1. Welcome to the new Styleforum!

    We hope you’re as excited as we are to hang out in the new place. There are more new features that we’ll announce in the near future, but for now we hope you’ll enjoy the new site.

    We are currently fine-tuning the forum for your browsing pleasure, so bear with any lingering dust as we work to make Styleforum even more awesome than it was.

    Oh, and don’t forget to head over to the Styleforum Journal, because we’re giving away two pairs of Carmina shoes to celebrate our move!

    Please address any questions about using the new forum to support@styleforum.net

    Cheers,

    The Styleforum Team

    Dismiss Notice

Investing for Monthly Income

Discussion in 'Business, Careers & Education' started by cmrocks, Feb 19, 2011.

  1. cmrocks

    cmrocks Well-Known Member

    Messages:
    639
    Joined:
    May 3, 2006
    Location:
    Vancouver, BC
    Hey,

    I was hoping some of the financial savvy guys on the forums could help me out here. I graduated from university last year with a degree in geology. I just finished paying off my student loans. I have a steady job and I earn about 75,000 a year currently. I've just started in my career and it will go up steadily for the next several years.

    Now that I'm entirely debt free, I'd like to start investing to support my passion in life which is traveling. Geology is a great career for this because I tend to work in blocks of 4-6 weeks in remote areas then have time off in which I can travel. I'd like to invest in a way that generates monthly income; that way, when I'm not working, I'll still have some sort of income stream to pay the bills and support my expenses while I'm traveling.

    I'll admit that I know very little about finances. What would be the best way to go about this? I'll say right now that I'm not really into high-risk stuff. I'd only like a small part of my portfolio to be reserved for playing around with small-cap stocks. Other than that, I'd like to invest in safer things that will help supplement my income.

    Thanks
     
  2. the shah

    the shah Well-Known Member

    Messages:
    16,537
    Joined:
    Jun 2, 2008
    Location:
    lying furtively
    according to CE standards you are poverty-stricken. Perhaps the Business subforum would be a better place for this question, although I'm going to keep checking to see if there's any sound advice.
     
  3. boo

    boo Well-Known Member

    Messages:
    665
    Joined:
    Mar 26, 2006
    Location:
    NJ
    There isn't any safe income these days, at least not meaningful income. A Vanguard Barclays Aggregate Index fund, which consists of investment grade credit, governments, and agency MBS is only yielding 3% (net) these days. I like bank loan funds, which currently yield 5%-6% and will rise along with interest rates. The thing is, if there's another credit-market dislocation, be prepared for roller coaster ride. There's always mortgage REITs, which are yielding 15%-20%, but of course there's a damn good reason the yields are high. When the Fed starts raising rates, it could get ugly.
     
  4. Hombre Secreto

    Hombre Secreto Well-Known Member

    Messages:
    3,835
    Joined:
    Mar 25, 2007
    Location:
    Lost Angeles
    An apartment will give you monthly cash flow.
     
  5. HgaleK

    HgaleK Well-Known Member

    Messages:
    4,972
    Joined:
    Jan 7, 2009
    Location:
    NY
    An apartment will give you monthly cash flow.

    There are a ton of headaches to be aware of with particular venture, though.
     
  6. nootje

    nootje Well-Known Member

    Messages:
    3,098
    Joined:
    Jul 14, 2008
    Location:
    Netherlands
    There are a ton of headaches to be aware of with particular venture, though.

    there arent organisations that can deal with that crap for you? I know there are several in these parts.
     
  7. Mr Herbert

    Mr Herbert Well-Known Member

    Messages:
    1,692
    Joined:
    Oct 29, 2009
    even still, rentals are rarely complete hands off.

    but they can be - all the luck of the draw (who your tenant is)
     
  8. Mr Herbert

    Mr Herbert Well-Known Member

    Messages:
    1,692
    Joined:
    Oct 29, 2009
    in fact, property is probably one of the quickest ways - assuming you buy in an area with a robust rental market and can make good progress on the mortgage repayments in the first 5 years.
     
  9. Don Carlos

    Don Carlos Well-Known Member

    Messages:
    7,527
    Joined:
    May 15, 2009
    Can you really not afford to live on your $75k? Despite what people here will tell you, $75k is quite high for an entry-level salary. Plenty of young-20s kids get by on half of that, or even less, and still manage to travel pretty extensively. I see no reason why you would even need a supplemental monthly cashflow, unless you're planning to quit your job, or start a business, or buy a lot of drugs.

    How much traveling are you really planning on doing here? And does your salary come in irregular bursts or something? I'll confess that I don't know much about your job or its particulars, but even still, $75k seems like plenty for someone your age. I assume you work for an energy company?
     
  10. Mr Herbert

    Mr Herbert Well-Known Member

    Messages:
    1,692
    Joined:
    Oct 29, 2009
    i read it to mean he wanted to take extended breaks from work

    a dream i also had when i started work until i got used to the extra money [​IMG]
     
  11. HgaleK

    HgaleK Well-Known Member

    Messages:
    4,972
    Joined:
    Jan 7, 2009
    Location:
    NY
    there arent organisations that can deal with that crap for you? I know there are several in these parts.

    They cut in to profit margins deep. It's one thing if you've got the time, experience, and connections to make an empire, but it's otherwise more hassle than not. He'd probably be taking on a mortgage and hoping for rent to cover that and a little for himself.

    Some of the issues that arise from real estate, even with a manager:
    -Loss of liquid capital with down payment
    -Managers tend to charge between 4-12% of rental income for a property. This cuts heavily in to any income that he may derive from the property
    -Additional management fees (see here for some basic info)
    -Irresponsible/unethical managers
    -Your mortgage doesn't go away when your manager can't find you renters (if they offer renter finding services at all)
    -Finding renters if the management company won't assist
    -Landlord insurance
    -Additional legal bullshit

    Even if everything goes well, he still ends up with a shit ton of money tied up in an immobile, illiquid asset.

    A good family friend of ours own several million in real estate. He's done apartments, houses, and gas stations.

    Just a few things from him:
    -After trying several management companies that were all sub par, he only uses his own people
    -He won't do anything other than gas stations now. People die, sell drugs, buy drugs, go nuts, don't make payments pull guns on you when you say it's time to gtfo, and then wreck shit as much as possible when the cops come for them.
    -Don't do it for your own money. He won't make most of his returns in enough time to enjoy them himself. The properties are being split between the kids. His wife is the bread winner.
    -Millions of dollars of property don't mean shit when you can't turn it in to millions of dollars cash when you need it
     
  12. Piobaire

    Piobaire Well-Known Member

    Messages:
    50,191
    Joined:
    Dec 5, 2006
    Location:
    In My Douchemobile
    Have you considered hiring some muscle and running a book or starting a game? Remember, vig is all tax free.
     
  13. Charley

    Charley Well-Known Member

    Messages:
    2,612
    Joined:
    Feb 18, 2005
    Location:
    Senior VP - Follies and Gewgaws
    One thing that might work for you is an investment in some of the pipeling MLPs. that is somewhat related to your field of work so you should be able to roughly gauge the upside from looking at their areas of operation. They have had a strong run up in the last 18 months or so, but still give fair yields, even if pretty fully valued. They don't generally own the product, just charge a toll for the transport.

    There are also a couple of Canadian apartment REITs with fair yields. Low vacancy and reasonable operating costs.
     
  14. Valproate

    Valproate Well-Known Member

    Messages:
    126
    Joined:
    Aug 23, 2009
    You can get 4%-5% these days in MLP's and some REIT's. If inflation goes up, these assets will get crushed, though.
     
  15. Charley

    Charley Well-Known Member

    Messages:
    2,612
    Joined:
    Feb 18, 2005
    Location:
    Senior VP - Follies and Gewgaws
    You can get 4%-5% these days in MLP's and some REIT's. If inflation goes up, these assets will get crushed, though.

    Actually the distributions on the MLPs can be in the range of 6% to 7% with some modest annual growth in the range of 6% or so. Getting crushed is a market price consideration, not an income consideration. After a few years of 6% increases the original 7% return on cost becomes 10% return on cost. At that point the unit value should have followed along with some gain. The best thing about the MLPs is that energy useage is not very likely to decline and throughputs are more likely to increase. The income is based upon the throughput units and generally there is some increase in the transportation charge. The business risk is relatively small compared to most investments. If there is inflation then the value of real useable assets will also increase if replacement costs are considered.

    Most utility type companies face the rath of the consumer at the various state regulators. The MLPs are completely off that radar screen and collect the agreed fees from the producer, not directly from the consumer.

    As to the inflation question and residential REITs, can you expect that there will be high inflation without rental price increases? Sure, it may not be perfect but it would sure beat holding a CD or treasury bond. It may be time to invest in postage stamps.
     
  16. Matt

    Matt Well-Known Member

    Messages:
    11,179
    Joined:
    Jan 14, 2005
    Location:
    Sunny Saigon
    according to CE standards you are poverty-stricken. Perhaps the Business subforum would be a better place for this question, although I'm going to keep checking to see if there's any sound advice.

    moved...
     
  17. Egert

    Egert Well-Known Member

    Messages:
    165
    Joined:
    Jan 16, 2011
    Location:
    Europe
    There are still some pretty good dividend stocks in emerging markets (CEE in particular) that can yield you up to 10%, in which I'm currently putting my savings (entry level job in inv.banking).
     
  18. Beckwith

    Beckwith Well-Known Member

    Messages:
    789
    Joined:
    Mar 10, 2006
    Location:
    NYC
    If you do quick back of the envelope math here, to have any real amount of money you would probably need $120K at a conservative 5%, which nets you about a $500 a month before taxes. Invest for growth and stretch your monthly income, once you accumulated enough then meet your goals for income. Bah Humbug
     
  19. otc

    otc Well-Known Member

    Messages:
    14,201
    Joined:
    Aug 15, 2008
    There isn't any safe income these days, at least not meaningful income. A Vanguard Barclays Aggregate Index fund, which consists of investment grade credit, governments, and agency MBS is only yielding 3% (net) these days. I like bank loan funds, which currently yield 5%-6% and will rise along with interest rates. The thing is, if there's another credit-market dislocation, be prepared for roller coaster ride. There's always mortgage REITs, which are yielding 15%-20%, but of course there's a damn good reason the yields are high. When the Fed starts raising rates, it could get ugly.
    Love me some REITs yielding at almost 20%... Dunno what the end is going to look like (or when it is going to come) but it probably won't be pretty. Should sell my AGNC shares at some point...but I don't want to
     
  20. Piobaire

    Piobaire Well-Known Member

    Messages:
    50,191
    Joined:
    Dec 5, 2006
    Location:
    In My Douchemobile
    Guys, I'm telling you, vig. With payday loans getting put out of business, big market opening.
     

Share This Page

Styleforum is proudly sponsored by