294: Finance Friday: Stable Index Funds or Cash-Flow-Reliable Rentals?

BiggerPockets Money Podcast

BiggerPockets

Education, Investing, Business

4.5 • 3K Ratings

🗓️ 22 April 2022

⏱️ 61 minutes

🔗️ Recording | iTunes | RSS

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Summary

Index funds and rental properties are at opposite ends of the investing spectrum. On one side, you have highly diversified, almost entirely passive index funds. On the other, you have cash-flowing, yet far more hands-on, rental properties. Both of these beloved types of investments belong in (almost) every investor's portfolio, but how much should you have of one or the other? Today’s guest Cecilia has built a strong net worth while keeping her income high and expenses low. She bought at the bottom of the market in Southern California, so while home prices rise all around her, she’s sitting comfortably with her rock-bottom mortgage payment. Thanks to all the housing expense-related savings, Cecilia has been able to dump a lot of her extra cash into the stock market. But, she’s longing for a more travel-focused life, where she can take sabbaticals in any corner of the world she chooses. Part of her plan to wealth-gaining greatness is buying a short-term rental in a city she loves, so she can still vacation on the cheap. In order to do this though, she may need to sell off some of her investments or swap her strategy entirely for cash-flowing rental properties in cheaper parts of the United States. Which path will set Cecilia on a fast track to FI? In This Episode We Cover How much to have in your safety reserves and what to do when you have too much cash Index funds vs. rental properties and when to focus on which asset Long-term rentals vs. short-term rentals and the cash flow that comes from both Building the perfect investment plan that will coast you to the life you love Automating your business and spending less time on repeatable tasks Whether or not early mortgage payoff is a good idea in low-interest times And So Much More! Links from the Show BiggerPockets Money Facebook Group BiggerPockets Forums Finance Review Guest Onboarding Scott's Instagram Mindy's Twitter Apply to Be a Guest on The Money Show Podcast Talent Search! Subscribe to The “On The Market” YouTube Channel Listen to The “On The Market” Podcast: Spotify, Apple Podcasts, BiggerPockets Check the full show notes here: https://www.biggerpockets.com/blog/money-294 Learn more about your ad choices. Visit megaphone.fm/adchoices

Transcript

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0:00.0	Welcome to the bigger Pockets Money podcast show number 294 finance Friday edition,
0:04.9	where we interview Cecilia and talk about designing a portfolio with the end in mind.
0:10.7	I think that's exactly where I got stuck was I started thinking I wanted something
0:15.5	a turnkey rental all the rent your retirement model which is I'm just going to give you some money.
0:21.1	So what else can a property manage it? What's going to send me a little check and it's going to be
0:24.9	not really that much money to give you maybe give you 25 40 grand the most and then I was like
0:30.3	well wait a second maybe I want this thing that you just described maybe I want it to be in
0:35.3	Palm Springs where I can air be and be it and I can go and stay in it but then that it is a
0:40.0	hundred grand in or a hundred and twenty grand in so then I was like okay you could have by doing
0:44.6	the right thing and then I froze. Hello hello hello my name is Mindy Jensen and with me as always
0:50.1	is my everything is a spectrum co-host Scott trench. Oh Mindy you really uh continue to come up with
0:56.3	these great new intros and adjectives for me. Scott and I are Scott and I are here to make
1:04.2	credit independence less scary less just for somebody else to introduce you to every money story
1:09.4	because we truly believe financial freedom is attainable for everyone no matter when or where
1:13.5	you're starting. That's right whether you want to retire early and travel the world go on to make
1:16.9	big-time investments in assets like real estate start your own business or find financial flexibility
1:21.6	will help you reach your financial goals and get money out of the way so you can launch yourself
1:24.8	towards these dreams. Oh I like that financial flexibility I love Cecilia's story today because she
1:40.7	truly does have financial flexibility she has positioned herself so that she is generating enough
1:47.7	income that adequately covers her expenses and a whole lot more and she's doing she's conscious
1:55.6	about where her money goes without depriving herself does she seem like she's missing out on
2:01.2	anything no she seems super happy. She's doing great I mean she she she's winning and and let's be
	...

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