Over the past couple of weeks, I decided to go out and ask a few of prominent bloggers a question that's been on my weighing on my mind lately:
Where is the single best place to invest a $50K after-tax windfall now? Assume the following: you don't need the money for at least 10 years, you've already max out 401k and Roth IRAs. Pretend that the windfall came under a couple conditions (like Brewster's Millions)... 1) You can only invest it in one area. 2) If your investment doesn't make 6% a year you lose it all.
Why would I pick this one question of all the possible questions? Lately I have noticed that the typical places to invest seem "expensive." The Dow is setting new records each day. Recently it was up 22 of 25 days - something that hadn't happened since the 1955. With stocks at an all-time high, I would typically turn my attention to real estate. I like to buy out-of-favor assets at a bargain and real estate doesn't fit the bill - especially in northern California where I am.
Ben from Money Smart Life had this to say:
How someone should invest a $50K windfall depends on their current financial situation. Since we're pretty much squared away on the personal finance basics and have built a solid base of investments, I'd take a risk with the money and start my own company. It would definitely be more work than passively investing in the stock market, but I think the potential returns would be far greater.
How I'd use the money is best introduced with a short story. My dad is an avid jogger and an even more avid pack rat. Almost every day he finds something during the course of his run that someone has left on the curb for the trash man. His back porch is overflowing with "throw-away" items that someone, somewhere, might likely be able to use.
I think this story reveals that our country buys too much stuff which later translates into too much junk. If I had $50K fall in my lap I'd rent a warehouse with a storefront, buy some trucks, hire some drivers, and market our services. I'd charge people and businesses money to come pick up their junk and then I'd sell it off through eBay, craigslist, the storefront, and any other appropriate sales channel I could find. There are already companies that do similar things such as 1-800-GOT-JUNK but their franchise fees are over $50K. If I had $100K I might consider buying a GOT JUNK franchise, there just happens to be one available in my area. So if I happen upon a windfall, I'd likely use it to turn trash into cash!
I think Ben's idea is a terrific one and could set him on the road to freedom. In the process, he would make the world a cleaner place.
Don't miss part 2 of this series.
Let me know in the comments, what would you invest in? Can you guess what I would invest in? I'll let you know in the conclusion of the series.
16 Responses to “Money Question: What Would you do with a Windfall?”
Next: Money Question: What Would you do with a Windfall? Part 2