Job Discussion Forums

naturegirl321 · Joined: 04 May 2003 Posts: 9041 Location: home sweet home

I've got 2 IRAs. one that I pay taxes now and one that I don't . Havne't had a taxable income for about 4 years now. Hopeing to get 5000 by the time I'm 25, I've been told that would set me up when I'm reitred.

Jizzo T. Clown · Posted: Tue Nov 29, 2005 9:52 pm Post subject:

naturegirl321 · Joined: 04 May 2003 Posts: 9041 Location: home sweet home

Talk to your financial advisor. I went through my parents advisor.

Joe Gahona · Joined: 24 Apr 2004 Posts: 27 Location: New York City

Roth IRAs are tax-free, and in my opinion it should be the first line of retirement savings. You are limited to investing $4K/year, but it goes up to $5K in 2007 (I think). When you're 60, you can pull out every last cent and you won't be taxed at all.

I wasn't trying to stress the lower-income people are worse tenants than high-income people -- I used to do wood floors for my buddy's company, and in general the nicer the house was, the fussier the people were. (We did some places that looked like crack houses in Detroit and the people were usually great.) My point was that real estate has a hassle factor that's not there with regular ol' investing -- which is fine for someone like you who enjoys it and doesn't see it as a hassle. But I know people who've gone into real estate thinking it was strictly an investment and were in for a rude awakening when problems arose.

tedkarma · Posted: Wed Nov 30, 2005 6:51 am Post subject:

tedkarma · Posted: Wed Nov 30, 2005 6:42 pm Post subject:

An important consideration about real estate is that it adds a stability to your investment portfolio - that other investments generally can't.

Okay, bonds are stable - but don't offer the income protection that depreciation provides - nor the potential appreciation in price that real estate can provide (okay you can get some appreciation in bonds when interest rates go down - but it is a sophisticated game I don't want to play).

Also, the illiquidity of real estate keeps you from being too implusive about your investment plan - you know you could/should hold on to it for 8-10 years or at least through a full economic cycle before selling.

And - don't forget tax advantages when you do unload. I just made a significant gain on the sale of a condo - and my total tax bill for the gain (net minus basis) bill will be less than 5%. Hard to beat!

moot point · Joined: 22 Feb 2005 Posts: 441

On the topic of bonds tedkarma wrote:

tedkarma · Posted: Wed Nov 30, 2005 10:43 pm Post subject:

moot point · Joined: 22 Feb 2005 Posts: 441

Thanks. That is clearer now. Originally, I thought you were referring to how bonds work.

JZer · Joined: 16 Jan 2005 Posts: 3898 Location: Pittsburgh

tedkarma,

it is true that cheaper properties tend to produce a better return. I don't know if you remember but we talked about real estate before. I AM currently looking to buy a house in my hometown for $40,000. The rent per month would be $850. The one disadvantage of properties in poor neighborhoods is I don't think they appreciate as much, so they should be looked at soley for their returns from the rent that is being paid.

I am not expert but this is my opinion.

tedkarma · Posted: Thu Dec 01, 2005 1:56 am Post subject:

That's a super rent for the price. Where is the property (I'll take it!)? How are the property taxes in the area (something to be very careful of - particularly in the eastern US)?

I agree with you about the appreciation of less expensive neighborhoods.

Generally, I buy to hold forever - so I pay the most attention to income. Only sold my condo as it didn't produce the net income that I thought it should. Got some nice appreciation though - as the prices in the area had "bubbled" (is that a word?).

JZer · Joined: 16 Jan 2005 Posts: 3898 Location: Pittsburgh

Well I will buy if they loan me the money. Also I am not sure how to get the deal done. I will finish my M.A. in December and then begin teaching in Korea. I am going to talk to the bank and the owner before I leave. If he is willing to sell to me, I will probably return home during my vacation in Feburary to sign the papers and get everything in order.

Do you have any suggestions?

JZer · Joined: 16 Jan 2005 Posts: 3898 Location: Pittsburgh

as for the house, it is a duplex in a poor area of town. A one room apartment and a two room apartment.

tedkarma · Posted: Thu Dec 01, 2005 3:56 am Post subject:

JZer · Joined: 16 Jan 2005 Posts: 3898 Location: Pittsburgh

Yes, I will ask to see the lease. Also I want to know when the lease is up because if it is in December when my contract will end, then it is no good, encase I am out of work for period of time. If the lease ends in the summer or fall then it will be no problem, since the rent will pay the morgage and during the fall if I have to find new tenants, then I can pay on the morgage from my salary.

Also, I am just starting my job so I don't know whether the bank will finance it for me. But if I come back in sign the papers in feb, I would put down 10%.