<p>This is more than 25k… A friend of ours told us that they prepaid their son’s 4 years college tuition freshman year. She said it was the best investment they ever made. They did it by calling up the school and struck a deal with them.</p>
<p>If someone handed me $25K I’d use it to pay D1’s second-semester college bill so I don’t need to drain all our other accounts to come up with the payment.</p>
<p>jym, come over any time, I’ll cook and you bring the wine! While you’re here, a little advice on an investment wine cellar would be appreciated. </p>
<p>The Aust/NZ investment is tempting for the rates. But currency fluctuation is a big gamble, and not nearly as known a quantity as your own currency, for the most part. I just checked the Aust. $ exchange rate, around .91 or so. When I visited Aust a few years ago, and they were selling commodities to China big time, the exchange rate was about 1-1. Previous to that, it was around 85 cents Aust to our dollar. </p>
<p>Now I feel ripped off, as everything was SO expensive in Sydney, and would be a bit more reasonable now. </p>
<p>I’ve heard you shouldn’t manage rental property unless you can put a family out in January for non payment of rent. Not something I could do, however I have rather enjoyed managing property for friends who live overseas. If you like people, as well as dealing with housing details, is rather fun, if occasionally maddening. Feels like a lark compared to my day job.</p>
<p>In the next seven semesters: tuition. After that: delayed work on the house.</p>
<p>oldfort-
How much of a discount did your friends negotiate with the school? IT’d have to be a pretty sweet discount to prepay 4 yrs of college.</p>
<p>greatlakes-
I am there!!</p>
<p>We just refied at 3.75 fixed in California. We could have paid off one property but we also own a rental property and it made sense to consolidate. We will prepay a lot so that it will all get paid in 5 years instead of the 15. I had a CPA run all the numbers before deciding to proceed. Well worth the money to have the figures in.
As far as rental property, ours is in our town and we manage it. We know the market and were sure before we purchased that the rent would cover the mortgage plus maintenance. You really have to know the market particularly at this time when you can’t count on real estate to appreciate.
Same with paying off our first mortgage…if we paid it off and the property is actually depreciating right now we could run into problems. Say we lost income and had to sell…sure would have been nice to have those savings to pay a small mortgage each month and have some left to live on. As my financial guy says “you can’t eat your front door.”
Of course, every situation different and I come from a long line of savers and probably too financially conservative people.</p>
<p>H and I received quite a bit of money awhile back from his great-aunt’s estate. We invested it in our kids … private middle school & high school. The investment paid off tremendously, in our opinions.</p>
<p>Be careful about looking at investing in foreign CDs & bonds valued in local currency. High interest rates are generally associated with currencies that are over-valued. The Australian economy is highly dependent on the minerals sectors (iron ore, uranium, etc), all of which are going flat out to feed the Chinese economy. Currently A$1=US$0.94, but in June it was worth US$0.81. When I was there on business in Jan09, it was worth US$0.65. Folks on Wall Street makes fortunes exploiting these opportunities - it’s called arbitrage and don’t think you can outsmart them. THey use computers to track all these markets and opportunities quickly disappear.</p>
<p>Getting to the original question…In my professional opinion, the best return of $25k would be paying off debt, starting with the highest rate first and working down. Then use the $ to do something you want to do, but have deferred since you didn’t have the money, such as a nice vacation or house renovation. Studies are showing these 2 things create the greatest satisfaction in life and decrease stress vs buying more material goods, such as new cars or clothes.</p>
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<p>This is a US-centric approach. People in other countries consider exchange rates. We just happen to have the reserve currency of the world. If that should ever change …</p>
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<p>Ridiculous.</p>
<p>What were interest rates in the US when the $USD peaked?</p>
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<p>I hear you, bclintonk! $25K sounds like so much money until you figure how much college it buys for some…</p>
<p>@BCEagle - unless the OP is working outside the US, the US$ is his/her functional currency and what they need to use to evaluate investments.</p>
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<p>I work in the US. I have investments around the world. I make judgements on where things are going. Having currency insurance with the account outside of the US has been a pretty good move for the last decade. A good chunk of the world is in beggar-thy-neighbor mode but not all. We’ve been abusing our reserve currency status for decades and we may lose that at some point with our reckless fiscal and monetary policies. Now having some currency in a country that mines a lot of gold (and other metals, minerals) hasn’t been that bad.</p>
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<p>Ain’t that the truth. Also, the pay-all-four-years-up-front plan seems like a pretty high-risk investment to me! All you have to do is read a little CC to know why.</p>