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Mutual funds generally underperform compared to stock market returns. Avg. stock market return is 11%. So we're talking, realistically, 8-9% returns on AVERAGE. If you are in Euro and Latin America funds now, you're doing a bit better, but who's to say how long that will last?
Here's another question, if you're so confident that you can make 12% on mutual funds, why wouldn't you finance your home at a 6-7% loan and dump your cash into mutual funds instead of directly into the home? If you can borrow money at 6 1/2, 7%, and make 12%, wouldn't that be ideal? Especially b/c you get the tax break on the 6 1/2% interest that you're paying!
NAH, we love ya, but your business mindset is making my head explode. I think this will be my last post on the subject of jobs, home prices, stocks, bonds, investing, etc. Let's stick to city info haha
single stocks can perform better but are much higher risk, dad speaks from experience, he makes more money with mutual funds but then he didnt get really lucky with single stocks. Some people have lost 6 figures, others have doubled their money in a year. Mutual funds is almost zero risk and easier to predict, dad constantly gets 12% average like everyone should.
When you owe money, its best to pay off the debts first before investing. You invest your money, not money you owe someone. If I owed money, I would be paying the debt as fast as I could. After you own it free and clear, then invest. If you invest with debt money and your stocks or funds have a bad year, you may not have money to pay the debt and get forclosed or even end bankrupt.
Its bad to be a debtor or owe money, period. Some people rent on the cheap and with all the money saved, they invest it. Once they make enough money to buy a house 100% down they do so. Then they save more money which gets invested and comes in handy for their retirement.
I just don't get it- houses don't produce goods or services, they are just a place to sink money into, that's it! An investment is a way of creating new wealth, through innovation, such as writing software, manufacturing goods, solving problems. It's baffling to me how people can consider home appreciation to be good. The cheaper the home, the less it costs you to maintain PERIOD!!! A loan is BAD unless it's for business purposes, why pull money out of the projected value of your home to just spend, WHY?? With out unstable and uncertain economy ahead, I think the person with lower overhead will win. If we have another Great Depression you can expect a lot of pain from those saddled with debt. The truth hurts doesn't it?
I read my own post again, you guys should read it carefully to understand why its better to buy cheaper houses and save the rest into funds! Believe it or not, a more expensive house can end up costing you your retirement. Ive seen many stories of people that have very little or no assets other than their house at the age of 50-65. They want to retire but dont have enough money to do so. Even if they sold their house and relocated to a cheaper location, their equity isnt enough to last them the rest of their lives. I will buy a nice big, expensive house in a better location when the market bottoms out and prices go up at least 10% a year, otherwise funds are a better deal.
How can you tell when the market has bottomed out? It's like trying to time the stock market. By the time we read this type of info in the paper or on the web we've long missed any peaks or valleys.
I have never looked at house in terms of resale value. When I look at a house, I look for things like a solid roof, lack of termite damage/infestation, safe electrical system, walls without cracks, etc.
I look for a house that will be a HOME. I have to like the neighborhood. There has to be room for my pets.
I think that looking at a house to see what you can get out of it in a few years is as not a good way to approach a major purchase.
I completely agree. I bought a house so I had a place to live in a location that I enjoy. I don't plan on moving anytime in the near future and I have a low interest fixed rate mortgage so I really don't give a hoot about what the market does. If I planned on living in a certain location for only a year or two I would have rented like I have done in the past. Too many people view houses as an investment. I view it as what it is, just a place to live.
Mutual funds generally underperform compared to stock market returns. Avg. stock market return is 11%. So we're talking, realistically, 8-9% returns on AVERAGE. If you are in Euro and Latin America funds now, you're doing a bit better, but who's to say how long that will last?
Here's another question, if you're so confident that you can make 12% on mutual funds, why wouldn't you finance your home at a 6-7% loan and dump your cash into mutual funds instead of directly into the home? If you can borrow money at 6 1/2, 7%, and make 12%, wouldn't that be ideal? Especially b/c you get the tax break on the 6 1/2% interest that you're paying!
NAH, we love ya, but your business mindset is making my head explode. I think this will be my last post on the subject of jobs, home prices, stocks, bonds, investing, etc. Let's stick to city info haha
Give over, NAH just wants to buy Low and sell High. Don't knock it somewhere I heard that concept actually works.
That boy is making my head hurt with all them numbers and it ain't even tax time yet. He should be raising the money for the big trip fact finding trip to Oil City and quit all this jawing tho. We want pix's.
How can you tell when the market has bottomed out? It's like trying to time the stock market. By the time we read this type of info in the paper or on the web we've long missed any peaks or valleys.
Just put your money in stocks/funds with potentional and leave them long term. You will do much better than real estate. Only buy real estate if you seriously believe you can get at least 10% equity per year, otherwise buy a house to call home and not to make money.
Quote:
Originally Posted by mels
I completely agree. I bought a house so I had a place to live in a location that I enjoy. I don't plan on moving anytime in the near future and I have a low interest fixed rate mortgage so I really don't give a hoot about what the market does. If I planned on living in a certain location for only a year or two I would have rented like I have done in the past. Too many people view houses as an investment. I view it as what it is, just a place to live.
That is smart, logic thinking. Too many people buy the most expensive house they can and end up "house poor" and when they retire, they have no money except their house and cant afford the property taxes anymore. They downsize to a smaller house but their "equity" isnt enough so they are forced to go back to work after a few years. You need lots of stocks/funds in order to retire and make it last the rest of your life.
Something that people dont realise is they will give up nearly two million in stocks/funds in order to have a bigger, better house. I will be content with a $25k to $50k house, its big enough, why should I give up my retirement for that? Comments please.
...Because $25-50k houses are that cheap for a reason. There's simply no arguing with it. The reason might not bother you, like sucky weather, 2 hours from anything to do, etc, but the reason is there, and most people don't wanna put up with that.
If you can get a home for 3 times gross household income or 5 times net income ou have made a good deal no matter what. Otherwise you need to move somewhere that you can. or buy something less expensive.
Anyone with any real estate savvy will tell you that IF you can afford it and plan to stay in the same area more than 2 years you are much better of to buy rather than rent. That being said the most sensible thing to do is to buy the house that meets your needs with an eye to resale. I am not saying that you should view a house as only an investment. However, there are certain principles that you should follow in choosing a home, such as buy in the best school district you can find WHETHER YOU HAVE CHILDREN OR NOT, and buy the least expensive home on the nicest street you can afford. Then as Mo Mark pointed out pay off the mortgage as quickly as possible and if you don't have to move because of your job live "rent-free" on into retirement. To say that you will only buy if you can find a very cheap house that will appreciate at least 10% per year show your lack of understanding of real estate.
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