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Ignore IRA. Fund land purchase instead?

Hello everyone, I wanted to run a thought by you guys and maybe you can tell me what you'd do in my situation:

I am 26 and make about 36k a year. I have zero debt and have about 3k in my savings account that is yielding 5.15%. Yea, I know it's not much, but I have been investing everything I earn into my business. I am single. I have medical insurance and great parents that can provide an emergency fund in case I lose my job (but I am my own boss and my services are in demand around here).

There are two things I want to tackle now:

1.) Open a ROTH IRA

2.) Buy real estate

Okay here it is: I've always wanted to own about 30 acres of country land out here in Texas for recreational use. The properties im looking at are about 150-200k. You see, It has always been a dream of mine to build my own log cabin and get a place that my parents can enjoy before they get too old. To put it bluntly, the last time I checked, no one was making anymore land. My father once told me when I was very young: "The first thing a man must do is to own a piece of land. When you go into a store and you buy something it's chattel, but when you own a piece of land, that's real. And that's where the words real estate originated."

I am willing to sacrifice funding an IRA if I can focus full time into paying off the land. I figure I can go hardcore on it until I'm 30. At that time, I'll begin funding an IRA. Heck, I can do both now, but my main point is whether this goal of purchasing land is feasible. Again, I want to buy a large amount of land by the time i'm 30.

I can alway sell if something does not work out, right? I am looking at news item here that says Texas land and ranches have appreciated about

400% and that looks like a better investment than IRA, imho. A wave of retiring baby boomers and hunters setting their sights on weekend getaways have pushed demand for Texas land to an all-time high, an appetite that's fueling double-digit appreciation in the state's farm and ranch market. Statewide, land values are rising at an average of 1 percent per month.

Right, I don't have much to fall back on (No IRA, low savings), but I am willing to take risks now because I can. That's one of the reasons why I am not married while all my other friends are having problems. There's always time for that, but I am not sure if there's always time to do what I'm doing now.

Thoughts?

Reply to
flagsposters
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Flagsposters, for one thing, I suggest you study the likelihood that Texas, like other parts of the country, is at the peak of a real estate bubble. I would not expect 1% appreciation a month to continue. Historically, it's been a lot less than this. You cannot always sell the real estate if something does not work out. Many people today are learning this the hard way. Refi-ing is way up and I swear, it's now a fashion statement to do one. People think it is perfectly /all right/ to refinance debt--in effect just borrowing from Peter to pay Paul(!). It's destroying many people's financial futures, laboring their perspective on life, and straining marriages.

Investing in real estate comes up a lot here, so you could google the archives for the last year or so and find a lot of good discussions and citations on historical rates of appreciations, past bubbles, etc.

On the Roth IRA, for now, fund it. Should you want to buy something big, you can withdraw the contributions (not earnings) at any time.

wrote

It's really because your mom and dad offer a safety net, no? I do not know that one gets much of a sense of pride from claiming to be striking out financially on one's own, when in fact mom and dad are always there to back one up financially.

You are /very/ astute to take note that spouse selection is a major component of proper financial planning. Two people must be able to discuss at length their financial futures and intentions well before a wedding takes place.

Reply to
Elle

I have around 25 acres of land out in the country with a small house. It provides me with privacy, recreation, and peace. I get hassled all the time by people wanting to buy it, but I have no plans to give it up. It's mine, and like you, I know they're not making any more land. It has turned out to be a potential investment, but that's not why I have it.

Buy the land with the realization that it's your dream and not an investment. It can be both, but don't count on that.

Reply to
nospam

"raylopez99" wrote

Are you saying one should care what people think?

The statement above seems less than factual. By your own admission later, you did not make this first million by age

  1. A bunch of people made this first million.

Investing for the long run per an allocation plan makes a person a loser?

All these Americans who have debt and are slowly but surely beating it down are losers?

I agree different cultures see this in different ways. E.g. many promote "family" as a business. Nothing wrong with that, and maybe there is everything good with it. After all, who is more likely to be loyal, blood or non-blood relations? Still, I'd apprise any family relations offering to subsidize my efforts of the risks, just as though it were a business proposal. My comments were a caveat, not a rule.

Seems rational for the poor to fight (such as they are able) for welfare dollars, too, then.

Reply to
Elle

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