Your Questions About How To Invest Money

Chris asks…

I want to invest money in Share Market what is the procedure?

There are many add here and there for investment in share but how can i know if they are SEBI registered or not and I’m novice I don’t know anything about Share investment and my salary is too low 8000 per month is it safe for me to invest in Share or in Bank as usual PLS Help me guys

John answers:

This is the first question a person asks himself and approaches others when he wants to invest in sharemarket. Basically you should have a clear vision when you want to reap the benefits that is the returns.

If you want to pullout the invested money in short term, you should choose the critical moving sectors and shares and also don’t act blindly on the third party suggestions. If you want to have the investment to be taken by your generation, then you can go for Long Term investment.

In long term investment one should analyze the pure fundamentals of the company, the dividend amount it pays to the share holders,the capital and the percentage of share ratio between the company and the public.

Betty asks…

How does one invest money and gain profit?

Do I go to a lawyer or find an investor? PLEASE HELP

John answers:

Invest in reliable stocks(big companies) keep your money in there forever. Don’t sell it to make a big buck. Historically your money always ends up growing with reliable stocks, you just got to let it sit, even if the stock it falling for a long time. Try online trading. No lawyer

David asks…

Is it wise to payoff mortgage or invest money?

If I try to payoff mortgage (30 years loan in 15 or 16 years) by paying extra amount to principle each month, is it a wise decison? Or As we do NOT know how the housing market will be after…

John answers:

You should be making extra payments on your mortgage only after you have all other debts paid off, have an emergency fund that can support you for 3-6 months, and you are investing 15% of your income in retirement accounts. When you have met each of those prerequisites, then you should put all you can towards paying off the house early.

Paul asks…

If I live in Texas and want to invest money in townhomes, how can I rent them out for profit?

Am I going to need a license to do this?

John answers:

No. Renting out property you own is passive activity (the income is called passive income) and you don’t need a license for that (it’s not like you’re actively selling something in a store or whatever).

The key to renting for a profit is to (obviously) have more money coming in from the rentals than your expenses are on them (positive cash flow). So, you have to figure out how much monthly rent you can get on a given unit and then figure out your monthly cost. And, the variable is the amount of the mortgage.

Let’s say you want to buy a property for $200,000 and you figure you can get $1500 a month in rent. You also have to consider that the income from the rents received will be taxable income. I don’t know what Texas state taxes are, but figure about 30% in federal taxes. So, that $1500 is actually more like $1050 a month after taxes.

Now, the question is: If you put down 25% (the minimum required for a non-owner-occupied mortgage), will this give you a positive cash flow?

25% of $200,000 is $50,000. So, you need a mortgage for $150,000. The cheapest mortgage you can get is an interest-only loan at about 7%. A fully-amortized loan will have higher payments. But, whether you get the interest-only or fully amortized loan depends on how long you intend on owning the property. If it’s less than 10 years, go with interest only.

A 7% interest-only mortgage on $150,000 is $875 a month.

Now add in the taxes on a $200,000 property. For the sake of argument, let’s say it’s just over 1%, or about $200 a month. Now, add on HOA dues. Let’s assume $250 a month. So far, this comes out to $1325 a month.

What about additional, optional costs? Do you want to purchase renter’s insurance (insuring the dwelling against damage caused by the tenant, such as a fire)? That could be up to about $25 a month. Are you going to need a property manager? That’s at least 7% of the rental income each month, or about $105 a month.

You’re now up to $1455 a month in costs. But, if you make less than a certain income for your total taxable income, you can write off these expenses (I think it’s $75,000 for an individual and $150,000 for a married couple – the amount you can deduct then goes down on a sliding scale the more income you have – including the rental income). So, basically figure with that $30% tax bracket that Uncle Sam is going to give you back as much as 30% of those expenses, or $436.50 a month. So, your after-tax costs are now more like about $1018.50.

So, if you rent that property out for $1500 a month, when all is said and done, you have a positive cash flow of $31.50 a month. If you want to increase your cash flow, put more money down on the property. Basically, for every $22,000 or so you put down, you will save $100 a month in mortgage payments (with taxes figured in).

Helen asks…

How to best invest money in shares?

where do i start?

John answers:

Now is not a good time, let them stableise then invest

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