Alternative investments

[spotty_dog]

At what point in your accumulation process have you decided that market returns just weren't enough for you, that you had a need/ability/willingness to take on more risk in the hope of greater reward?

It seems like maybe early in the dawkter's career you have a bit more need and willingness for risky investments because you're front-loading your retirement, so a big win early could pay off a ton in compounding and a big loss you still have plenty of time to recover from.

But then again, maybe later once you've accumulated a solid nest egg, that's what gives you the ability to take risk because you won't be derailed from retirement when/if things go south with your alternatives.

Anyway. We're stupidly conservative of course, if anything we're taking on the risk of not growing our nest egg fast enough. But we can sleep well at night, and we're ahead of the mark in terms of being ready for early retirement. Still, sometimes I wonder if we shouldn't be branching out a bit now that we've got our basic retirement needs met. I know some folks have messed around with individual stocks, or with options, and I just saw on Facebook about some kind of real estate thing? So...what worked for you, and how much of your portfolio did you use at first for alternatives? I don't think I could do bitcoin, and lending club sounds like a PITA. I need a few grand more of real estate to match my currently preferred asset allocation, but I'm quite leery of taking geographical risk by sinking a ton of money into a single property. Would love to hear others' thoughts!

[JaneDoe]

We’re aggressively moving forward with our plan to purchase a second home at the end of next year, primarily as a get away to our favorite area, but also with the secondary intent to invest. Properties in this location have done very well over time, though tend toward greater volatility in the ups and downs of the real estate market.

We’re on track with retirement, but are waiting until Dh’s last business loans are paid in full (end of next year). At first we considered moving up in house, but there really isn’t anything in our area that I’ve found desirable. I anticipate that we will pay off our primary mortgage in about four years. We have already saved a healthy down payment. We’re very conservative too so this would be a big move for us.

[spotty_dog]

Cool, so will the return mostly come from rental income or from appreciation? Real estate ownership seems like a popular investment these days.

[JaneDoe]

It would be from the appreciation. At least at this point, we don’t plan to rent it out. The area where we are planning to buy has a strong and active vacation rental market, but we aren’t interested in putting it in the rental pool.