What would you do with $250,000 right now? Imagine waking up one morning to see a Genie at the foot of your bed with milk and cookies. She grants you the wish of converting your future earnings or current illiquid net worth into $250,000 cash.
For example, say you were to work for 20 more years and earn a median income of $60,000 a year before taxes. Instead of methodically saving 20% for the next two decades, you can get all that money right now. Would you take it? I bet most would say “yes” since it's your money and the present value of a buck is greater now than later.
The big question is, what are you going to do with the $250,000? The stock market is volatile, bonds are bubbliscious, and savings interest rates are less than 2%. Perhaps you'll use some of the money to pay off your debts, further your education, and help out your loved ones. Or maybe you'll invest the money in your start-up company and watch it grow into the multi-millions.
Finally, maybe you'll do absolutely nothing with the $250,000 and just keep it liquid for a rainy day. The political landscape is uncertain right now, with President Biden planning to raise income taxes and capital gains taxes.
Genies are appearing in front of many homeowner's beds thanks to Janet Yellen and the Fed's low interest rate policy. Few people would have ever expected the 10-year yield to drop below 1.5%, but it has.
Cash-out mortgage refinances are tempting people night and day now, but the party can't last forever.
WHAT I'D DO WITH $250,000 OF MY OWN MONEY (REMEMBER, IT'S NOT FREE MONEY!)
- Look for attractive 5%+ yielding 2 bedroom, 2 bathroom rental properties. Rentals properties are very attractive in 2021 because interest rates have come way down. The value of rental income has gone way up because it takes a lot more capital to generate the same amount of risk-adjusted income.
- Decide which municipal bond ETFs to buy. Examples: CMF, CXA, HYMB, INY, ITM, PVI, NYF, PWZ, PWA, SHM, SMB, SFI.
- Invest $50,000 into Financial Samurai to make it grow more. At the very least, you guys should sign up for my free weekly newsletter. 100,000 people have subscribe so far for more nuanced personal finance content.
- Look for offshore high yielding, but stable assets given the USD will likely continue to remain weak or depreciate.
- Send $50,000 to my parents to help contribute to their home remodeling project. Good luck guys!
- Invest $100,000 in real estate crowdfunding so I can earn more income passively.
- Invest $10,000 in NFTs and crypto. Although these are highly speculative investments, you just never know. It's always good to go fortune-hunting with 1-5% of your investable capital.
Invest In Real Estate For More Passive Income
With $250,000 in surprise cash, I'm a buyer of real estate. I strongly believe rents and real estate prices will be going up for years to come. The housing market is strong and will continue to strengthen.
Check out my two favorite estate crowdfunding platforms. Both are free to sign up and explore.
Fundrise: A way for accredited and non-accredited investors to diversify into real estate through private eFunds. Fundrise has been around since 2012 and has consistently generated steady returns, no matter what the stock market is doing.
CrowdStreet: A way for accredited investors to invest in individual real estate opportunities mostly in 18-hour cities. 18-hour cities are secondary cities with lower valuations, higher rental yields, and potentially higher growth due to job growth and demographic trends.
Both platforms are free to sign up and explore.
I've personally invested $810,000 in real estate crowdfunding across 18 projects to take advantage of lower valuations in the heartland of America.
With $250,000, I can generate around $25,000 a year in passive income through real estate. As a busy father now, I love earning income more passively.
What Would You Do With $250,000?
What would you do with $250,000 in cash? So many people are making so much money now. Depending on how big $250,000 as a percentage of your net worth, you may want to invest more aggressively and get to $1,000,000.
Thanks to inflation, $3 million is the new $1 million. Therefore, make sure you keep on investing wisely!
For more nuanced personal finance content, join 50,000+ others and sign up for the free Financial Samurai newsletter. Financial Samurai is one of the largest independently-owned personal finance sites that started in 2009. Check out my Top Financial Products page for more great products to help you make and save money.
I need that monew right now to buy a house in New Jersey and leave puerto rico. With this earthquakes i dont know how long i can resist. Im scare.
How did the Obama re-election and coming recession work out for you?
I would pay off my grandchilden’s student loans and if any is left help
pay down our children’s mortgages. Then a little for charity and a little
for savings.
I would take all 250K and buy $1 dollar lottery tickets and hope to win BIG….
I would pay off all of our mortgage, student loans, and credit card debt ($200,000). I’d set aside money for the immediate care of my son who has hemiplegic cerebral palsy, ($25,000). The remaining $25,000 would go toward openin an online business that we always wanted to start-especially since I was recently laid off for the second time in a year and have already blown through two emergency funds! By the by, anyone hiring?
I am dealing with my mom’s estate. She left a paid off home in a stable and desirable neighborhood. From what I know right now, there is at least 200,000.00 in savings/checking accounts. There is a savings account that I have not checked into, and a safety deposit box with unknown contents. Oh, then there is her retirement account of about 500,000.00.
When I see all the numbers (at least the ones I do know) it is a lot of money for me to comprehend. I want to make the best decisions for me and my family and not screw up financially.
I have a primary mortgage of 90,000.00 that I could pay off and then there is my rental (that I am upside down in) that has a mortgage of 97,000.00.
This all happened fairly recently so I am trying to take my time with everything.
Thank you
The rental property should pay for it’s self if you have good tenants or sale.the others house for 90,000 I would pay off fast but not all at once.
I will go to Peru and invest $200.000 in a savings acc. it pays 10% return anual. that will give me $2000 a month to live like a king in Peru, and with the $50.000 left. I will build a house outside the capital in the sierras.. and will live in peace…
Sounds like a great plan!
I’m semi lucky, half 125k I got from property and investments and savings split from a messy divorce, the other half 125k from inheritance from both my late parents who passed away young, all in the last couple of years. As well as the cash I still have another 250k valutaion of hard assests tied up in a freehold property. So the plan is to invest and lock away about 125k in stock and fixed term investments, 75k in high interest savings which both can’t touch remotely, quitting my 55k job and selling up everything except my property and 50k budgeted to travel around the world backpacking cheaply for a year or a bit to clear my head. Will come back, eventually refocus finances and start studying and building a decided career and life from scratch.
Personally it would be nicer to have all my family back instead of this sudden wealth but have to make the best out of life you can despite circumsatances which is what is important…. at 36.
Where in Canada can you find houses cheap enough where 250k is enough down payment to buy 4 to 5 houses? And would the bank really loan you that much money???
So I’m a lucky one that has $238,678.38…
I got 70k from a house I brought at 21and sold at 25 and the rest I saved… (I went without the finer things… Some may say um frugile)
So what did I do? Left it in a high interest bank account and it just keeps growing. No risk and the money is there if I need it :)
And I’m only 29…
I would pay off my student loans. Unfortunately I found out 4 years later, that my mother forged my name on applying for private student loans leaving me with 223+K in student loan debt. I make a good amount of money, however it all goes to paying my student loans. If this debt was taken away, I could invest in a laundromat with my husband and generate additional income, once that takes off it leaves room to invest in other Laundromats or other investment properties to generate more money.
Wow… that is unheard of?!?! $223,000 in student loans? Don’t you have recourse to get that money back from mom? I wish you good luck.
$250K hmmm.
$100 to $150K would go to the future house payment. The Wife and I want the lowest monthly mortgage payment possible the next time around.
Then the last $100K…hmmm I am thinking split among hand picked dividend stocks.
I am not convinced on rental real estate yet. I have seen my dad go through hell with his properties, but I have seen the cash flow when things are up! So I go back and forth.
I will just put it together with what i already have. Then, revisit my numerous projects to see if it could fit the gap
I will take the $50K to pay off some loans and debts, add another $10K on my 401K, put the $50K to our savings, and another $50K to mutual investments and stocks. To reward myself, I will spend $10K and go on a vacation and shopping spree (which I have not done for a long time) with my family. The rest? Let it sit on the account in the meantime while I think of what to do or where to invest further.
I need more than $250k.
We have a mortgage over $200k (for the record we borrowed about 40% of what we were “approved” for). But I wouldn’t pay that off in its entirety.
I’d settle a loan: $12k
Max out our TFSAs: $30k (likely a 50/50 mix of emergency fund and international stocks)
Put $30k into some sort of investment vehicle that will help Mom down the road. I’d do this w/o discussing with her.
$100k to the mortgage.
$50k to install solar panels on the roof. Ontario pays (a silly) $0.80 or so per kw/h to people feeding the grid. ROI should be 7-10 years (our roof see a lot of sun so hopefully closer to 7). Then 20 yr contract w/ the province means awesome passive income.
$8k to have our recently re-exposed hardwood floors finished professionally.
$12k to get our attic reno done (structure, stairway, electrical, base plumbing, skylights/roofing) so we can add 900sq ft to the house.
$8k for me to finish the attic myself.
So yes, i’d pay off debt, and do some investing – but i’d also want to do things beyond the boring. I love our house and would love to upgrade it.
I’d do nothing. It’s the best advice I could ever give anyone that comes into a windfall inheritance, award or otherwise. Sit on the money for an extended period of time, at least a year and figure out what to do with it. You may decide to start a business, buy real estate (which takes months to close a deal), buy stocks via dollar-cost-averaging or just throw it in a retirement fund. There are dozens of things you COULD do with the money immediately, but you’ll end up regretting most of them. Take the time to research, investigate, and come to terms with your approach. All you’ve lost is some opportunity cost – and saved yourself a lifetime of regret.
Wow that’s good.. I know I have some regrets that could have been avoided by taking more time to research. This is a good principle I have learned in life.. take time, act slow and do your research.
Doing nothing is actually great advice which I completely agree with. It’s always good to think things through long and hard before doing any kind of investment.
A new pistol is being released for all the free people who still have 2nd Amendment rights by Sig Sauer, the Sig P290 Sub-Compact 9mm with a starting price of $550. Like the peddlers of old I would buy my gun dealing license and purchase about $300 of these buy enough spare clips and ammunition to fend off a small metropolitan police department.
Then I would hire roughly 200 former U.S. Military personnel and start my own personal security business focusing on areas where the government is failing to get the job done, i.e. Houston, Juarez, Phoenix and reclaim the rights that citizens rightfully have, to include freedom from harassment or extortion from the government.
I would also strike deals with the right to work states and campaign with them to completely crush the unions in this country and their stranglehold on U.S. companies and Congressmen. While GM, Ford were on the brink of bankruptcy and disaster due to poor planning the unions taking their fat cut more nimble companies like Kia and Hyundai have been opening plants and creating profit and jobs.
Once unions are gone my next goal would be to do away with lobbyist, make it illegal for government workers at any level to have collective bargaining agreements and allow each health insurance company to sell coverage in every state instead of implementing a sure to fail government run program.
Of course, now I will be reported to #attackwatch on twitter or some website and be reported as a Tea Party extremist who must be locked away in a padded room for thinking that free Americans should actually be free and not slaves to the Government, the minorities and special interest groups.
* * *
Really, I would focus my energy on expanding the trade skill programs for wounded warriors and bring in smart CFP’s to give seminars in small towns across the country on how to perform the basics on financial management with follow-on consultation fees starting at $15 an hour. My goal would be to create an entire legion of people who are free from credit card debit, horrible car loans at 9% or higher, stop the over-spending on college (get those first two years at a junior college) and teach people how to be responsible for their own retirement and not on the government.
I would pay down the remaining $130k on my mortgage, and then I might consider buying a rental property with the other half. There is a cute house just outside my subdivision that has been for sale for awhile. It is an older house but it is in one of the best school districts in the state. I would check it out and see if I could get a great deal on it. (Assuming it met all my other criteria for buying it.)
Sounds like a like of speculation and wishful thinking with respect to near-term stock market growth. If I’ve learned anything, and as I profess in chapter 13 of my book, “How We Prevent Wealth”, we are horrible investors. Yep, every last one of us who think that we can time the market.
It would suck to throw a quarter million dollars in a retire fund (although this couldn’t even happen as their are limits on contributions) and in 30 years not yield much from it.
I’d pay off my two homes, which are passive income generating investments, and then perhaps write more books or invest in other people’s ideas so that I may receive royalties.
Think about it, 2 homes that are paid-in-full, but generate at least $1000 monthly yields $24,000 a year! Why play the stock market when we can get a 10% annual yield?
I would put all my money for a 10% net annual yield FOR SURE! It’s why I, along with many commenters so far have pointed to wards the stable cash flow of rental properties.
$250,000 extra dolllars, crashing down from the sky? That would be great!
My approach would be simple:
Take $248,000 and put it toward retirement.
Then, take the remaining $2,000 for a vacation
That’s it. Life would remain the same otherwise, and once saved I’d pretend that I never got the money.
Yep, thx to BenGenie and his loose interest rate policies, money is falling from the sky!
The question is… What do you put towards retirement.
I would likely invest all of the money and have about 55% of the funds to go towards ‘safety’ such as guaranteed interest terms or bond index funds and the remaining 45% towards large-cap dividend paying stocks (both Canadian and US equities) and maybe a few international ETFs.
I’m not the type of person that would keep cash on the table hoping for future market gains/losses to capitalize on; I would be investing the funds the moment they would become available.
Nice post Sam!
Wow….. you’d dump $115,000+ into large-cap dividend paying stocks? That’s aggressive from my very conservative perspective, especially if $250,000 was basically the lion’s share of your liquidity. But, if it’s not, and since you have bonds.. then it sounds pretty balanced to me.
Yep, no problem at all.
And I say this only if the $250,000 are funds that are not required for any debt repayment.
For example, if I owed money on my principal residence (which I don’t), I would pay my house off, along with and other outstanding debts.
I would consider using the funds for a rental properties, but I have an interest in three of them and don’t wish to own any more.
I think it’s a fairly balanced approach given my age. As I get older, I think I’d up the percentage of safety closer to the 60%-65% range.
Cheers
TWC
Once the trigger is pulled, all you’ve got to do is get the $250,000 and pay down that cashed out refinance mortgage to get back down to the original mortgage level. It’s just accounting.
I like dividend yielding large cap names as well.
Oh, I’d probably hire out a bit more blogging stuff too, maybe posting to carnivals or social media. Maybe I’d also hire more help around the house.
That’s what I’m saying. Invest some of it into your own business, give it a boost!
The conversation is an enjoyable exercise. No brainer, invest and save. I’m still on the fence about more investment real estate; Although there were some wonderful properties in Provo Utah and Arizona that have some appeal.
$50k debt repayment
$50k Emergency Fund
$150k cash for a house
I like that 50K emergency fund! You’ll sleep well at night.