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Old 10-29-2013, 12:10 PM   #1
TheAviator
 
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Serious Advice needed on investing major amounts of $ Cash $

There are a lot of smart guys on this forum and I wanted to get your opinions. I have just come into some major amount of cash $500K and more actually and wanted your advice on my plan. Right now the vast majority of it is in stocks and that's what the current value is. Stocks right now are pretty high, especially this one company that about 80% of it is in.

I have gotten some advice from my friend who is a very rich real estate guy and attorney who I've chatted with quite a bit.

I was originally going to cash it in and invest it in an apartment complex or duplexes for renting out. However, that has changed, my real estate friend and after my own independent research I do concur with his opinion, that I should invest it in a mini-storage unit facility.

The numbers are as follows. Right now the stock is not generating any significant income. Doing a mini storage unit facility (the size I'm thinking) would produce over $10,000 a month in income once the units are 90% rented out.

I would pay cash for the property so there would be no bank note. So hence, it would just be a matter of waiting on the property to start generating income. I've researched the facilities around here and all are almost full and there are several good areas that don't have any, or any in the immediate vicinity, so on paper it looks like a good idea.

I just want some advice on what you would do, do you think its a good idea? I've crunched the numbers on comparison of this with say condos or small apartments, and you get way more bang for your buck with mini storage units as far as a lot less investment, a lot MORE rental income potential.

For example say for the same $400K I could do a small apartment complex that would produce maybe at most $5K to $6 K a month in income. Spending less money on mini storage I'm looking at $10 K a month and more in income, so the numbers are appealing.

Spending this kind of money on something like this is nerve racking, but I think this makes more sense than just letting it sit, and degenerate in value once the stock will no doubt tank, then come back up again along with the market. Its invested very soundly in stock, and the main company is a major fortune 500 company so the value will never go to low, but right now its at an almost record high. Just nervous about doing something like this with a past loved ones money I've inherited, thanks in advance.
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Old 10-29-2013, 12:28 PM   #2
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Think about not putting all your eggs in one basket...I'd talk to an Edward Jones type of guy....Some real estate, some mutual funds, hi and low risk, etc.

Don't know your age, but there are a lot of products out there for retirement, long-term health/nursing care. Use some of it to protect what you have, especially in old age. Before doing the real-estate thing, talk to your tax-man about long-term tax implications, strategies...

Good luck, it's a nice "problem" to have....lol
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Old 10-29-2013, 12:38 PM   #3
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Kudos on the forward thinking! I have to say, though, that if you want SERIOUS advice, you're in the wrong place. I'm sure many here have done well for themselves, but most will have differing opinions. Financial investments are always a unique, hand-crafted venture and a professional financial planner should be involved with a large investment such as this. Good luck to you.
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Old 10-29-2013, 12:44 PM   #4
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You need to get with a financial adviser and set yourself up a nice diversified low cost portfolio. Get it out of the stock market asap though. It is way overvalued at the moment and a correction is coming.
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Old 10-29-2013, 12:45 PM   #5
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Mistake # 1 - Coming to the internet and asking strangers for financial advice.

Mistake # 2 - Coming to C5 where most people would rather put what little money then have into mods instead of retirement.

Mistake # 3- Posting such significant financial information on a site where so much info can be found on you very easily.

What you need to do:
Go and visit a financial advisor.
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Old 10-29-2013, 12:48 PM   #6
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i'm not a financial advisor, but I did stay at a holiday inn express.
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Old 10-29-2013, 12:58 PM   #7
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i'm not a financial advisor, but I did stay at a holiday inn express.
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Old 10-29-2013, 02:09 PM   #8
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Thanks guys, well I'm not getting advice from JUST this forum I like to get advice from as many different places I can get it. But I do think the general consensus is to get it out of the market, that was my first instinct as well, especially since the primary stock is very high right now.
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Old 10-29-2013, 03:23 PM   #9
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You are doing this all wrong... Take it all out of the stock market and invest in a large garage that you will fill with different camaros.
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Old 10-29-2013, 04:02 PM   #10
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You are doing this all wrong... Take it all out of the stock market and invest in a large garage that you will fill with different camaros.
I seriously can't believe none of you have insisted I get rid of my Camaro LT and get a ZL1 what's the matter with you people
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Old 10-29-2013, 05:13 PM   #11
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NOOO!!!! Send it to ME!!!!

On a more serious note - If you want to be in the storage business just buy some "SSS". Look at the 5-year chart and do the math. Small dividend there too. You don't even need to actually operate that business yourself. You would not be owning a single storage business so the headaches/liabillity/risk is less AND you still have ALL DAY to do something else. Maybe continue to work a job while you have your capital "working" for you? Just a thought.

Diversification is good too. Financial advisor would take you down that path. Quality investments will do well over time.

-Mark.
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Old 10-29-2013, 05:50 PM   #12
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NOOO!!!! Send it to ME!!!!

On a more serious note - If you want to be in the storage business just buy some "SSS". Look at the 5-year chart and do the math. Small dividend there too. You don't even need to actually operate that business yourself. You would not be owning a single storage business so the headaches/liabillity/risk is less AND you still have ALL DAY to do something else. Maybe continue to work a job while you have your capital "working" for you? Just a thought.

Diversification is good too. Financial advisor would take you down that path. Quality investments will do well over time.

-Mark.
What is an SSS?
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Old 10-29-2013, 05:59 PM   #13
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Regardless of whether you follow one of your investment strategies or not, I would say that as soon as you possibly can, diversify your portfolio. Having 80% of your assets tied up in a single stock is VERY risky. Even fortune 500 companies stocks can tank on bad news or a general market crash.

Sorry, no advice on the storage units vs. rental property, but good luck.
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Old 10-29-2013, 06:25 PM   #14
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You could invest in my business if you want to spend your money.

Seriously though. A car forum is the last place I would ever ask advice about my money.
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Old 10-29-2013, 06:56 PM   #15
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Agree with seeing a Financial Advisor. Too many unknowns at this time like age, risk tolerance, financial goals, tax situation........ there is a long list of things to go over, do yourself a favor and talk to someone well qualified.
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Old 10-29-2013, 08:14 PM   #16
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If the money was in cash, I'd say to do nothing for about 6 months until the "hype" of the situation died down. Since the majority of it is in one stock, you're exposed to a huge risk. Moving to gold or another single stock is not smart. Also, DON'T go to Edward Jones, Merrill Lynch, etc. If you seek out a financial advisor, go to a fee-only advisor; the others are paid on commission and will try to sell you products, what you need is investment advice, not a salesman.

As Apex Chase mentioned, a well diversified portfolio of low cost index funds is the proven method to long term wealth. If you were say, 30 years old, and invested $500k in an age-appropriate low cost portfolio, you'd have just over $4MM by the age of 60, or $5.7MM at age 65 (assumes an average return of 7% per year). That doesn't account for inflation, fees, etc. The average return of the stock market since the year 1900 until today is around 9.5%, so 7% is a realistic assumption.

There is a great website with tons of information you might want to check out: http://www.bogleheads.org/forum/index.php

Members of this site follow Jack Bogle's (founder of Vanguard) theory of investing - low cost, broad index investing. Remember, investing should be boring...if you want excitement, by a motorcycle, jet ski, etc.


Something you should also consider is the purpose of this money. If you're looking for an income stream, typical long-term investment strategies won't work.
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Old 10-29-2013, 09:55 PM   #17
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My advice. Get it out of the stock market ASAP. Buy gold.
Not knocking anyone's opinion, but have to watch the conversion costs. That's all.

Yeah, the standard answers of find a financial adviser and diversifying are good choices.

However, who's going to run your storage facility? How many hours will it require? Where is it located, ie, will it be 90% full? Going to where you think the people will be as opposed to where they are can be a fatal flaw in any small business. But, buying outside of the city limits, where ever that may for you, and "banking" that the property will be later annexed into the city can be a good plan. It's a trade in some cases, again, may not be 90% full, and that could be as more of a long term approach, sell the property for profit later.

I don't think it's a terrible plan. $120,000 a year in revenue, of course that isn't income. Still have costs of ownership and maintaining the place. The real estate guys I've known are split at times. Some say stay the hell away from residential. It's less dependable, tenants tear up the place and don't pay rent sometimes. Less likely to have that happen with commercial, and specifically with a storage unit. Put a lock on it until the pay.

Don't know your current income. If you went a route like the storage place to sink no more than 75% of your money into. I like the not note plan. But you still need operating capital, I like to tell people to have a minimum of a year's worth of operating capital liquid up front. That's not including what you need to live off of. So if you keep your job then good, if you don't, you cannot count on profit on day one.
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Old 10-30-2013, 08:35 AM   #18
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Quote:
Originally Posted by TheAviator View Post
What is an SSS?
"SSS" stock ticker symbol for "Sovran Self Storage". It is a way to be in the self storage business without actually being an operator. Just showing another way to look at it. I used to own some, My Mom still does.

I would advise you to seriously consider seeking out a non commission financial advisor that charges a flat fee based on account size. You have about half of what many of them would normally consider a minimum investment but maybe you can find a firm that would be happy to help. Diversification is critical. Do your homework before handing over the money.

I just noticed you are in AR. This firm might be willing to work with you. http://arfinancial.com/ I know some of thier clients and they seem to be happy. There are other firms so look around before you make any decisions.

Hope this helps.

-Mark.
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Old 10-30-2013, 09:09 AM   #19
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You need to get with a financial adviser and set yourself up a nice diversified low cost portfolio. Get it out of the stock market asap though. It is way overvalued at the moment and a correction is coming.
This +10000

OP can hire an independent fee-based financial advisor, someone who isn't pushing a particular company's funds or insurance plans, and can provide advice and review his overall financial situation.
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Old 10-30-2013, 10:02 AM   #20
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Thanks guys great advice all, see and some of you question the wisdom of asking you guys? I think not, great advice and I will take it. No I'm not quiting my job yet. I am wanting it to get at least half full before I would even consider that. Operational costs I will have, but that's the other beauty of this, very low operational costs, I'll have one employee. Hardly no up keep. But thanks again, would still be interested in hearing more advice. Particularly if any of you actually own a storage unit facility
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Old 10-30-2013, 09:08 PM   #21
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Gold, Silver in small denominations... Hyper-inflation is on it's way.
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Old 10-31-2013, 06:54 AM   #22
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holy crap never quit, diversify and enjoy. Investing is a very personal choice and only you know the entire situation. Age relates to taxes to income etc. Visit a few financial advisors and get a better feel from an expert's view.
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Old 10-31-2013, 09:15 AM   #23
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Unload it all and bury a concrete vault to put it in.
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Old 10-31-2013, 09:57 AM   #24
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Look up the background and track record of any "Financial Advisors" that you are dealing with.

Many are simply insurance salesmen with proprietary certificates selling canned investments with entry load fees and poor returns.

Same thing for "investment houses" operations.

Buyer beware.
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