I am a very young man, 18, still in high school. I have been middle class all my life, worked summer jobs for gas money, all the normal teenager stuff financial wise. I have been following the markets and self educating myself for about two years, but I never had any capital to trade with, and for a while I was not of legal age to open an account with a brokerage. However in November, out of nowhere I inherited 4 houses and a mutual fund portfolio worth over 150 k from a family member. After the stock and housing market tanked more than half my inheritence got wiped out but I still have 55 k of mutual funds (which I will soon cash out) and 600-700 k in houses/ one apartment that I will soon sell (or attempt to). I am going to swing trade with the liquid 55k and when I steadily obtain the 600-700k (by selling off houses) I am going to invest in many high dividend yielding companies that will give me more than enough income (through the divi's) to live on. DOM, NAT, WFC, and GE to name just a few. Basically, What would you do if you were me. Incredible capital (700k eventually), a house to live in (im gonna keep one), and all at the ripe old age of 18.
DO NOT SELL THE REAL ESTATE NOW! The real estate in the next 5 years will make you more money than the stock market. If you sell now, you are selling at the bottom. Take the 50k and mess around. If you are successful, then you will have more to play with. If you lose it, at least you still have the real estate.
I will put my feet up on a table and read and re-read Rich Dad/Poor Dad until I understood his idea of preserving wealth.
The only problem with that is I will not have any income to live on. I do not think I can make a living by trading w/ 50k, not yet anyways. I am SOOOOO green (inexperienced) right now and I am going to basically shoot for break even for the first year of my swing trading. If I keep the real estate and wait for the economy to improve I will be paying money to maintain the properties. But if I buy oversold stocks or etfs with the real estate money instead I will be recieving money as opposed to paying money. Keeping the houses with the hopes of the market turning around is just as speculative as buying stocks.
Move into one of the places and drastically cut your expenses to the bare minimum to make the $55K last as long as possible. When the Real Estate market turns, sell what you are not keeping. I would not swing trade the $55K...if you do, we will be reading another thread in six months saying you lost it, but at least you still have the houses. You have been given a gift - don't gamble it away. edit - I just read your last comment about not having enough to live on if you don't sell the RE now. Here is an idea - get a job.
renting the houses out is not a bad idea, but I still dont think that the housing market will ever get back to what I feel was an artificial high just a short time ago. I think that if the housing market improves= economy improves= large cap, divi paying stocks improve. I think that both the housing and the stock market will each eventually slowly improve. Either way I'd be making money.
Don't sell all the real estate. Sell ONE if you must, live in one and rent the other two out. Better off keeping them if you can. Even with the massive pull back in real estate, real estate has beaten the market in $ appreciation (unless you live in Detroit). $55k is plenty to trade with and live off of - in fact 30k should be enough. 30k gets you 120k intraday buying power. If you make just 1/4% on 120k per day ($300) it adds up to @ $60k per year. That plus the rental incomes should keep you living well - hopefully bigger gains will come and you can turn that 30k into real $$$. To be your age with that inheritance and the wisdom I have now would be magic. The biggest nightmare would be to sell the real estate, put it in the market and then lose that.
I would bet that at least three of those ridiculously high dividend yields will be slashed by the end of the summer. GE is so screwed, it's headed back to low single digits. WFC is a crap shoot. They still have billions of foreclosed real estate on their books and more coming in everyday. Credit crisis is far from over. Don't know DOM or NAT. ----------------------------------------- If you're really 18 and inherited 700k, remember this--- YOU ARE ALREADY RICH (comparatively). YOU DON'T HAVE TO GET RICH, YOU HAVE TO STAY RICH. There is no reason for you to put your whole nest egg into stocks. You should put most of your money into conservative investments (bonds, CD's), and put a smaller portion into stocks, commodities, and other "riskier" asset classes. Also, keep at least two of those properties if possible. Your friends are making $7.50 an hour. Don't be stupid, that money should set you up for the rest of your life.
Thanks for the advice so far everybody I would not buy Ge until it tests new lows or at least gets into the 7's. I do not think its screwed, its so large and diversified. I can see it going lower but I eventually think it will fully rebound. NAT current divi is 87 cents. Of the last 20 dividends paid only 4 were lower than 87 cents. Over half of those are over a dollar. once the economy starts improving it should return to those higher levels and if I buy at this low price then a very high dividend yield will be locked in. The dividends may get slashed more but that is only short term and this would be a long term hold. Also, I agree I would not put my whole nest egg in stocks I will diversify into other less risky or risk free investments.