Dave Ramsey says: Real estate, mutual funds are wise options for investment

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Dear Dave,

I’m 24 years old, single, and make $ 60,000 a year. I am also debt free and live in an apartment. I also have about $ 550,000 in a brokerage account that’s 75% mutual funds and 25% individual stocks.

The money in the brokerage account was originally an inheritance of $ 280,000 that has grown since I received it in 2007. Am I currently investing my money in the best investment opportunities?

– Drew

Dear Drew,

You are in a beautiful place! I’m glad you take your finances and your future so seriously.

First, I don’t mess around with individual stocks. There is just too much risk for me. Since I do not invest in individual stocks, I do not recommend that others do the same. I look at two things in investing – real estate and mutual funds.

I always pay cash for income-generating real estate. And when it comes to mutual funds, I invest in good mutual funds with growth stocks and a solid track record of at least 10 years.

Now I don’t get mad at people who want to dig into individual stocks, but I wouldn’t recommend packing more than 10% of your investment portfolio into them. The numbers of playing individual stocks just aren’t that good for an individual, and besides, I don’t like losing money!

If I woke up in your shoes, I’d turn the 25% you have in individual stocks into good mutual funds. And I wouldn’t use a brokerage account. I would go with a good financial advisor who has a teacher’s heart.

I think you will do better with your money this way in the long run. It might be a little bit boring, but boring is good when it comes to things like that. Exciting means you have a good chance of losing a lot of money.

They have a good income, especially for a single man who is 24 years old, so I would make these adjustments and live like the inheritance money wasn’t there.

Stay out of debt, live on a decent budget, and make sure you put 15% of your income on retirement. Then, a few years later, when the time comes, use part of that inheritance money to pay cash for a beautiful home.

If you can manage all of that, the money you inherited from buying a home yourself is likely to grow to millions of dollars by the time you are ready to retire. Pretty cool situation, Drew!

– Dave

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