Investing for yearly apps
Elk
With it costing a good amount to apply/front for applications in different states every year,(Colorado moose, sheep, goat, elk, deer is $7k) do you have an application fund that you invest every year in something and only pull the money out for apps?
I have never dedicated money to a fund but I am thinking about it. $10,000 seems like it would cover what I apply for every year. The goal would be that you make enough interest on the $10,000 while it is invested that it would pay for the application fees/license costs and maybe even build slightly.
Anybody do anything like this for apps every year?
If you are applying for all states and all species, you will easily have $2,000 in non-refundable fees. A $10,000 fund won't generate more than a few hundred dollars a year at best. Especially when you consider it will be empty for 6 months a year.
I end up with $1,000-$1,500 in non-refundable fees and have as much as $15K out in tags from February - June or so. I just use a home equity line to float the large fees and it doesn't amount to more than a hundred bucks if I really have to use it.
Putting money into a fund early on in life really builds quickly after 10-15 years, but it takes time to grow it. If you have the spare money, put it aside in a good find and it will balloon in a few years.
Yea I've got a separate account - cuts down on the raised eyebrows for the state apps that get pricey. plus its relatively easy to devote a small chunk of each paycheck and build the total over time.
Agree that 10K wouldn't cut it if you wand multiple species in multiple states. Man a bison and a few sheep tags would put a big dent in that amount. I like to start with $15k and ride the refunds to cover the total costs through June. Gets me about 30 apps.
You really appreciate Utah and cuss the states with $150 non-refundable license for a 5% out of state hunter share. I'd never apply in Idaho for their 1:1000 sheep draw odds. IMO that's the definition of a sucker bet. Don't know why more states don't have market pricing on general elk tags where they just raise the cost until the number of applicants and hunters equals out. I know, Montana supposedly does that, but lately they haven't been getting a lot of takers.
so what is the purpose of different buckets. you earn X per year and spend Y per year to live whatever lifestyle you and your family live. X and Y are the same whether you use 1 account to hold your money or 46 accounts for 46 different expense categories.
if this is to be a crutch for some type of self discipline issue (to prevent the hunting money from being wasted on groceries or visa versa) or to keep wandering spousal eyes out of the way that would make sense, but that is not an economic issue with incremental economic benefit.........it is a personal one that addresses other issues.
You could do a trip of a lifetime every year with 7k. Point creep is making things more difficult each year. Perhaps consider hunting each year now with your 7k budget! Good luck!
I use my home equity line also. At the end it cost me around $1,500 for all my apps. Apply for most all states except eastern states for moose and nothing in Washington, Oregon, Cali, New Mexico or Idaho.
Branden,
The way I took your question is that you wanted to put enough money in a fund that you could cover the expenses of applying solely on the interest alone.
If that is the case, you are going to need more like $50K in the fund and it has to be something you can plan on pulling out $10-20K for several month periods. That's going to be a hard fund to find that pays more than 0.5% interest.
You could put that money aside in a good fund and just know that it is making enough to cover the costs but you don't have access to it.
Many different ways to do it, just know that you will spend a couple grand a year For a few years until you have a real shot at a good tag. Just hope the 5% tags hit so you get some return early on in the process.
If you put $10,000 in a fund that makes 5% you make $500.00. But if you pull out of the fund to pay for tag applications there is no way it will work. Your average balance will be much lower and therefor not make enough to cover the non refundable costs. But it all depends on how many tags you apply for. I am assuming you are also buying preference points also out of this fund. Now if you had a fund that makes 15-20% each year that would be different. putting money aide for a hunt is a good idea though
I use to have an account just for hunting, put $100 per pay period in. Not the same scale as discussed since everything in Colorado took around $900 for a resident to apply. The idea lasted until some last minute cancellation hunts and taxidermy sucked up the funds. It was less impactful on dealing with the other half...
I use a credit where I can then just be sure to have enough to send checks where required for applications and points. The investments are simply added to regularly to be used when tags are drawn.
don't forget the impact of taxes... the gains on anything you pull out before a year will be taxed at your regular rate, meaning that if you think you're pulling out $1,000 you're actually pulling out $1,000 * (1-tax rate).
compound interest is the 8th wonder of the world if you let it do its job... put some money away and don't touch it for a long time and it is impossible to not be wealthy at the end.
I've heard of people who have 5 digit accounts for application deposits in CO, NM, and WY where you have to submit the tag price to apply and get a refund if you don't draw and as far as I understand, this is what the OP is talking about.
I'm with Bou on this one. It doesn't make sense to me.
Everything goes on the AK airlines card anyways (besides the taco shop, the only reason I carry cash) so I can accrue miles. The card is basically the next step to my checking account for money out.
No not hiding it and not undisciplined. More like I have retirement accounts and saving and checking accounts. Instead of leaving the money in checking or savings why not put it in a taxable fund, invest it in an index fund that historically makes 8-10% a year, and pull it out for applications.
Now I know that you won't get the full % since some is pulled out for part of the year, but even if you made a total of $500 its better then taking a loan out.
Maybe 10K isn't enough but I don't apply for NM because of the odds, and I only apply for deer and elk points in Wyoming and won't start applying for the others because I did not get into the game in time. Colorado and Idaho are the only 2 expensive states I apply for that you have to front the fees now.
Anyway it was just something that I was thinking about this year.
williamtell, "Don't know why more states don't have market pricing on general elk tags where they just raise the cost until the number of applicants and hunters equals out." Wow. If that isn't the single most elitist comment I've ever read. That is the epitome of everything that is wrong with "hunting" today. People killing animals for all the wrong reasons. If anything, it should be well-to-do people who should be excluded from hunting. They sure don't need the meat. BTW, no I'm not poor, so don't bother with the "You're just jealous" nonsense. When our government makes hunting a truly rich man's sport, I will no longer fault the poacher. Why is it we found the concept of "The King's deer" such an outrageous idea, but some of us don't even see that we are headed toward the exact same fate? Or maybe we should put it just a bit beyond williamtells' means. That would be OK, wouldn't it?
Interest rates are near all time lows. There is no yield anywhere, especially risk free. A CD or TBill on $10k wouldn't generate enough to buy you lunch. So if you expect to generate some return, you are going to have to take some risk. And then what happens when it doesn't work out? Just work harder, make more and save more. Thats the best solution. And that's coming from someone who invests for a living.
You should PM NvaGvUp. He's a Bowsite sponsor and does financial planning for a living.
In my semi-educated (and now retired early because we invested well) opinion, a low-cost index fund will give you the best "safer" return over the long run, and will give you liquidity for withdrawals to apply for licenses, but it has to be money you can handle losing if the market takes a dump.
The good news is that what goes down comes back up if you have the time to wait it out.
I use home eq line also and credit card for states that take it. Last year was the most I ever sent west for the draws (7 states) nearly 17k. And it worked I drew a great tag as most here know.
It's worth it regardless of how you make it happen.
Bill v
Jaquomo thats what I use is low cost index funds. I actually emailed NvaGvUp a few times.
Read rich dad poor dad.
Trust me on that one.
DonV
If you want to hold funds aside to be used annually for application fees, I personally wouldn't invest it per se - but rather put it in some form of deposit instrument in between seasons. The yield is lower, but your principal will be preserved from year to year whereas you can have losses with bonds or equities.
Invest the rest of your funds under a strategy that will allow you to ride out the cycles.
