Is your primary home really an investment? (brokerage, fund, mortgages)

[pghquest]

Originally Posted by lumbollo

A deed /= title.

A deed is NOT a title..

A deed is proof of ownership of real estate
A title is proof of ownership of real property, not real estate.

The intent is the same in which they show proof of ownership, but indeed they are not the same, but even if this is what you meant, I'm still not sure why you disputed the posting..

[Texas User]

Originally Posted by Traderx

Gee pgh, this is twice in one week we agree. wtf?

This is easy. Your home is not an investment and as such that mortgage is bad debt contrary to what some may claim and you should pay the sucker off as soon as you can unless you are certain you can make a better return elsewhere. History shows, btw, that most people cannot make a better return.

What do you mean by cannot make a better return?

[Traderx]

Originally Posted by Texas User

What do you mean by cannot make a better return?

I was speaking to the fact that most people don't make a return better than the interest on their mortgage. I know all the "experts" talk about a 10% annualized return in the stock market but ask yourself this; how many people do you know who've done well in the market over time? I'm sure some will chime in and brag about their returns and good for them but the truth is most people only end up with a lot of money if they invest a lot of money. Hell, in the last 10 years stocks have returned zero. Basically unless you start at the right time and stop at the right time the odds say pay off the mortgage.

Btw, I give this same advice to family and friends too. My brother-in-law is surgeon and like most Dr's. thinks he's smart about everything. During a heated debate he once asked me why I could do so well in the market but didn't he could. I told him for the same reason he can do micro surgery on a dying man and save his life while I couldn't operate on a healthy guy without killing him.

[lumbollo]

Originally Posted by rubber_factory

..... but I think that it is a point of view that doesn't fully appreciate the luxury of good timing.

I think it is more a comment on having some common sense.

[rubber_factory]

Originally Posted by lumbollo

I think it is more a comment on having some common sense.

What do you mean?

What I'm saying is, some guy who bought his house for $110k can go on and on about how good of a deal it was for HIM, and how everyone should do it - based on his past experience.

but he isn't out there looking forward in this market, looking at the same house for $225k, with houses sitting for months and years - and also with zero existing equity, so therefore very little room for error.

[Texas User]

Originally Posted by Traderx

I was speaking to the fact that most people don't make a return better than the interest on their mortgage. I know all the "experts" talk about a 10% annualized return in the stock market but ask yourself this; how many people do you know who've done well in the market over time? I'm sure some will chime in and brag about their returns and good for them but the truth is most people only end up with a lot of money if they invest a lot of money. Hell, in the last 10 years stocks have returned zero. Basically unless you start at the right time and stop at the right time the odds say pay off the mortgage.

Btw, I give this same advice to family and friends too. My brother-in-law is surgeon and like most Dr's. thinks he's smart about everything. During a heated debate he once asked me why I could do so well in the market but didn't he could. I told him for the same reason he can do micro surgery on a dying man and save his life while I couldn't operate on a healthy guy without killing him.

Stock market has returned an average of over 12% in the past 80 years. I have gained over 50% myself this year. Lot of people don't do well because of the lack of Asset Allocation.

A person who puts their money in the bank for 30 years with an average of 3% Interest will have a lot less money then someone who puts in in the Diversified portfolio for 30 years.

[lumbollo]

Originally Posted by Texas User

... I have gained over 50% myself this year. Lot of people don't do well because of the lack of Asset Allocation.....

What was your return last year? If you are bragging about timing the market then kudos for your good luck. Market timing is beyond most people's ability to do with any kind reasonable expectation on a good return.

So if you take short term trading out of the picture then you are left with the long term. So consider this:

• $100 stock goes to $10 = This is a 90% drop. Pretty clear cut, $90 = 90% of base.
• This year $10 stock goes to $19 = 90% gain. Interesting enough this 90% is only equal to $9.

This is the way it often gets reported. You lose 90% you lost $90. You gain 90% after loss, you have only gained $9. The fact of the matter is you are still down 81%.

The other mistake that people make is to assume that past performance = future performance. If this were truly the case, then the stock market could never fall. If you have a mortgage it is a guaranteed return of X% to pay it off early. No question about it and this is where the money should go first.

[Texas User]

Originally Posted by lumbollo

What was your return last year? If you are bragging about timing the market then kudos for your good luck. Market timing is beyond most people's ability to do with any kind reasonable expectation on a good return.

So if you take short term trading out of the picture then you are left with the long term. So consider this:

• $100 stock goes to $10 = This is a 90% drop. Pretty clear cut, $90 = 90% of base.
• This year $10 stock goes to $19 = 90% gain. Interesting enough this 90% is only equal to $9.

This is the way it often gets reported. You lose 90% you lost $90. You gain 90% after loss, you have only gained $9. The fact of the matter is you are still down 81%.

The other mistake that people make is to assume that past performance = future performance. If this were truly the case, then the stock market could never fall. If you have a mortgage it is a guaranteed return of X% to pay it off early. No question about it and this is where the money should go first.

I actually benefited from this recession and the stock market crash. This was probably the greatest buying opportunity for the investors and I bought as much as possible. I was Dollar Cost Averaging. So this means I recovered from the losses much faster then someone who got in the market after March. The key to keep buying regardless of the down market. I don't time the market. I am only in it for the long term.

Your primary home is NOT an investment and it was proven in this thread.

Most people do not pay cash for thier homes. Unless you have a rental property then I can understand.

[lumbollo]

Originally Posted by Texas User

....

Your primary home is NOT an investment and it was proven in this thread.
....

I was the 2nd person in this topic to have posted this. Read back.

[sterlinggirl]

Originally Posted by Texas User

Your primary home is NOT an investment and it was proven in this thread.

Property, by definition, is an investment, and if you want to argue that your home isn't property I'll let you do so with your tax assessor.

Whether a home is a wise investment is a different matter entirely. Right now it's probably a losing bet for anybody needing leverage to buy one, but then again it could be a GREAT investment if the Dollar goes into serious decline and we follow Germany's example of backing currency with real estate.