I made a decent amount of money from a startup (enough to pay for a wedding + eventual retirement at a standard age). As part of this windfall I paid for a vacation for me and my close friends.
No one ever came asking for money. No one asked if we could do it again. Friends that didn't go have never asked for me to pay for their vacations. And if they did I would just say no.
Also, do you worry about any future expectations they might have?
How did you decide who made the cut-off of being a "friend"? Seems like every acquaintance you ever had would suddenly become a fake friend if you were giving away free houses, no? Genuinely curious what that was like.
Diversification: It's All About (Asset) Class
https://www.investopedia.com/articles/financial-theory/08/as...
Because its the poor-man's version of F-You money.
It instantly and dramatically lowers the monthly takings to have to make to keep your household going, and noticeably shifts the balance of power in all financial negotiations in your favour.
Try it. Trust me.
Sure tavaresh, I'd like a mine to be pied á terre in the Hamptons. You know, since there's no shortage.
Please try debug your suggestions first.
If you mean cheap or free housing should exist as a public works project, that is possible... and what you get without a profit motive is Soviet style apartment cinderblocks.
Also worth mentioning, much of our housing stock, especially rentals, are totally falling apart and unmaintained. Soviet housing was of higher quality to at least some of our existing stock -- especially in poor areas.
If you expect to make 6-8% a year in the stock market and pay 2% in interest on a loan, you'd miss out on a lot of money paying it off.
You're essentially making another 4-6% a year on the amount of the loan. If that's a million dollar loan, that's $40-60k a year.
There are reasons not to do this, like if your interest rate was higher, or you want to be safer (it might not be 6-8% a year! You might even lose it all for some reason!), but I have no idea what your comment is saying.
1. How much are your monthly expenses?
2. How much of that is your mortgage payment?
3. If you had no payment, what would you do with that money?
Let's take an example:
1. Monthly expenses are $10,000 a month.
2. Mortgage is $4,000 a month.
3. If you had an extra $4,000 a month, you could work part time and volunteer more at that coding camp.
3. Because you have $80,000 saved, you could take a 6 month road trip, and still have time to find another job.
3. You could use that for one of the 15 side projects you've been thinking of.
3. You could go on a fancy vacation every year with your family.
3. All the while, no bank can evict you from your house, because you fully own it.
Are any of those things really worth foregoing extra 4-6% rate of return? For many people, they are. All it takes is no payments.
You don't just "have an extra $4,000 a month" if you pay off your house. You lose all the money that's currently earning you 4-6%.
$4k/mon is probably a million dollar loan or so, right? Well 4-6% of a million dollars is $40,000-$60,000 per year. $3,333 - $5,000 per month.
You can just fund everything you said using the interest gained on the million dollars, while at the same time putting money towards paying off the house.
Of course, we're talking about a 2% rate. If it was 4+% then it might not be worth the risk.
Its the psychological value, not some optimisation on a spreadsheet.
If you are comfortable with that go for it! Seriously. But paying it off simplified so many things in my life. I am now getting to a point where I could think about helping others with it. Which in and of itself is something you need to put thought into.
Also if you have a huge sum of cash you want 'safe bets' and 'gamble bets' and 'medium bets'. Buying property is usually in the 'safe bet' area. 'safe bets' you can realistically borrow against if something goes wrong with the other two catagories.
Pretend you lose your job in an economic recession. You can't make your mortgage payment anymore, and because recession, your investments aren't worth anything either. Lets pretend you have rental properties, too: there's an eviction moratorium, and small businesses are closing left and right, so almost no one's paying rent.
https://en.wikipedia.org/wiki/COVID-19_recession
OH F**K.
Did each friend have to pay income tax on the money/property you gave them?
How was the house actually paid for, did you give the friends cash or did you buy the house for them and somehow gift it to them?
It's a great way to lose a lot of money. It's why venture capitalists prefer to play with other people's money.
You better absolutely love playing god with start-ups, because there is a hellish nightmare that can go with allocating capital to high-risk new businesses, tracking everything, being responsible for it, enforcing legal agreements, dealing with lawyers and accountants, dealing with conflicts, watching people do incredibly stupid things with your money, and on and on and on it goes.
And you can't just hire people to entirely remove you from the annoying aspects, because that's an even faster way to lose a lot of money.