Q&A: We Save $5,000 Per Month. Where Should We Invest It?
Apr 12, 2024
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Former financial planner Joe Saul-Sehy tackles questions from listeners about investing extra cash, managing wealth for high-net-worth individuals, analyzing condo investments, and maximizing financial goals through strategic saving and investing strategies.
Evaluating rental potential through cap rate calculations is essential for making informed real estate investment decisions.
Understanding the impact of HOA fees on property expenses and assessing value is crucial for effective property management decisions.
Prioritizing Roth savings accounts for tax-exempt growth aligns investments with long-term financial goals, ensuring financial independence and security.
Deep dives
Managing a High Net Worth
Eugene, a 55-year-old physician with a significant net worth of $7 million, seeks advice on managing assets, including retirement funds, life insurance policies, and financial planning. He questions the continuation of his insurance policy, potential surrendering, borrowing against the policy, investment decisions, and the role of a financial planner in his situation.
Condo Dilemma
Adrian ponders whether to sell or rent her condo due to rising HOA fees and future plans of purchasing a single-family home. She seeks guidance on evaluating the condo's rental potential, considering revenue, expenses, and cap rate calculations to make an informed decision based on returns and associated risks.
Understanding HOA Fees
Discussed within Adrian's condo dilemma is the significance of HOA fees in covering various expenses like water, gas, trash, maintenance, and reserves. Understanding the reasons behind fee increases and assessing comparable fees in the neighborhood helps in comprehending the overall value provided by the HOA in property management.
Maximizing Returns Through Cap Rate Calculation
One key point discussed in the podcast episode emphasizes the importance of calculating cap rates to maximize returns on real estate investments. By considering a range of cap rates in different scenarios and factoring in property value appreciation, investors can determine the unleveraged total return, reflecting the property's potential return if held without financing. This approach highlights the significance of understanding asset returns independent of financing considerations, leading to informed investment decisions based on risk-adjusted returns.
Prioritizing Long-Term Financial Goals and Roth Savings
Another key insight from the podcast focuses on prioritizing long-term financial goals and Roth savings accounts. The importance of maximizing Roth accounts for tax-exempt growth over the long term is highlighted, emphasizing the benefits of investing in Roth 401(k) options before considering other investment avenues. By aligning investments with specific timelines and goals, individuals can strategically allocate funds towards various objectives, ensuring a balanced approach towards financial independence and security.
#499: Eugene and his wife are retiring with a $10 million net worth and a guaranteed income that exceeds their annual budget. Do they still need things like life insurance and a financial advisor?
The next question, at 30:24, comes from an anonymous caller. Her HOA costs have doubled since she bought her condo. She’s wondering if it’s still a good investment. Should she keep it or sell it?
We answer Nandini’s question at 48:14. Nandini and her husband save tons every month toward no goal in particular. What should they do with all their extra cash?
Former financial planner Joe Saul-Sehy and I tackle these three questions in today’s episode.
