A Non Conventional Investment Strategy
With the state of our current economy, who is investing any money into the stock market? Not that we have any spare change left to invest. I suppose one could argue that the Market only has up to go, but I stopped investing in stocks back in 2001 when we last saw our fictitious wealth evaporate due to corporate mal practices (i.e. Enron, WorldCom, Arthur Anderson, etc.) and the implosion of the tech bubble. So, that begs the question, unless you’re a day trader making millions on the market metrics and patterns, how do you save or invest for the future?
Well I wanted to propose one possibility in today’s blog entry. More specifically, I want to speak to how my family is saving for our children’s future college education. As the cost of living and tuition increases each year, so does the amount of cash we need to save in order to afford our children’s education. Why not purchase your children’s future accommodations today? It’s paying present value as opposed to future. I know it sounds strange, and let me try to explain a little as the multiple “what-if” scenarios arise in your minds.
This whole investment model implies two things. The first, is that you are living within or below your means. More specifically, you aren’t biting off more than you can chew financially. The second implies that you have the money to invest and the desire/risk tolerance to do so.
We have chosen Austin, the University of Texas, as the University that our children will one day attend. We are admittedly biased to this fine institution of higher learning as alumni, but you’ve got to start somewhere. Let’s suppose that our children have no desire to attend this school, no problem, there will be plenty of demand by those who do and we can sell our condo at an appreciated market value and use the proceeds in a 1031 exchange to avoid tax penalties and reinvest that money into a condo or home in a different college town.
In the meantime, we will be landlords. If the position of landlord doesn’t appeal to you, think about hiring a management company to handle all the collections, maintenance, leasing, etc.
The truth is, with the deficit growing at an alarming rate, the government at some point will have to start printing more money. When the money presses start rolling out new paper, this devalues the money that we hold as a result of inflation. I predict that we might see liquid capital being rolled into hard assets to whether the storm. Of course my guess is as good as anyone else! Just something to get your college real estate minds thinking.