What would you do with $80,000?

What would you do with $80,000?

What Would you do With $80,000?

I talked recently about how I have quite a large amount of money coming my way soon as I’m finishing up my time teaching abroad in Korea. Pension payouts, housing deposit, etc, combined with the best exchange rate for Korean Won—>Canadian Dollars in a decade means that I’ll have roughly $90,000 come March 2016. Since I’m ridiculously frugal, and am living for free on a farm when I move back to Canada, I think it’ll take me only around $10,000 to get myself set up with a car, some sports gear and other household furnishings.

So, that leaves me with around $80,000 and I’m not quite sure what to do with it. I’m paralyzed, somewhat, by indecision and my attempt to get some clarity via asking for advice on my Facebook status yielded no consensus.

As far as I see it, there are three good options, all with pros and cons:

Dividend Paying Stocks

I’m all about dividend paying stocks and have a portfolio of about $140,000 USD worth of them. Investing another $80,000 or so could kick the dividend payments into high gear from $300-600 a month now to $600+. The things I don’t like about this are the following:

  1. Most of my eggs are currently in the dividend paying stock basket. While I do think it’s a fabulous investment choice and it doesn’t worry me, at all, I wonder if it’s not a bit foolish to have literally everything in it.
  2. It won’t provide me with income now. I generally just reinvest dividends and buy more stocks, leaving everything in my brokerage account. It would be an expensive hassle to start taking out $500 here and there if I needed the money on a monthly basis.
  3. Stocks are currently pretty expensive. I’m no fortune teller, and I definitely don’t follow the markets on a daily basis, but P/E ratios are starting to get up into the 15-20 range which signals to me that we are perhaps ready for a crash of some sort. Update!!! I just checked and we’re now at 21.5 according to this chart. Now is most certainly not time to be investing $80,000 all at once.

Buying some Proven Websites

I’m a huge fan of Empire Flippers.  They’re a company that has a marketplace where you can buy and sell vetted websites. I’ve been listening to their podcast for years now and they’re totally legit, only offering quality websites. With $80,000, I could buy 2 or 3 proven websites that are making around $3000 a month total. I like this option a lot for the following reasons:

  1. I’m somewhat knowledgeable about building websites using WordPress, affiliate marketing, building an email list, etc. I certainly have enough knowledge to take something that’s already up and running, and not destroy it. Most of the websites are being sold because the owner is too busy to add new content to them and that’s certainly one of my huge strengths-writing content.
  2. It will generate a nice amount of income on a monthly basis that I could live off of, and hopefully continue to invest $1000+ a month in more stocks, save up for a down payment on a house, or buy more websites.
  3. It will help diversify my online business away from ESL, which is where the majority of my income comes from now.
  4. I think we’re only in the really early stages of buying and selling websites, and as an example, $20,000 for a site that is earning almost $1,000 a month seems really cheap to me. By adding some more content and trying to rank on the first page of Google for a few more keywords, I could make that $20,000 back in a year and a half. This is far, far, far better than the option below: rental property.

Buying a Rental Property

I was cruising around online on Nanaimo Craigslist (the biggish city close to where I’m moving on Vancouver Island) and saw something interesting. A ton of studio and 1-bedroom condo units on the market for around $70,000. One in particular is in nice condition, has a reliable renter in it now who wants to stay, is on the top floor, has a balcony, etc. It seems quite ideal.

They’re so cheap because the strata has done some major repairs in previous years and people didn’t like the costs associated with them, as well as one owner who had 14 units is now selling them all at once because he doesn’t want to be a landlord anymore. I both like it and don’t like for a few different reasons:

  1. I do like the back-up option of having a place to live if I don’t like the farm. Kick out the tenant and move on in! These place also allows rentals and pets, which is a bit unusual for a condo.
  2. As a rental property, after adding up the taxes, strata fees, rent, etc., I’d only make $350 a month. It’s not bad, but it’s not fabulous either. Certainly far less than the amount of income websites would generate.
  3. Surely the prices will go up within the next few years when there aren’t 14 of them on the market at a single time if I wanted to sell it.

What Would You Do if You were Me?

Please don’t say things like some of the people on Facebook:

  1. Donate the money to charity! Give away what I’ve been working for for the past 10 years? Hmmm.
  2. Put it in the bank. Sure, except I’d actually be losing money due to inflation. See this video of mine: I’m Scared of the Stock Market!
  3. Talk to a financial advisor. The only financial advisor I trust is myself. I can just picture how this conversation would go. Why don’t you buy some mutual funds? You know the fees for Canadian mutual funds are the highest in the world, right? Can you really in good conscience tell me to buy this over a Vanguard ETF that has basically the same stuff in it? Ummmmm….awkward!

So, what would you do? I feel like I’m at a bit of a crossroads. #1 is the best long-term choice. #2 seems like the riskiest, but potentially the most rewarding. And #3 seems safe, but scraping out $300 bucks a month in income? Not fabulous. I’m learning towards #2 right now!

 

11 Comments

  1. no brainer — websites

  2. Property, because you like to diversify

  3. It’s hard to answer without knowing how many hours you’d actually spend managing the websites you mentioned. It seems like the type of thing that could end up being much more time consuming than you think initially, and if that’s the case $1k a month might not be a great return.

    I’d go for property because it’s a nice back up place to live. It’s not a bad time to buy and I feel like managing a single tenant in a single apartment wouldn’t require that much time, which means you could just freelance write for other sites, which is what I do. You could make well over $1k a month writing and while right now an apartment might only get you $300 something a month if you buy in an up and coming area that could easily change.

    FWIW I’m definitely not an expert just a fellow frugal person. 🙂 Love your blog!

    • Most of the people running say a website earning $1000 a month is spending 1-5 hours a week doing it. They put in a ton of work up-front. I’m planning on doing the website/internet marketing thing for my full-time job, so putting in even more time than that wouldn’t be an issue.

      Property…I would like the feeling of having a back-up place to live if necessary.

      Happy that you like the blog!

  4. Hi Jackie! I will pretty much be in the same situation money-wise as yourself. I’ve been racking my brain trying to figure out if we should put the money into our vanguard index fund, try our hand at single funds with dividend payouts, buy a rental property, or start a small business. Sorry I don’t have any answers for you but I look forward to hearing what you finally decide to do with the money!

    • Hey Brandy…nice to hear from you! I’m leaning towards property at this point. I have more than $100,000 in dividend paying stocks right now and can do the website building thing myself from scratch. Property is kind of the obvious thing missing from my portfolio. But, making only $350 a month? I don’t love it.

  5. Hi Jackie! I’m not in your enviable position of having that sort of cash to play with, but as someone who’s doing a sort of similar thing (I spend my time between my ESL website and ESL book-writing too!) I’d go for the property. You might make even less than the $350 if you have repairs, so I’d live in the place, live off the dividend income / book sales, and use my time to further develop my ESL offerings. More materials, more books, promotions, etc. Personally I wouldn’t live on a farm – that would be a distraction for me from my primary goals. A “no” to the websites as well, because they’re always more work than you think – and it would be a huge learning curve imo – so a time-suck and not a sure ROI.

    Look forward to hearing what you decide anyway – good luck!

    PS – if you ever want to chat about ESL / book-selling strategies etc, would be great to hear from you!

    • Hey Clare, thanks for the advice. I’m really leaning towards buying some property. As for the farming, it’s only 13 hours a week in exchange for free accommodation so I think I’ll still have plenty of time to do what I want to do with writing and websites. The farming might actually be a welcome break from all the computer stuff.

      Websites…I’ve already built my own niche websites, so I think the learning curve wouldn’t be so steep for me. I probably already know 70-90% of what I’d need to run whatever I’d buy. It’s still tempting!

      Yes, we should chat. Email me: jlbolen@gmail.com

  6. The key thing with property is actually capital gains and you need to know about tax implications.

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