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While that is all true, any monkey could make money hand-over-first in that market. I'm sure if this post was originally from 2011, the OP would be cautioned "well, you might wind up putting 5k/month into the market and coming out with only 4.5k if the market is anything like it was the past few years."
Just saying.
Just saying. That over a great many decades of investing, returns on a moderately conservative portfolio have averaged about 7.5%. My mortgage is under 4% fixed for 30 years. Some people are not investors, do not understand investing and always seem to have "reasons" that investing is a poor idea. As I stated before for those individuals it might be best just to pay off even low rate mortgages.
I am always amazed at attitudes towards investing. Even my illiterate grandfather, from the hills of northern Italy, talked about having your money work for you. He invested his meager excess income in land and later in buildings. He made a living with his hoe and died wealthy due to investing.
Just saying. That over a great many decades of investing, returns on a moderately conservative portfolio have averaged about 7.5%. My mortgage is under 4% fixed for 30 years. Some people are not investors, do not understand investing and always seem to have "reasons" that investing is a poor idea. As I stated before for those individuals it might be best just to pay off even low rate mortgages.
I am always amazed at attitudes towards investing. Even my illiterate grandfather, from the hills of northern Italy, talked about having your money work for you. He invested his meager excess income in land and later in buildings. He made a living with his hoe and died wealthy due to investing.
ughh...the idea of "dying wealthy..." bothers me to no end!
I want my money and life to end around the same time
I just remember the crash of 2008 many of my friends lost their homes and cars. At that time I had older cars that were long paid off I was lucky I didn’t get laid off. My car loan since I paid double for 3 years I have more then a year before I would have to make a minimum payment in a way that is a savings. I don’t have enough cash savings to feel comfortable I really want to have 100k in my cash savings. I don’t trust markets being used for savings.
Did they lose their homes and cars due to a lay-off, or due to the stock market crash?
ughh...the idea of "dying wealthy..." bothers me to no end!
I want my money and life to end around the same time
Who said anything about dying wealthy? For many of us prudent financial management and investing during retirement is important. I am a few years into retirement, but am still planning to be able to have the income to support myself and my wife until well into our 90s. It is unlikely that I will live that long but my wife likely will. The money our investments are returning now will help support us in the future. Our final phase of life is likely to be expensive. CCRC and assisting living can get wildly expensive but I would prefer that to Medicaid or the Vets home.
Did they lose their homes and cars due to a lay-off, or due to the stock market crash?
Because if it's the latter, I don't understand.
Layoff > cash out 401k > loss of home was worth 1/2 of the mortgage they stopped paying because they were laid off, and why pay for a mortgage which is double the amount of the value of the home.
Pay off debt, cut up credit cards, use debit cards, then build up your savings. What people don't realize is you spend differently when using a debit vs. a credit card. With a credit card the impulse is to spend more because you can pay it off over time. With a debit card you are spending your cash, so you tend to look for bargains, spend less.
Pay off debt, cut up credit cards, use debit cards, then build up your savings. What people don't realize is you spend differently when using a debit vs. a credit card. With a credit card the impulse is to spend more because you can pay it off over time. With a debit card you are spending your cash, so you tend to look for bargains, spend less.
Twice I've had my debit card compromised and drained my checking account. No more for me, gee, it's in a drawer and I don't even remember the pass code.
I use one c.c like a debit card and another that may need a 3 month plan to pay down.
I also have an auto repair card, no interest if paid in 6 months that I pay in 6 months and incest the rest .
If you treat a c.c like a debit card, you won't have trouble and have the c.c protections against many things.
I have been debating with a friend who thinks my idea of paying debt off early even if the debt is low interest is a mistake. He thinks it’s better to pay regular payments and invest extra money in markets such as mutual funds. I typically double my house and car loan payments instead even though my car loan is 1.7% and home is 3.75%. I just want to be debt free What’s the consensus of th group here?
All depends on you. Do you stress at night about having a mortgage? If so, payoff the mortgage. Life is too short.
At your age I would ask :
Do you lack investing discipline?
Panic during market down turns?
Spend money you should invest on something unnecessary?
If the answer to any of the questions is yes, then payoff the debt.
If the answer to everything is no then your friend is right, invest.
Makes no sense to payoff 3.75% mortgage (with a tax break) and forgo and average return of double that.
The issue is risk management. The next time there is a recession, if you lose your job you may be forced to sell in a depressed market to service loan payments. That would make a serious mess out of your investments. Before you pay off loans or make market investments, get your emergency fund in place. That means six months of your total expenses in cash, in a bank account or money market fund. The last recession some money funds came very close to "breaking the buck" and paying out less that people deposited, but I don't think any did. Bank or credit union deposits, of course, are insured. Unemployment insurance checks will probably supplement your income, so your emergency fund will last longer than six months.
During a recession you may lose your job or have to take a cut in income. That's what the emergency fund is for. If you have collateralized loans, like a mortgage or car loan, and you default, you can lose the collateral and everything you put into it. That's a 100% loss. If you have mutual funds, they will recover, and you will only suffer long term losses if you are forced to sell while the market is in a hole. You have to assess the risk based on your personal situation. Once your assets exceed your liabilities regardless of economic conditions, you can do whatever rings your chimes. Is your mortgage payment higher than rent in your area? Are rents increasing rapidly? You need to assess if abandoning the house and your down payment is a disaster or smart move. If you invest in stocks, realize that the market is high and will probably go down. If you are investing in an IRA or 401k, realize that taxes will eventually go up, so a Roth may be a better long term choice. How old are you? If you have a 30 year investment horizon, a value stock DRIP can really build. If you bought Microsoft at its IPO and put the same amount of money into Standard Oil on the same day, reinvesting all dividends, the Standard Oil stock would be worth substantially more.
There is no such thing as no risk. Life is risky. You have to evaluate your situation. Is your job shaky? Get out of debt and stay out of debt. Is your job secure? Thanks to inflation, 20 years from now your 3.x% mortgage will look like cheap living. Inflation is currently running about 4.5%, and in many areas housing costs are running 5% or 6%. If you just make mortgage payments and put excess cash into a shopping cart of investments you can end up doing very well.
The worst thing to do is nothing. Evaluate your situation and pick a strategy, then stick with it and don't panic. The people who got hurt in the last recession were the ones who decided they were upside down on their mortgage and just walked away, or who saw the market in free fall and bailed instead of riding it through.
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