Selling your home is a significant decision. If you are looking for ways to make the proceeds work for you, not letting them sit in a low-yield savings account is the way to go. However, choosing where to invest the money can be stressful. Here are three investment tips to help you:
Buy Another Property
One of the expenses of selling a home is the capital gains tax. Many people choose to eat up this tax and go along merrily. However, the financially savvy will do otherwise. A 1031 exchange involving TIC properties is a great way to avoid paying capital gains taxes. Consult a qualified intermediary in your area to learn about your options. Usually, this will involve buying another property. Real estate is a significant investment that you must consider.
Paying Off Debt
While people have different levels of comfort when it comes to holding debt, getting a financial windfall from the proceeds of a home sale is an excellent opportunity to free yourself from the claws of debt. If you have high-interest debt, paying it off is advantageous. Because you no longer have to pay the interest on the balance, you get a sure return on investment.
Low-cost Index Funds
Investing your money on low-fee index funds is generally a good choice. Funds like VTSAX and S&P 500 performed well over the last several decades. Many economists and financial experts say that if you invest your money in these funds, you will have a steady ROI thanks to compounding interest.
Overall, these are three ways to invest the proceeds of your home’s sale. There are other methods, but these should give you a head start when deciding what to do with the money. Good luck!