Let’s suppose, for the fun of it, that you have $50,000 just sitting around collecting dust. Or if you’re really good, maybe you do have $50,000 just sitting around. In either event what would be a good way to use that money?
Buy a vacation home
Have you dreamed about having a vacation home someplace warm? Well, now might be a good time to buy something with that $50,000. You could buy a second home in places such as Myrtle Beach, South Carolina; Lakeland, Florida; or Tucson, Arizona as that $50,000 would give you a down payment of around 30%. You would not only have a nice second home but it could actually help pay for itself. This is because according to HomeAway.com, more than 50% of people with vacation homes say they bring in enough rental income to cover 75% of their mortgages. In other words, you would have a nice vacation home in a warm place practically for free.
Help your kids and grandkids
If you have college-bound grandchildren, here is some bad news. A recent study showed that parents making $100,000 or more could handle only about 52% of their kids’ college costs. Yikes! However, you could help your kids by putting that $50,000 in a 529 plan to help pay for your grandkids’ education. The money will grow as your grandchildren grow. And if you use the money for education it’s tax-free. Three good picks for college savings plans as of this writing were the Virginia Education Savings Trust, Ohio College Advantage and Utah Educational Savings plan.
Buy peace of mind with an annuity
You could buy what’s called a longevity annuity and look forward to having income for life after you retire. You’ll pay only a small premium today but, of course, won’t see any annuity payments for 10 or 20 years after you invest. However, you will see steady income after that. Do keep in mind that a longevity annuity is a bit of a gamble because if you die before your payments begin, you receive nothing.
Take advantage of today’s low mortgage rates
Your biggest budget item is most likely your mortgage. You could put a big dent in it by taking advantage of today’s low rates and doing a refi. Here’s the math. Let’s suppose that three years ago, you took out a 30-year mortgage at 5% for $200,000. If you refinance into a new 15-year loan with an interest rate of 2.9% and put that $50,000 towards the principal, you’ll slash 12 years off that mortgage. But here’s where it gets really good. If you put $50,000 against your principle when you refinance, you’ll reduce your monthly payments by $110 and save more than $120,000 in interest over the course of the loan.
Have some fun and protect your body
Finally, you could treat yourself to a luxury automobile such as the Cadillac XTS or the Infiniti JX35. Luxury models like these are not only good buys but are jam-packed with high-tech features that can help protect your body and those of your loved ones. The Infiniti has a sticker price of $48,750, holds seven passengers and has a number of safety upgrades including blind-spot assistance and backup collision intervention. The very roomy Cadillac XTS has a MSRP (manufacturer’s suggested retail price) of $50,500 and includes blind-spot assist, lane tracking and warnings if there is traffic behind you when you back out of a parking spot or if you’re about to rear end the car in front of you.
What else could you do with that $50,000?
You could always do the tried and true and simply invest that $50,000 in mutual funds or certificates of deposit. You’d get a nice return on your investment but how much fun would that be versus having a vacation home or a Cadillac XTS? We’re just saying.