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This post was edited by MindlessChaos 19 months ago
I HATE that you're asking me at 11pm while I'm drinking. The wheels are spinning..
Yea tryin to figure out if this is a stupid statement.
You seem line the kind to shop cd rates
Easy amateur...it's all about the frontier markets now.
Anyone looking for investment advice, do not follow this. Its pretty much the worst thing you could do in terms of accumulating wealth and retiring, and runs counter to every rule of investing.
This post was edited by Chitown_Badger 19 months ago
I'm in the same boat. I will pay off my house this year. I am doing so because of monthly cash flow (the other part of the personal finance equation).
The house is now my "shit hits the fan" nest egg. Already have enough liquid savings.
I like getting the debt off my back and then investing what I would be paying for mortgage into more real estate (market has bottomed and is on its way up again + future income through rental) or market based assets.
Waiting for more investment until fiscal talks conclude.
EDIT: It's an emotional issue too: Are you comfortable with the debt? That being said, when I graduated college and early in my career, I had a lot of debt that made me uncomfortable on a month-in-month-out basis. That probably skews my opinion on what to do now that I have the luxury of a decision.
This post was edited by Umchemeng 19 months ago
If you want to guarantee me just a 5% return I would be happy to take you up on it. Otherwise, STFU. In other words, STFU.
edit, sorry not directed at you but at all the wannabe financials gurus out there. A 3-4% guaranteed return by paying off your mortgage is not neccessarily a bad idea.
This post was edited by Big Green Stick 19 months ago
I will pay off the homes in 2 years as a additional insurance policy in my (unfortunate) absence. The housing market in certain areas are roaring back and the house will likely appreciate faster than anything else I have going right now. With the mortgages paid off and the life insurance policy I'll be keeping a close eye out for the hit man the wife may hire.
I would suggest you take a look at funds managing portfolios with EM exposure. I wouldn't suggest doing direct stock trading in these countries - too much volatility plus currency fluctuations besides other unknown risks. But I know for sure you can definitely make very decent returns. Vanguard has plenty of EM managed funds. I would suggest maybe 8-10% exposure on these funds to capture some of the gains - if not India/China, you got lots of potential growth on the next set of upcoming nations - South Africa, Philippines, Indonesia, Turkey etc. Pretty sure you could easily be getting YOY growth of 10% every year. Adjust that for currencies (+ or -) and inflation and you can still be left with a good residual return.
Location: Mumbai, India
Another option is to look at ADRs. International stocks trading in the American market. Although that involves more time and research because some of these companies could be shady and not having fully disclosed information. Hence ETFs or MFs if you are just getting into the game
If your house was paid off, would you take out a mortgage in order to raise capital to invest in the stock market? Most people would say no, because this adds risk to the equation, but in the end is really the same thing. I'm not a big risk taker and don't like debt, so I do both, but my first priority is paying the house off. Have to also consider time in the equation of retirement savings as a powerful component, therefore you can't completely wait to postpone saving until the house is paid off.
Keep the debt - put all your money in gold. You can thank me later.
Well, it all depends on your comfort factor, your circumstances, your priorities etc. If you're in debt or have a mortgage, the sooner you pay them off, the more you can contribute to your savings and the longer time horizon you have for your capital to grow. But if you know your fixed cash outflow for each time period, you should at least try and minimize that by structuring your portfolio where a portion of it contributes to the cash outflow. Example, bonds paying regular coupons and stocks paying regular dividends. The rest of the capital can be allocated according to your time horizon and your risk taking ability. And of course, be extremely disciplined and not get carried away by emotions. Lots of easier said than done comments, but its always better to follow a particular strategy than making ad-hoc decisions.
This post was edited by sparty419 19 months ago
I'm disappointed. I thought everybody here paid for their house in cash. Damn recession really hit tRCMB hard.
Vehicles too. RCMB ballers don't need credit.
Takes money to make money and to have access to the best financial advisors. If you invested 100k 14 years ago in the hedge fund I use your balance would be 1.45 big ones. 7% is in no way outrageous.
You got a boat? Sweet! Is it a houseboat? What kind of mortgage do you have?
Outside of a dog, a book is man's best friend. Inside of a dog, it's too dark to read. - Groucho Marx
It's all about risk tolerance and your investment time frame. It sounds like your risk tolerance is low. A good gauge on your personal risk tolerance is how low you let your gas tank drop before filling up.
If you have a short time to invest then having a safe and reliable return on your money is very important. However, if your time frame for investing is much longer then you are doing yourself a major disservice by paying your mortgage off early. The average rate for a 30-year mortgage today is 3.44%. With the tax breaks, you are looking at closer to 2.6%. Even if you aren't comfortable with the volatility of the stock market then you should be able to find some investment vehicle that will return more than 2.6% for you.
There is something to be said for paying off your mortgage early and being debt free. However, getting rid of that debt will cost you money.
I see others making comments about the uncertainty of the future and having that money in your home if you need it. If you don't already have one then the first thing you should do is set up an emergency fund that will take care of at least 6 months of your expenses to protect against the unexpected.
I think that someone is you. "If you get aggresive its a great time to make money". Sounds like you have just slurped up what some financial advisors spew to manage your money.
The debate really comes down to this. Higher risk (in the investing sense) produces higher rewards and higher volatility. An example is investing in EM. If you are investing a large nest egg beyond emergency type savings and have a longer investment outlook, it makes sense to bring on a ton of risk because you can weather large swings in volatility.
If you barely have emergency funds squared away or are at a negative net worth position, investments with high volatility probably don't make sense. Guaranteeing a return of ~3% on any excess funds availabe for investing (or debt reduction) is a smart play.
Lastly, making a generic statement like 7% returns is conservative is foolish unless you include a discussion of risk and volatility. Yes, for someone that has unlimited access to capital and investment vehicles, 7% average annual returns is likely very conservative. For others, not so much.
take it out a 15 yr and put it in Tax Free Muni-Bonds.
really only for ballers in the high tax brackets.
That was my point as well. It's all about the time value of money. A dollar invested in a 401k when you're 22 is worth a hell of a lot more than a dollar invested when you're 42. Thats why people are always encouraged to start contributing whatever they can to retirement savings as early as they can. You end up with a hell of a lot more money in the end.
If student loans and mortgage rates weren't so ridiculously low right now, it might be a different story, but that's not the case.
Not to mention, if you think you might need to take out a loan at some point, you can do so against your 401k just as easily as you can against the equity in your home.
I think his advice holds credence for smaller debts such as credit cards, cars, etc. But I agree that postponing long term investments to pay off your house is a foolish decision. You would be foregoing years of compounded earnings.
Yep. I would say only do that as long as the rest of your financial house is in order obviously. That means maxing the 401k and getting the full employer matching to get you to that 15% of income or whatever number you need to retire comfortably based on your age. I say that because while you get the house paid off, you can't make up for lost time in the retirement savings area. That's precious interest you can't get back.
After maxing the 401k though, getting the house paid off gives you a ton of freedom to move and sell if the housing market takes another dump. Better than being underwater.
This post was edited by JMSparty08 19 months ago
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