Use this money to max out all tax advantaged accounts available to you (401k, IRA, HSA), and invest the rest in a brokerage account. When in doubt, invest the money in a target date fund at Vanguard or Fidelity that most closely matches the date you plan to start withdrawing from the account. A total world fund/ETF, like VT, is also a fine option.
One would think the price would increase until someone would pick you up.
Uber should add the ability to bid up your route--like when it's taking a long time to match you to a driver, or you want to entice a driver who is nearby so you can get where you're going sooner.
Exactly. I commonly enroll in Coursera classes just to get access to the video lectures for later perusal for information relevant to my work and interests.
While not an interest bearing account, investing in an index fund of global stocks should outpace housing. Investing in a REIT should roughly keep pace with housing costs.
At some point, it's a better financial move to rent instead of own. That is true in many American cities (much of NYC, for example). Housing bubbles happen. Try not to buy into one.
This advice sounds just as great today as it did in Vancouver, 15 years ago.
In the meantime, inflation-adjusted housing prices more than doubled. Pretty much everyone and everyone would have been better off not following your advice.
And today, in 2019 there is still no clear transition path out of the current horrorshow that is the property market. Prices are not coming down, nobody sees any mechanism by which they might come down, and too many people have too much invested in land for the government to ever encourage prices to come down.
When you rent, you are seriously gambling that property prices will not keep rising. When you own, you are seriously gambling that property prices will not fall.
The thing is, there are enormous political and economic pressures to create policies that prevent property prices from falling. As a renter, you are placing a bet against these incredibly powerful forces. It doesn't even matter if you're right - the markets may remain irrational longer than you can remain solvent.
Edit: Obviously there are complications to this. Buying and selling a house is stressful, time-intensive, and expensive. If you're only going to be in an area for 5 years, it's not as smart an idea as buying one with the intent to stay for 45 years. Obviously, it's possible that a generational shift in demographics will result in a property crash... But it's just as likely that increased immigration will offset that shift. Obviously, your city's financial situation, and likely future changes to property taxes will have an effect... The list goes on.
If things get seriously unaffordable as a renter, it's always possible to move somewhere more affordable.
Housing, on average, rises at the rate of inflation (it's closely linked to the cost of new construction), per Robert Shiller's research. Even if the housing market explodes in one area, there's almost certainly another area where it hasn't (normally one without restrictions on new construction-San Fransisco being a prime example of a place where housing prices have skyrocketed due to such restrictions).
Affordable places don't have jobs. This is not a trend that's reversing anytime soon.
> Housing, on average, rises at the rate of inflation
I don't care about the price of the average house in the country. I care about the price of a house within a commuting distance of where I can find gainful employment.
Right now, the prices of homes in those areas are skyrocketing, while the prices of homes in areas that don't have gainful employment are nosediving. Take the average, and you'll find that it tracks inflation... And is a worthless metric.
> Even if the housing market explodes in one area, there's almost certainly another area where it hasn't
Yes, and none of those areas are ones where young people can make a living.
The socially optimal thing would of course be for retirees to consider selling their million-dollar coastal metro homes and move to cheaper areas, like the interior. But as long as they have access to HELOCs, they don't feel any pressure to do them. They can just borrow money against their million-dollar home, instead of downsizing. This is also not going anywhere. It would be political suicide to force grandma and grandpa to move to the boonies, just so that their grandkids, who need to work in the city could afford to live in it.
"I care about the price of a house within a commuting distance of where I can find gainful employment."
I really didn't like it for several reasons, but not too long ago I briefly lived inside the DC beltway and had a 10 minute commute to work, and paid $1000/month for half a 2 bedroom apartment in a mid-rise that was pretty decent.
Perhaps grandkids should ask to move in with grandma? She might like the company. :)
In seriousness, not all metro areas have seen the same huge rise in rents and property values. I can personally vouch that the Baltimore-DC region offers relatively high paying jobs and housing that is adorable given those incomes. I've heard San Antonio, TX is also good on the jobs to housing costs front.
Montreal and Quebec City seem reasonable, but this is based purely on a few web searches.
I hope you end up in a place where you can start building some financial security.
Also, run the numbers on long term renting in areas where housing prices are high. There's sometimes a high opportunity cost to having a ton of your savings stuck in the down payment for a house when you could otherwise have it invested in low cost index funds or something similar.
It's such a cliche to say that real estate is always local, but it is.
Where I live, my rent was essentially 2/3rds of my gross income, but I found a place to buy for about 5 times my yearly wages and either way, I'm under 10 minutes from work.
I'm a bit surprised that negative nominal interest rates are a thing. If you print enough money, inflation starts to rise. Why not print money such that you can still provide a positive nominal interest rate so people don't start bank runs and stuff money in mattresses? True, the real return would be negative, but that would be the case either way.
Because is just doesnt work. Since 2000 the amount of € (M3) has tripled while the economy grew by 50%. The money is just parked and not circulating in the economy. This is why it does not contribute to inflation. There are no good investments to be found, so adding money just adds to the sea of parked money.
