EverGuide Financial Group, LLC
Mark R. Painter, CFA is the Founder and President of EverGuide Financial group. He has been an investment manager for over 12 years at both the institutional and retail level having managed public mutual funds and individual client accounts. Additionally he has written for Seeking Alpha and been a speaker on various panels and industry conferences. Mark and his team's mission at EverGuide Financial Group is to help their clients navigate their financial course through cost effective wealth management and Everlasting education.
A graduate of Carnegie Mellon University Tepper School of Business, Mark went on to attain his CFA charter in 2009. Mark worked for Stanley Laman Group, Ltd from 2004 2016.
At Stanley Laman Group, Mark quickly went from analyst to portfolio manager in 2005 and helped create their portfolio management business. Not only was Mark responsible for portfolio management but also had large responsibilities in working with clients to understand their needs and financial goals. In 2014 Mark became the lead portfolio manager of a publicly listed mutual fund (American Real Estate Income Fund).
BS, Business Administration, Carnegie Mellon University
Assets Under Management:
EverGuide Financial Group Investopedia
Good for you on thinking towards the future. It is never too early to start investing. In fact, the early you start the longer your money has to compound and earn more money.
Since a 1 year old is not going to need income for a long time, your best bet is to use stocks.
The only other thing you should consider is what the money will be used for. Thinking ahead to college you may want to consider a tax advantaged account such as a 529 plan.
Congratulations on having the extra $1,000 each month! This will go a long way towards your financial goals. While there are a number of other factors to consider in order to give an exact recommendation such as other debt, retirement savings, emergency savings, age, current income, taxes, etc. I will try to point you in the right direction on how to think about the problem.
First of all you want to make a decision that puts you in the best situation on an after tax basis. Taxes are important here because if you have the ability based on your current income to contribute to an IRA then this would be a great place to start. The money that you contribute will reduce your current taxes and then will grow tax free until you decide to take the money out after age 59.5 or are required to start taking the money at age 70.5. Not maxing out your 401k contributions would be another area to consider as well.
Additionally, the mortgage interest you currently pay is also tax deductible. The combination of lower taxes makes the 5.75% return requirement a little bit lower.
In either case, whether you decide to invest or pay down debt, you are making a good long term financial decision for yourself!
For 2017 you would not get a deduction since your AGI is above 119k. However, you can contribute to a Roth IRA and have that money be tax free.
First off, congratulations on taking the biggest step which is deciding to invest the money.
There are a few things to consider when thinking about what to do with the money. The best place to start would be thinking about what your objective is. Are you looking to grow this money or are you looking to generate current income. The rental property would be best suited for current income while the stock market would be best suited to grow the money and the franchise would be a combination of both.
Next you want to look at how involved you want to be. A franchise is going to require the most amount of time and if you have no experience operating a business there will be an enormous learning curve. Stocks can be very passive such as an index fund or active with individual company selection. Rental properties can also be a lot of work, but if you hire a property manager you lower your returns and your headaches.
Taxes should also be a consideration. Depending on your current employment situation and other current assets each of these investments can have their tax advantages and disadvantages. I would recommend speaking to a tax professional to walk through all of your options from a tax perspective as well.
I hope this helps point you in the right direction.
The problem with going to cash is to know when to get back in. Even though markets are volatile right now, there is rarely a year (2017 being the exception) when there is not some bout of volatility. It has been shown that investors that move in and out of the market do significantly worse over the long term than a simple buy and hold strategy.
I am not suggesting that this money should be overly aggressive, but a balanced allocation that focuses on income generation should be appropriate. If you look at your income needs 30,000/800,000 = 3.75%. My suggestion would be to find the right mix of investments that will get you 3.75% income and then you will not have to worry about the market swings since you will not have to "sell low" to supplement your income needs.