finger.
 
nimbus said:
If you live long enough and hopefully you will, you’ll have to touch a nominal amount of your retirement funds due to RMDs.
Click to expand...
Correct but that will only pertain to my IRAs which is a prob only 15% of my net worth which becomes inconsequential. My income will change little b/c my business and RE cash flows.
 
VA Hopeful Dr said:
Not if they do private school and/or some sort of grad school.
Click to expand...
Agree, 10K a year for 16 more years might only cover part of a 4-year college cost, depending on where you have it invested & how much it grows.
 
Greenbayslacker said:
What business do you have and what kind of RE? STR, long-term, multi family, etc
Click to expand...
I have STR, LTR, and MTR. STR/LTR have property managers so little work. MTR I do myself but its maybe 4 hrs every 2-3 months.

Medical facility business and Finance business
 
I'll give a more serious answer than my other post -

It doesn't really matter how you invest it, as long as you don't get scammed or throw it away on high risk speculation.

Three things matter -
1) savings rate
2) spending rate
3) investment choices

The first two are far more important than the third. If you have $500K set aside in addition to traditional retirement accounts, you've already got the first two things figured out, and you've won. You can't really screw it up at this point by picking one ETF over another.
 
skougess said:
The problem is that until you get scale, you lose any sort of reasonable risk adjusted return if you hire management. If you don’t, you have a job as much as an investment.

Once you get to scale (I would estimate 30+ units minimum but really hundreds are better), then these managers/maintenance people that you can hire full time factor into the return more sensibly.

I’ve always been of the opinion that if you want a job as a property manager, go ahead and invest in real estate. Maybe you’ll even be so successful that you’ll own 400 units one day and you’ll truly be just managing the assets. Otherwise, real estate is really for the middle class taking a swing at wealth, not physicians who can plug their money into the market and ride it into the sunset of wealth without lifting a finger.
Click to expand...
If you are looking at cash flow from RE in relation to a physician salary, then I think RE is a terrible option. You are better off working an extra shift and make as much/more than renting it out with the associated Headaches.

If you are looking to get to 400 units and creating a job, then sure but I am not looking for another job.

I look at RE as diversification, deductions, leverage. I am not looking for cash flow when I am in my early attending age b/c juice not worth the squeeze.

As an example, I bought a 500K STR and put in prob 300K in renovations so 800K all in. It is worth 2+M now, and I have about 200K note. Once I pay off this note, I would be cash flowing about 75K/yr with a prop manager cost accounted for. Terrible Cap rate on 2M but not bad for 800K. But now I have 75K income built in with little work plus I get to use it. When I am in retirement, I will have 30% FTE pay. I have STR/MTR/LTRs for a total of 7 properties. Once I get the 2M loan all paid off, then I will cash flow about 250K or 100%FTE not to mention about 6-8M paid off properties.

So when I retire, I would be getting paid what I was an an attending for very little work and continue to have the properties appreciate.
 
there is some luck involved involved in real estate

Anyone who purchased 2012-2020 pretty much sitting pretty in real estate investments.

Easy to brag about positive cash flow

But those who brought in 2022-2023 say to do the air b n b business. Getting slaughtered right now. Buying expensive properties and high maintenance especially in resort areas where it’s seasonable.

Real estate is a long term play.
 
Greenbayslacker said:
Four years out of training, have a decent amount of cash waiting to be deployed, currently in HYSA earning 5-6%.
Already have $250k in stocks/crypto/bonds and $250k in retirement. $10k/year into 529 for our toddler. Halfway through the mortgage on our primary residence. Wife has $100k in retirement accounts as well.

My thought is to deploy into real estate with STR, and take depreciation against W2 income while generating rental income.
I have a small plot of land nearby to build on, and I am also eyeing properties near Killington, VT.
However the world is in upheaval right now and the general financial state is unknown going forward.

Keep saving and holding, deploy more into index funds, or take a jump into real estate?
Click to expand...
i would max out your 529, i think your going to want 400k per kid
put a good chunk in there early and be done with it
i would not do real estate
 
-1 for real estate.

See this post

dchz said:
My advice is don't. Let's assume you inherited $2 million dollars of cash flowing real estate. The managing time and the $/hr will be way lower than an anesthesiologist. Some tenants will make you wish you were a chronic pain doc instead.

It's a pipedream oversold by social media.
Click to expand...
 
sloh said:
And a swing that isn't always a guarantee.
Click to expand...
Right, I used that word purposefully. Many people see/use it as a realistic lottery ticket out of middle class.

Physicians are in a weird grey area where the juice generally isn’t worth the squeeze with small time real estate, but we don’t make enough to hang with the big boys.
 
For me personally, I don’t do real estate because I think I’m gonna out-earn the market or make crazy money. Cliche as it sounds, it is to diversify. I will not place every single penny of my savings and retirement into the market. I will place a large portion of it, but not all of it. I own some properties, and while I know for a fact that had I placed the money that I used to purchase those properties into the market I would have “made more money,” I have absolutely zero regrets.
 
If I had 500k I'd buy myself a huge piece of land to build my dream house, that way I get to enjoy my dream house for many many years.

Note this is different from real estate as investment. It's real estate as enjoyment.
 
dchz said:
It was a guarantee if you bought 2008-2014. Some people don't realize how much luck is involved in the timing, second only to people not realizing how much work it is to own real estate.
Click to expand...
Real estate was still going down in Florida 2008,2009. Probably didn’t bottom out till 2010

I brought a home beginning of 2009 thinning the market was bottoming out. But the real bottom was end of 2010 (for my part of Florida). So when I sold the job in 2012. I lost 15% of the value plus 5% real estate commission cost. So 20%.

Had to compete with so many short sales at the time in 2012. The short sales sold for even cheaper

The biggest mistake the federal govt made during this time was the mortgage and forgiveness act forgiving 1099c debt owed to irs. Just encouraged people to dump homes as short sales and I think a good 30-40% of people really could
Have kept their homes if they wanted to but since their values had gone down. They saw no need to keep an underwater home especially those who used it as an atm machine to fund other stuff.
 
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