School paper

[isaac gs0]

for economics i have to do this for my final and well i would like some of your guy's opinion

you have just inherited $250k after taxes and attorneys fees. discuss and prepare a cost benefit analysis for each of the following scenarios keeping in mind that ever important"risk equals return" concept and potential tax benefits of owning a home and or business.

choose the best plan for you and explain if you are more concerned with short, medium or long range goals.

1. you pay "cash" for a residence
2. you can use the entire inheritance as a down payment on a much more expensive residence and finance a 30 year mortgage payment for the balance.
3. you can use part of the inheritance as a down payment on a residence and invest the balance.
4. you can invest in other types of investments that we discussed in class.
5. you can invest the entire amount in starting a business.
6. after the biggest grad party in NU history, you could decide to attend the most prestigious university in the nation and pay cash for the next four years

[802Chives]

personally.... I would go with #1,  buy a  residence.  If its an option buy a rental property the generates $20-30k/yr(net profit) and then persue #5 or use the instant equity from the residence to buy another property that will sustain its own mortgage.  Take care of your income and then persue your dream, thats what i say.

#6 is an interesting choice, the party is tempting but the thought of a prestigious university screams waste of money to me   If your dream is a college education then do that.... after you secure your future. (to inherit $250k and only "invest" that into an education would be a huge mistake imo.)

Housing markets and finacial investments do crash so neither one is sure bet.  I just would rather be able to see and touch my investment, then to just let one of these people that went to the prestigous university play games with my money that are impossible for a normal person to fully understand

[Reaper]

I agree with Chives idea, and it's a really good one, although I would probably go about spending the money a whole other way... I'd invest 200K into 5 year bonds that generate ~5 percent interest, and keep another 50k in the bank under normal savings, and just use it for the normal everyday expenses (food, medicine, insurance).  That way, in 5 years, you would have made an additional 55k from the interest earned, therefore replacing the 50k you had in the bank in the first place, and you can live your life with relatively little worry about not being able to pay the bills, allowing you to get the job you really want rather than a job that will make a lot of money (although to some people those are one in the same)

[isaac gs0]

ya i would have to go with number five because i have always wanted to own my own business but with that little amount of money i would not be able to open the club that i want. with 250k i would be able to open a rec center like establishment which would have 10 lanes for bowling multiple billards or pool tables, darts arcade games, and different assorted thing like that.

thanks you for the input helped me get a different point of view on it.

[802Chives]

no prob isaac, there is one more note to make.... what has the teacher taught you to do in a situation like that, I mean just because we have these opinions about the topic, doesnt mean that is what your teacher would like to see.  Call it brown nosing or whatever, but try to reflect the maximum amount of guidence that your teach has taught you right back into this paper.

Getting good grades doesnt allways require knowing the material, a lot of times it is about knowing the teacher and giving them what they want to see. just my 2 cents on the matter.