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The problem people have with DV is he gives financial advice that is only suitable for the least financially savvy consumer. He's not even consistent on this issue.
On one day he will say buy term and invest the difference, but then the next day he will say go 15yr over 30. The problem with this is the interest saved is not greater than what even bonds will return.
Unless you're talking corporate bonds or possibly municipal bonds, this is not so.
want to bet you don't see more than the coupon rate going forward and in fact take a hit if rates rise even 1/2 point that will leave you at a loss .
it has lost almost 9% the last 3 months as rates kicked up already on the long end .. ytd has it at less than 1% total return at this point including interest.
I am not a Dave Ramsey fan however the idea of using a 15 year mortgage with at least 10% down and payments no more than 25% of your take home pay is a pretty good idea. It will limit your home purchase to what you can afford rather than what the bank will lend you.
I agree..All 30 year mortgage's does to extend the amount of time the banks could expect to get loan paid off...BUT of course those pesky monthly mortgage payments may be lower..it doesn't at all shield one from future hikes in interest rates...Best thing one can do is lower ceiling ( to 15-20 year amortization schedule) then set up biweekly payments..pay higher payments which increase the principle payments thus decrease amount owed to financial institution.... Bottomline..If one can never afford higher payments..One should reconsider buying a home then..Ya always have to have the ability to PAY..no matter what..So do the homework and figure it out!!
Most mortgage agreements also allow pre-payments per year one can make towards principle too..and given lower tax right now..Best take advantage in order to lower the DEBT while one can..as low Interest rates can only go UP and Up and UP which will decrease ability to lower that debt!!!
It's worked for myself..and I strongly recommend lowering Mortgage IF one can...Of course higher interest rate on Credit cards is mandatory..to get ris=d of first,,,BUT thankfully never had that issue..Always paid off credit card purchases first in full..never used them except to use their $$ for 30 days..LOL They HATE ME .. Also when one uses credit cards and pay up monthly increases your credit risk....It won't work if you pay minimum..and escalate charges to max...and get flagged by credit card as a risk..
Anyway..kinda got side tracked there..It always comes down to management of your debt load and incomes..It's NOT easy..But learning the benefits of wiser flks is always helpful
want to bet you don't see more than the coupon rate going forward and in fact take a hit if rates rise even 1/2 point that will leave you at a loss .
it has lost almost 9% the last 3 months as rates kicked up already on the long end .. ytd has it at less than 1% total return at this point including interest.
You talking about bonds? If so, why does a 3 month return matter if 30 years is our time frame? Over the past 100 years real estate hasn't returned anything, but bonds averaged out at 6%, so putting money into real estate is a bad move unless you are just going to **** your money away.
because rising rates will cause the share value to fall as it has done the last 3 months.
there is no maturity date in a bond fund which is what whosx is.
we had 30 years of falling rates and most of that if not all is behind us.. real returns after inflation and taxes are what counts .
so here is the last 30 years results with rates falling for 30 years. i will bet you returns after inflation will be negative going forward for anyone buying now.
real returns after inflation and taxes : averages.
because rising rates will cause the share value to fall as it has done the last 3 months.
there is no maturity date in a bond fund which is what whosx is.
real estate has had real returns that kept up with inflation so you are wrong .
Yes, kept up with, but not surpassed. I've posted the data before, but SFH do not do well compared to other alternatives. Rental and equity REITS perform well, or have, but that isn't what we are talking about.
bonds and bond funds will be a different animal going forward with rates having little place to go but up. even if a fund retires older bonds and gets higher paying ones the weighted average duration of a fund will have you always behind the curve.
unlike stocks which cycle relatively with the business cycle pretty quickly , once rates rise you may never see them cycle this low in your lifetime .
in fact equities and cash not equities and bonds may be the better choice.
I agree..All 30 year mortgage's does to extend the amount of time the banks could expect to get loan paid off...BUT of course those pesky monthly mortgage payments may be lower..it doesn't at all shield one from future hikes in interest rates...
Huh? Explain how a 30yr fixed-rate mortgage doesn't shield one from future hikes in interest rates.
Huh? Explain how a 30yr fixed-rate mortgage doesn't shield one from future hikes in interest rates.
That poster's profile indicates they are from Canada. They don't do 30 year fixed rates, you have to renew your interest rate every 5 years.
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