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The only thing I regret about having invested in the stock market starting about thirty years ago is that I listened to those who told me it was risky and I should keep some of my money in bonds. I'd be a lot better off now if I'd kept it all in equities. However, now that I'm retired, I'm more willing to accept lower returns to insure a consistent income stream.
As to investment real estate, there are plenty of risks involved as well. In fact, I'd say it requires more knowledge and skill to make money in real estate than it does in the market -- where you can do ok over the long term just by picking some relatively conservative mutual funds.
to do really well in real estate it is a professional game . as someone who lucked out by having a chance to partner up with one of america's real estate moguls i can tell you the deals and opportunity's they get are not things the layman is privy to.
sure you can buy a rental and collect rent and capture some appreciation , but that is not where the really nice money is usually found .
it is usually found in special situation real estate or commercial projects or lease right sales , bulk tax lien sales etc .
while we do have 2 co-op apartments left where we are doing the typical collecting rent thing that wasn't the plan or the game . we have now pretty much liquidated everything we held .
our thing was buying rent stabilized co-op apartments in manhattan over looking central park , then taking a shot by offering big dollars for them to sell us back the leases and leave so we can sell the apartments for big profits .
we would buy the commercial lease rights to spaces in nyc buildings that had storefronts , we would get the rents up and sell the lease rights to investor groups for big dollars .
these are all things folks who dabble at being a landlord will rarely get the opportunity to partake in but these are the kinds of things where the big money in real estate is made .
it takes contacts , big pools of money and knowledge far beyond what most of us know to pull off ourselves ..
but real estate to us is not passive and in retirement we want nothing to do with tenants , courts and laws anymore . we want nothing but true passive investing now where our money works for us instead of us working for the money .
Last edited by mathjak107; 01-14-2016 at 07:34 AM..
After years of careful study, investing, trading and doing just about everything, I've concluded:
The stock market isn't for the masses. It's for the ultra high net worth multi-generational wealth families. Basically, people so rich that they don't have to touch large portions of their wealth, for decades, even generations. It helps these people tremendously to preserve and grow their wealth. But the stock market is a lousy savings vehicle for the masses who might actually need to access their money at a moments notice.
If you're not ultra-high net worth, chances are a portion of your retirement savings or savings you might need to access are in stocks. Unless you have extreme patience, discipline and luck, chances are you might need to get at that money when the markets are down. Life happens.
So basically you are saying we all need a $10 million emergency fund. For me that is about 500 years of expenses
Quote:
Originally Posted by concept_fusion
If you're worth less than $10 million, stick with real estate. Atleast you can live in it while you build equity, or rent it out. Far more people do far better in real estate than stocks.
And many people do better in stocks than real estate. At least with stocks you are liquid and not confined to a geographically undiversifiable asset which can go to the dumps if the city goes downhill like Baltimore or Detroit!!! If you had bought property in one of those cities 20 years ago, you'd regret it...
Quote:
Originally Posted by concept_fusion
If you have more than $10 million, stocks are a decent option because you can comfortably not touch large portions of your wealth. Real estate is also a good option, but it's at the level of net worth something more liquid is often desired.
But don't go putting half in stocks. Maybe 1/10th of your net worth. Or 1/5. Something VERY comfortable. And sit on it for a long time. Markets go down 50%? No problem. Simply invest more, and when they recover you'll be richer than ever. While everyone else has gotten poorer (the masses who actually need to use their money).
Discuss.
In the long run, keeping your money in fixed income securities actually is riskier than stock once inflation is factored in.
Although it doesn't sound like it, OP must be exaggerating (quite a bit) to make his point. Which I think is a bit of a dumb point.
Investors are not one breed. Real estate won't work for everyone for a multitude of reasons, neither will stocks, or bonds, or many others. W're all different with different interests, goals, time horizons, and risk appetites.
Arguing against investing in equities if you have less than $10mm is so odd that OP must just be making his best attempt at either provocation or humor.
Well, I disagree. Anybody with contributions in a 401k plan can invest in the stock market, and should do so over the long term.
Most rich people build their wealth slowly over a long period of time.
I have to disagree with you idea. I started investing in a 401K when I was 20's. After 20 years of investing my account has about $200K. I have another 20 years to go but you think I can retire with that money???
The only thing I regret about having invested in the stock market starting about thirty years ago is that I listened to those who told me it was risky and I should keep some of my money in bonds. I'd be a lot better off now if I'd kept it all in equities. However, now that I'm retired, I'm more willing to accept lower returns to insure a consistent income stream.
As to investment real estate, there are plenty of risks involved as well. In fact, I'd say it requires more knowledge and skill to make money in real estate than it does in the market -- where you can do ok over the long term just by picking some relatively conservative mutual funds.
In theory, I agree with you. In practice, most of us are really bad at holding onto a 100% stock portfolio for 30 years. The stock market went nowhere for 10 years from 2000 until the end of 2009 and it was a volatile ride. Holding on and adding money to stocks for that long a time requires a level of patience most of us don't have. That's where bonds and balanced funds come in. The better balanced funds outperformed the market over that 10 year period and they did it with less volatility.
Stock valuations aren't as bad as they were in 2000, but they're still on the high side. Owning some bonds helps cushion the blow in bad stock markets, and if you're lucky they might actually add to your returns instead of subtracting from them (although I wouldn't count on it).
I have to disagree with you idea. I started investing in a 401K when I was 20's. After 20 years of investing my account has about $200K. I have another 20 years to go but you think I can retire with that money???
Just because you made an investment in a 401K doesn't in and of itself guarantee you a positive return on your money---or enough to retire on--
Maybe your company offered poor array of investment options--maybe there were high fees--maybe you made some bad choices in what you put your money in...maybe you didn't save enough if your 401K is solely responsible for covering your retirement years...
There is no way to tell if you are the problem or the economy/investment system itself...
I have to disagree with you idea. I started investing in a 401K when I was 20's. After 20 years of investing my account has about $200K. I have another 20 years to go but you think I can retire with that money???
You want to really see what a scam it is??? Take a look (if you can find the true cost which is normally very well hidden) out how much in "management fees" was taking from you via your 401K over the 20 years.
But don't go putting half in stocks. Maybe 1/10th of your net worth. Or 1/5. Something VERY comfortable. And sit on it for a long time. Markets go down 50%? No problem. Simply invest more, and when they recover you'll be richer than ever. While everyone else has gotten poorer (the masses who actually need to use their money).
Discuss.
Stocks have historically been the best performing asset class.
If you have a long time horizon then you invest heavily in stocks. Plain and simple. As you get closer to retirement you put more in bonds.
By the way, have you ever heard of bonds?
The lowest risk bond/stock allocation according to Ibbotson is 28% stocks / 72% bonds. That's what a retiree would do. With a 28/72 mix the most you can lose if stocks tank 50% is 14%, but chances are that bonds will go up. Look no further than 2008 - 2009......
2008: +3.96%
2009: -0.74
10 in stocks? If you want to go against modern portfolio theory then enjoy your lower returns
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