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Best way to invest 30k

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Best way to invest 30k

I am wondering if there is a smarter way for me to invest this amount of money. I saved it up by buying and reselling cars and car parts. Generally 2-5k cars and make around 1-3k profit per "flip". Now I am at quite a large amount it feels slow flipping small values like that. More expensive cars take a lot longer to sell too. A 12k car I flipped for 14k took me 4 months, about 2 more than average.

I have no debt on any credit cards, rent/utilities/food/gas/insurance/phone only come out to 1300 a month and I make 2600 a month so a full paycheck also gets saved. I really would like to buy a house and get renters, but it is seeming like the smartest way is to do 20% down here in CA to keep rates low on mortgage payments and avoid mortgage insurance. I would need around 100k down for houses in my area that would be easy to rent out.

Any tips or ideas are welcomed. The general info I have seen online is Roth Ira, get a nest egg, CDs, ect...but those returns all seem to take a lot longer than what I generally get from flipping cars (around 1k a month in untax income).
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16 REPLIES 16
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Valued Contributor

Re: Best way to invest 30k

Don't think I have an answer, but I think it's great what you've saved on the side. Now look at you! You have some $$ to put towards something else. I hope it works out, whatever your decision.
                               

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Message 2 of 17
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Regular Contributor

Re: Best way to invest 30k

You have a talent fixing cars. Is this going to be a full time career or continue to be a side hustle? I think investing it in a rental property is probably a good route as well. Do you have any other assets? Home, retirement, pension, etc...


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Message 3 of 17
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Regular Contributor

Re: Best way to invest 30k

That would be my first question as well. Sounds like you should have quite a bit saved up if you are able to put away a full paycheck each month, and assuming the $30k is just from the car flipping. But we would need a better idea of your current assets/savings.

FICO Scores (4/4/15): EQ: 748 TU: 777 EX: 778
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Message 4 of 17
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Frequent Contributor

Re: Best way to invest 30k

If you like flipping cars, you can start your own dealership. Start hiring other mechanics and sales staff, and you get a piece of every transaction. 

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Message 5 of 17
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Frequent Contributor

Re: Best way to invest 30k


@Poisonouschimp wrote:
I am wondering if there is a smarter way for me to invest this amount of money. I saved it up by buying and reselling cars and car parts. Generally 2-5k cars and make around 1-3k profit per "flip". Now I am at quite a large amount it feels slow flipping small values like that. More expensive cars take a lot longer to sell too. A 12k car I flipped for 14k took me 4 months, about 2 more than average.

I have no debt on any credit cards, rent/utilities/food/gas/insurance/phone only come out to 1300 a month and I make 2600 a month so a full paycheck also gets saved. I really would like to buy a house and get renters, but it is seeming like the smartest way is to do 20% down here in CA to keep rates low on mortgage payments and avoid mortgage insurance. I would need around 100k down for houses in my area that would be easy to rent out.

Any tips or ideas are welcomed. The general info I have seen online is Roth Ira, get a nest egg, CDs, ect...but those returns all seem to take a lot longer than what I generally get from flipping cars (around 1k a month in untax income).

Well if you budget is 1300 a month, I would set aside $7,800 (6 months x budget) in a savings account just for your "Emergency Fund."  Does your regular employemnt have a 401k/Simple IRA?  If so, i would look to start investing money in that.  (really good if your employer will match 3% etc.   Open a roth IRA now!  Even if you just open one via Cap one or something and put $100 dollars in it.  You need to start your 5 year waiting period asap.  

 

If you are looking for large fast returns, then investment accounts/ira's/savings are not going to help you out.  If you want to buy a home to rent out I would suggest a 20% down.  Or you can just use that money you have saved (after you set aside your emergency fund) to keep purchasing and then fixing cars.  

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As of 09/03/17
Message 6 of 17
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Re: Best way to invest 30k

I was a mechanic for 6 years until I herinated my back at work and went on medical leave. Went through rehab and now I am no longer in daily pain, but I can't work as a mechanic full time anymore. I am able to do an hour or so at a time which is how I have been doing my car work. I either buy ones that need repairs or modified ones and remove the modifications and sell the car off and parts I have removed. 

 

I went to the bank today and they said even with the full 30k down I would only qualify for a 250k place and in my area that is only looking at condos or apartments, neither which work for my current situation since I have a puppy. They need to see at most 50% of my income going to mortgage payments with a co-signer who is not living at the residence, so at my current job that means 1300 at most. I would need to bump up my income to look at any decent houses in my area in the 400-500k range (SoCal isn't cheap!) in order to get renters. My ideal home purchase would be a 3 bedroom while I rent out 2 rooms to cover the mortgage. I am looking into becoming a public notary and making my car "business" an official revenue stream rather than just Craigslist dealings in cash so my reported W2 earnings would qualify me for buying a home. I can also go back into custom computer building and networking that I used to do in college for additional income. 

 

My other assets are 3 other cars and a motorcycle, which if I liqudate at current market value would be around 25k. All of my assets are paid off in my name. I am not totally sure if my job does retirement and it isn't my final job so I am not 100% worried about it right now. My long term plans are to get into medical school and become a doctor. I am only 25 right now so I have some time for retirement. I just feel that investments are more profitable and have a faster turn around than ROTH IRA or savings accounts and that I have more control over them. Having the money sit in the bank and grow interest just seems like a very lazy way to make a profit haha. 

 

I also have a 30k limit credit card as my primary card, 10k personal line of credit, and about 6 other cards 1500-3k limits that I don't really use anymore. Also my credit score as of today was 795. I feel that I am ahead of the curve for the average person my age, but I always hear stories of people who are millionairs by this age and feel like I am undershooting my potential. I can't really figure out what is a smart move at this point of where to invest that would have fairly large returns. Flipping the cars that generate the highest profit and fastest turnaround net around 1500-2000 per car, but if I could figure a way to use the bulk sum of 30k with a 10-20%+ return it would be far more productive in my eyes to do so. 

Message 7 of 17
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Regular Contributor

Re: Best way to invest 30k

I may be wrong but this is likely not the best place to find ideas for quick cash, people here are working on savings and/or credit with a long time horizon.

 

I know you mentioned your current job isn't your final job, however, I would highly recommend you look into their retirement package. If they have a match start funding your 401k (or similar program) up to that match, it is free money you are leaving on the table. The money you contribute will immediately be vested whilethe employer match may have a vesting period, that is something else you should consider. All vested funds are portable and you can roll into an IRA when you change jobs or go back to school.  At your age (I'm 28 myself, started as soon as I was 21 and was eligible) you should definitely be thinking about retirement, with the power of compound interest funds you set aside today will grow nicely if wisely invested. As a poster above said it also pays to start the 5 year countdown on a Roth IRA.

FICO Scores (4/4/15): EQ: 748 TU: 777 EX: 778
My Cards:
Amex BCP $25k (March '14) | Cap1 QS $8k (Oct '07) | Arrival + WEMC $10k (May '15) |
PNC CashBuilder Visa Sig $8k/NPSL (March '11)
PNC Points $1k (June '07 - First card at 19) | MB Financial MC $3500 (May '13) | Chase Amazon Visa Sig $6k/NPSL (April '09) |
Macys $1200 (Nov '12) | Citi Double Cash $9k (Jan '15)
Message 8 of 17
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Valued Contributor

Re: Best way to invest 30k


@Poisonouschimp wrote:

I was a mechanic for 6 years until I herinated my back at work and went on medical leave. Went through rehab and now I am no longer in daily pain, but I can't work as a mechanic full time anymore. I am able to do an hour or so at a time which is how I have been doing my car work. I either buy ones that need repairs or modified ones and remove the modifications and sell the car off and parts I have removed. 

 

I went to the bank today and they said even with the full 30k down I would only qualify for a 250k place and in my area that is only looking at condos or apartments, neither which work for my current situation since I have a puppy. They need to see at most 50% of my income going to mortgage payments with a co-signer who is not living at the residence, so at my current job that means 1300 at most. I would need to bump up my income to look at any decent houses in my area in the 400-500k range (SoCal isn't cheap!) in order to get renters. My ideal home purchase would be a 3 bedroom while I rent out 2 rooms to cover the mortgage. I am looking into becoming a public notary and making my car "business" an official revenue stream rather than just Craigslist dealings in cash so my reported W2 earnings would qualify me for buying a home. I can also go back into custom computer building and networking that I used to do in college for additional income. 

 

My other assets are 3 other cars and a motorcycle, which if I liqudate at current market value would be around 25k. All of my assets are paid off in my name. I am not totally sure if my job does retirement and it isn't my final job so I am not 100% worried about it right now. My long term plans are to get into medical school and become a doctor. I am only 25 right now so I have some time for retirement. I just feel that investments are more profitable and have a faster turn around than ROTH IRA or savings accounts and that I have more control over them. Having the money sit in the bank and grow interest just seems like a very lazy way to make a profit haha. 

 

I also have a 30k limit credit card as my primary card, 10k personal line of credit, and about 6 other cards 1500-3k limits that I don't really use anymore. Also my credit score as of today was 795. I feel that I am ahead of the curve for the average person my age, but I always hear stories of people who are millionairs by this age and feel like I am undershooting my potential. I can't really figure out what is a smart move at this point of where to invest that would have fairly large returns. Flipping the cars that generate the highest profit and fastest turnaround net around 1500-2000 per car, but if I could figure a way to use the bulk sum of 30k with a 10-20%+ return it would be far more productive in my eyes to do so. 


ROTH IRA's aren't investments.  They are tax advantaged accounts that allow you to invest in things tax free.  For example, I invest a small portion of my Roth in foreign real estate via a REIT index fund.  Stock and real estate will not make you rich overnight, but decades can make you very wealthy.  The big advantage of stocks/REIT funds is they earn you money without you having to spend time and energy.  Side gigs can earn you extra money, but it can be difficult to scale unless you turn it into a full time business.    Investing in a ROTH now when your taxes are low can be an excellent long term investment.    For most people, making more than you spend and aggressively investing the extra is the only way to become wealthy.  But it is not a quick process.

 

If you really intend to go into medical school, I wouldn't buy investment properties.   Starting with medical school you will need to dedicate all of your time to it.  Rental properties need someone to manage them.  Medical school is one of the few investments that could earn more long term than the stock market  Real estate can earn good returns, but on average it does slightly worse than stocks.  Starting a business can make you rich quickly, but it also will likely require all of your time and energy.  Even then it can take years to make your business profitable. 

Message 9 of 17
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Frequent Contributor

Re: Best way to invest 30k

I would recommend setting up a Barclays or Ally online savings account, they both earn you 1%/1.05%.

I have just over $30k in mine right now earning me over $25 a month and I usually add another $1-2k a month, so it keeps getting bigger.

I just turned it into a healthy habit where I transfer as much as I can on payday so I can budget the rest comfortably.

I also have some stock but I feel I don't have enough time/I am not educated enough to play the market a lot.

The money from this is guaranteed and requires little effort. Perfect for me.


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