investing HPSP money

[thebagg28]

I was accepted for an HPSP scholarship. I am wondering if anyone has any good ideas about investing the signing bonus (20 grand).

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[Saddleshoes]

Have you considered buying a house to use during your schooling?

There are many good reasons to invest in a house at this point in time.
If I had had 20K when I started school I would have bought the duplex I lived in and sold it upon graduation for a tidy profit.

 

[thebagg28]

I have started to think about it. I have to look into what the prices for houses are right now in the area of my school. If I could get a good price I could live there throughout dental school and try to rent it to other students when I graduate (or sell if the housing market explodes within the next 4 years).

 

[teeth63a]

I have started to think about it. I have to look into what the prices for houses are right now in the area of my school. If I could get a good price I could live there throughout dental school and try to rent it to other students when I graduate (or sell if the housing market explodes within the next 4 years).

Short term/conservative: "ladder" the money into different CDs (find out about laddering at bankrate.com). Or bonds.

Med/long term: 1) buy a house as you say...it all depends on the housing marke in your local area. Money magazine had a good article this month (?) about how long the writers think different areas of the country will take to recover from the housing crash. $8000 tax credit to frist time homebuyers is nice, also the tax deduction for mortgage interest is great, and record low interest rates. 2) Buy conservative index funds in the stock market. I think its a great time to get in.

I'm a dentist, not a financial planner so take my advice at your own risk ! Do resist the urge to buy a shiny new car.

 

[ArmyDDS2013]

You'll be taxed heavily on the initial 20,000 bonus (30%) but you should get a lot of it back after filing your taxes.

I'm thinking about buying a house and renting out a room or two as well. This would really allow us to cut costs and make a decent profit assuming the price of the house increases over the next 4-5 years.

Just the 20k bonus itself is nowhere near enough to buy a house however, well it depends where you are located.

 

[kalvydas]

HPSP gives you $1900/month stipend. Not sure if you can find a decent house near dental school and pay your mortgage, bills, living expenses with $1900/month income.

 

[kevin512]

Dont worry too much about taxes on your income. I was very mad that I was bumped up to the 25% bracket (bonus and pay since October), but turbotax worked its magic and I got 75%+ back.

 

[Kahr]

teeth63a:

I can't imagine affording a home/apartment of any decency with a taxed 20k bonus in San Francisco(I'm from Hawaii, and currently live in NYC; both of which I've heard are comparable to SF in terms of real estate prices), I know that may not be relevant to the OP, but would your opinion differ based on your situation if you were only attending UoP now and were considering the same thing? (Now, in a state like Nebraska, it would be a reasonable idea for sure)

 

[ArmyDDS2013]

Yeah in any big city like SF, NY, LA, etc. it would be almost impossible to buy a new home unless you had equity or money stashed away to put down a down-payment. The cheapest little 1 bedroom or studio apartments still go for $150k-200k easy for something decent.

 

[teeth63a]

teeth63a:

I can't imagine affording a home/apartment of any decency with a taxed 20k bonus in San Francisco(I'm from Hawaii, and currently live in NYC; both of which I've heard are comparable to SF in terms of real estate prices), I know that may not be relevant to the OP, but would your opinion differ based on your situation if you were only attending UoP now and were considering the same thing? (Now, in a state like Nebraska, it would be a reasonable idea for sure)

I may have missed something I didn't see that the OP was in the Bay Area...I mentioned that it "all depends on the local market".

One thing I did assume was that he had other means of support (parents make a big down payment, money saved up, rich wife, secret Swiss bank account etc). I think everyone knows that $20,000 grand and a $1900 stipend a month alone is probably nowhere near enough in a major metro area.

In my own personal situation, I could not have afforded to buy a place in the Bay Area.

Knowing what I know now, if I had received the accession bonus and was about to start D1, buying property would probably not be in my best interest, I would paid debt and invested the rest (CDs or index funds). The money could be easily liquidatred if I needed it.

 

[Kahr]

I may have missed something I didn't see that the OP was in the Bay Area...I mentioned that it "all depends on the local market".

One thing I did assume was that he had other means of support (parents make a big down payment, money saved up, rich wife, secret Swiss bank account etc). I think everyone knows that $20,000 grand and a $1900 stipend a month alone is probably nowhere near enough in a major metro area.

In my own personal situation, I could not have afforded to buy a place in the Bay Area.

Knowing what I know now, if I had received the accession bonus and was about to start D1, buying property would probably not be in my best interest, I would paid debt and invested the rest (CDs or index funds). The money could be easily liquidatred if I needed it.

You missed nothing, I was just directly asking you, as you were at UoP in the bay area, which is also where I'd like to go -- so it was in my personal interests more specifically than anything toward the OP.