Index funds and rental properties are at opposite ends of the investing spectrum. On one side, you have highly diversified, almost entirely passive index funds. On the other, you have cash-flowing, yet far more hands-on, rental properties. Both of these beloved types of investments belong in (almost) every investor’s portfolio, but how much should you have of one or the other?
Today’s guest Cecilia has built a strong net worth while keeping her income high and expenses low. She bought at the bottom of the market in Southern California, so while home prices rise all around her, she’s sitting comfortably with her rock-bottom mortgage payment. Thanks to all the housing expense-related savings, Cecilia has been able to dump a lot of her extra cash into the stock market. But, she’s longing for a more travel-focused life, where she can take sabbaticals in any corner of the world she chooses.
Part of her plan to wealth-gaining greatness is buying a short-term rental in a city she loves, so she can still vacation on the cheap. In order to do this though, she may need to sell off some of her investments or swap her strategy entirely for cash-flowing rental properties in cheaper parts of the United States. Which path will set Cecilia on a fast track to FI?
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