Emergency fund of 3-6 months of living expenses? (if no then put that much in a bank savings account)
After those 2 things are taken care of, then buy a place with the rest of the money.
In this situation your friend should not invest the money in mutual funds. Presuming your friend has a job (or an income), they will be able to pay for the HOA, maintenance, and property taxes from their income.
Think of the decision this way:
If your friend currently owned their own home debt free (they didn't have a mortgage). would they go take out a loan on the home so they could invest in mutual funds? Of course not? But that's exactly what they would be doing if they invest the money in mutual funds and take a mortgage for the new apartment.
It depends what other money she has available. Home ownership means you pay for a new refrigerator when it breaks. You have taxes and insurance and possibly association fees. All these need be considered before buying.
Mutual fund values may drop significantly in the short term. So you should not buy mutual funds with money you might need in the next 5 years or so.
See if there is a first time home buyer program that can help her understand all the options. Make sure she has an emergency fund that is not in either mutual funds or real estate.
A friend of mine got an inheritance, It is not too much money but she can get an small apartment with that without getting a loan. It is wise to put all the money on that or it is better to get a loan and put the rest of the money in mutual funds? any other ideas?
