My dentist recently received a decent size inheritance. I advised him to put half in equities and half as a downpayment for a new home. He knows nothing about finance and finds the stock market a casino and “rigged”.
He is looking at 3 options for his inheritance:
1) Use 100% of the funds to buy a house (no mortgage required, home fully paid)
2) use 50% of the funds to buy a house and rent it out. Use the other 50% to buy a house (50% mortgage)
3) use 100% of the funds to buy a house (no mortgage required, home fully paid) and rent it out. He will continue renting (rent free in a way as the rent he is receiving pays off his own rent).
He is planning to keep the home (s) for decades.
I advised him to go with option 1, but now that I think about it further, if he is so risk averse, what will he do with all his savings? In cash? That’s too low a return going forward. If we are close to a low in housing and he expects to keep the property for a long-time, maybe options 2 and 3 seem more attractive.