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Old 01-31-2016, 02:48 PM
 
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why ? depending what you want renting can be cheaper . few of us rent the same house we would usually buy . homes in our area start at 600k and go up . i would not rent a 600k home . i rent a 2 bedroom apartment in a luxury building for a fraction of the price .

what about the couple who moves from a 3 bedroom apartment after the kids are out to a 1 bedroom . they likely see better cash flow then most homeowners paying to heat , cool and maintain an entire house .

it is all about cash flow , not if you rent or buy .

in fact think about this : when we entered the housing market back in the 1970's a home in long island was 35k . that was a lot of money back then . our rent was 187 bucks so a home was a fortune .

well today that home is paid off and taxes are 12-18k a year . the mortgage of that paid off home represents 1/2 a utility bill today .

so the fact a home is paid for may mean little in affordability .

again , it all about cash flow and location .
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Old 01-31-2016, 02:55 PM
 
2,443 posts, read 2,073,079 times
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Quote:
Originally Posted by mathjak107 View Post
why ? depending what you want renting can be cheaper . few of us rent the same house we would usually buy . homes in our area start at 600k and go up . i would not rent a 600k home . i rent a 2 bedroom apartment in a luxury building for a fraction of the price .

what about the couple who moves from a 3 bedroom apartment after the kids are out to a 1 bedroom . they likely see better cash flow then most homeowners paying to heat , cool and maintain an entire house .

it is all about cash flow , not if you rent or buy .

in fact think about this : when we entered the housing market back in the 1970's a home in long island was 35k . that was a lot of money back then . our rent was 187 bucks so a home was a fortune .

well today that home is paid off and taxes are 12-18k a year . that paid off home represents 1/2 a utility bill today .

so the fact a home is paid for may mean little in affordability .

again , it all about cash flow and location .


I would prefer to own my home and never really upsized so don't need to downsize home. I don' think we are talking apples and apples here. I believe you live in an area where more rent than own homes.
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Old 01-31-2016, 02:59 PM
 
Location: SoCal
13,236 posts, read 6,340,776 times
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Look at your spending is the best way. Generalizing doesn't work. $20k is doable to me if everything is paid of, no debt, and no kids to mooch off you, and also low property tax. My property tax is $15-$20k a year. As much as I like peanut butter and jelly sandwich, I'm not sure I want to live on that alone.
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Old 01-31-2016, 02:59 PM
 
7,936 posts, read 5,045,305 times
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Benjamin Graham taught us that over sufficiently long periods of time, the stock market is a "weighing machine", that not only beats risk-free investments handsomely, but does so over sufficiently long term stably. What Ben omitted is that "long term" isn't merely a decade or so. It's multiple decades.

This thread has featured much estimation of cumulative or annualized equity returns in recent years. But it's been specialized to the American stock market, and in particular to large-caps. But we're told to diversify internationally, aren't we? I certainly did so. I started investing in the Vanguard European Equity Index fund circa 1996, adding money in more or less equal increments in the ensuing years. That's 20 years. Over those 20 years, I was slightly net-negative, as of this past summer. As of today, I'm solidly negative. And this is with dividends reinvested, and no panic selling.

That was Europe. Need I mention anything about Japan, the onetime world's second largest economy?


Quote:
Originally Posted by mathjak107 View Post
...i worked on commission for many years and did far better then a salaried position would have but that does not mean i made the highest amounts year after year .
I couldn't possibly work on commission, with its undulations and vagaries! Consider two scenarios: one where you earn $100K in Year 1, $0 in Year 2, $250K in Year 3, and $50K in Year 4; and one where you earn only $75K, but every year. In the first case, that's an annualized salary of $100K. But I'd prefer the second case! In fact, I'd rather earn LESS, if that means an annual increase; I'd rather earn $65K in the first year, $70K in the second year, $75K in the third, and finally $80K in the fourth year for an average annual salary of $72.5K which is LESS than in the second example, and $27.5K/year less than in the first! But it's stable, and increasing.

On a personal note, I'm a first-generation immigrant. My parents, in American terms, would have been lower-middle-class. However, their parents were (initially) upper-middle-class, and the generations prior, were outright wealthy. My objective isn't "saving for retirement", or funding a comfortable lifestyle. My objective is to recreate the level of financial power wielded by my ancestors in the 19th century.
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Old 01-31-2016, 03:00 PM
 
71,651 posts, read 71,777,271 times
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owning is a personal preference , not always a financial one when the opportunity costs are considered because the money eventually is tied up in the home .

as an example we can buy a co-op like our apartment for about 300k . it would cost us 6k a year less then our rent if we buy and pay cash .

sounds good right ?

except we will give up 12k in income on the 300k we will tie up in the apartment .


so lots of folks rent but they invest elsewhere and at better returns so once again owning vs renting may mean little at the end of the day .
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Old 01-31-2016, 03:02 PM
 
Location: Ponte Vedra Beach FL
14,628 posts, read 17,935,948 times
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Quote:
Originally Posted by reneeh63 View Post
Yes....but even though your wife stayed fully invested and didn't try to "time the market" she did in fact benefit HUGELY from being in the market for that very specific era of time. People tend to take a bit more credit for their good fortune than they might if they'd lived 20 or even 10 years earlier or later....
The correct mantra is "don't confuse brains with a bull market" .

We owe almost all of our success to a couple of lawsuits where my husband won big (he's a retired trial lawyer) - and the 20 years of great bull markets (in equities and especially bonds) we had in the 80's and 90's.

Note that the annualized rate of return on the SP500 from 1/1/2000 to the close Friday has been 1.86%/year. Toss in 2% dividends - and you're talking about returns that are less than our parents got on their 5% passbook savings accounts. With a lot less stomach-churning volatility. I don't think things are going to get any easier in the near future either.

Also - I think a million dollars isn't anywhere near as much as it was when my parents retired decades ago. Especially in the current low interest rate environment. Robyn
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Old 01-31-2016, 03:02 PM
 
71,651 posts, read 71,777,271 times
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Quote:
Originally Posted by ohio_peasant View Post
Benjamin Graham taught us that over sufficiently long periods of time, the stock market is a "weighing machine", that not only beats risk-free investments handsomely, but does so over sufficiently long term stably. What Ben omitted is that "long term" isn't merely a decade or so. It's multiple decades.

This thread has featured much estimation of cumulative or annualized equity returns in recent years. But it's been specialized to the American stock market, and in particular to large-caps. But we're told to diversify internationally, aren't we? I certainly did so. I started investing in the Vanguard European Equity Index fund circa 1996, adding money in more or less equal increments in the ensuing years. That's 20 years. Over those 20 years, I was slightly net-negative, as of this past summer. As of today, I'm solidly negative. And this is with dividends reinvested, and no panic selling.

That was Europe. Need I mention anything about Japan, the onetime world's second largest economy?




I couldn't possibly work on commission, with its undulations and vagaries! Consider two scenarios: one where you earn $100K in Year 1, $0 in Year 2, $250K in Year 3, and $50K in Year 4; and one where you earn only $75K, but every year. In the first case, that's an annualized salary of $100K. But I'd prefer the second case! In fact, I'd rather earn LESS, if that means an annual increase; I'd rather earn $65K in the first year, $70K in the second year, $75K in the third, and finally $80K in the fourth year for an average annual salary of $72.5K which is LESS than in the second example, and $27.5K/year less than in the first! But it's stable, and increasing.

On a personal note, I'm a first-generation immigrant. My parents, in American terms, would have been lower-middle-class. However, their parents were (initially) upper-middle-class, and the generations prior, were outright wealthy. My objective isn't "saving for retirement", or funding a comfortable lifestyle. My objective is to recreate the level of financial power wielded by my ancestors in the 19th century.

many company's usually put you on a base salary until you exceed certain levels . then once your are established you go on commission with a pretty good customer base .

i loved commission. i never really had a awful year but i had quite a few great years .
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Old 01-31-2016, 03:03 PM
 
2,443 posts, read 2,073,079 times
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Quote:
Originally Posted by mathjak107 View Post
why ? depending what you want renting can be cheaper . few of us rent the same house we would usually buy . homes in our area start at 600k and go up . i would not rent a 600k home . i rent a 2 bedroom apartment in a luxury building for a fraction of the price .

what about the couple who moves from a 3 bedroom apartment after the kids are out to a 1 bedroom . they likely see better cash flow then most homeowners paying to heat , cool and maintain an entire house .

it is all about cash flow , not if you rent or buy .

in fact think about this : when we entered the housing market back in the 1970's a home in long island was 35k . that was a lot of money back then . our rent was 187 bucks so a home was a fortune .

well today that home is paid off and taxes are 12-18k a year . the mortgage of that paid off home represents 1/2 a utility bill today .

so the fact a home is paid for may mean little in affordability .

again , it all about cash flow and location .


I can't fathom paying 12-18K a year for property taxes. Moving to a lower cost of living area might be a better option when retired.
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Old 01-31-2016, 03:05 PM
 
71,651 posts, read 71,777,271 times
Reputation: 49240
Quote:
Originally Posted by Robyn55 View Post
The correct mantra is "don't confuse brains with a bull market" .

We owe almost all of our success to a couple of lawsuits where my husband won big (he's a retired trial lawyer) - and the 20 years of great bull markets (in equities and especially bonds) we had in the 80's and 90's.

Note that the annualized rate of return on the SP500 from 1/1/2000 to the close Friday has been 1.86%/year. Toss in 2% dividends - and you're talking about returns that are less than our parents got on their 5% passbook savings accounts. With a lot less stomach-churning volatility. I don't think things are going to get any easier in the near future either.

Also - I think a million dollars isn't anywhere near as much as it was when my parents retired decades ago. Especially in the current low interest rate environment. Robyn
market investments are all about the time frames unique to you .

while some are better then others usually over typical accumulation time frames spanning decades of time they do fairly well .

when we do have crappy time frames like 2000-2015 the time frames leading up to them or after them generally are pretty good so they just average out those excellent years back to the averages again .

odds are take any rolling typical accumulation time frame which can be 20-30 working years and returns are not to shabby .

we can all cherry pick shorter time frames within an accumulation time frame where things sucked wind but when the whole picture is looked at it usually looks a lot better .
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Old 01-31-2016, 03:12 PM
 
71,651 posts, read 71,777,271 times
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Originally Posted by jasperhobbs View Post
I can't fathom paying 12-18K a year for property taxes. Moving to a lower cost of living area might be a better option when retired.
it might be a better idea . but then again if i lived in long island and my kids and grand kids were there i can't fathom being anywhere else
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