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But FED "prints" like there is no tomorrow... Value of the FEDnotes/cash going down and house where you plan to spend next 5-10years to life seem to be a better option than cash IMO.Even if you plan to switch it to an apartment or bigger house in future if possible / necessary. Gold option view very true IMO
That is a question that the top money managers in the world are asking themselves right now. I sure don't know. It's tempting to say "buy gold", but gold is likely to have a sharp correction if Bernanke doesn't say "roll the presses!" next week. For the moment, since hyper inflation has not started yet, I'd hold onto the cash good and tight (build up a "rainy day" fund). Stay out of the stock market.
But FED "prints" like there is no tomorrow... Value of the FEDnotes/cash going down and house where you plan to spend next 5-10years to life seem to be a better option than cash IMO.Even if you plan to switch it to an apartment or bigger house in future if possible / necessary. Your gold option view very true IMO
But FED "prints" like there is no tomorrow... Value of the FEDnotes/cash going down and house where you plan to spend next 5-10years to life seem to be a better option than cash IMO.Even if you plan to switch it to an apartment or bigger house in future if possible / necessary. Your gold option view very true IMO
Think about what you are saying. If a dollar is worth less in the future then that is the dollar you want to use to pay today's debt.
By paying cash and being debt free, you wouldn't have to worry so much about one or both partners losing their job and having to sell or relocate. It's not really about the value. It's about stability. The argument for financing is that, assuming hyperinflation, you pay back cheaper dollars than you borrowed. There are valid points for both sides of the debate, as well as for renting.
There are valid points for both sides, i just don't feel as though any of the points made below are valid points for paying cash.
1. If I have $200,000 to pay cash today, either of us losing our job is meaningless to the conversation. i could put 20% down, and still have $160,000 in low risk investments. I could have $160,000 mortgage financed @ around 4 or 4.5%. i can use the interest paid to help push me into itemizing (i realize, you have to account for the standard deduction before saying you can truly "deduct" interest paid"), thus, effectively lowering my interest expense. that $160,000 isn't going anywhere unless i invest it with taking risks. not only do i pay back with cheaper dollars, but i also earn money on the dollars i use to pay back as well.
housing market bottom being a valid point for paying cash? maybe - assuming one has any idea when the bottom is...which is impossible for any of us to know, therefore it's not a valid point.
to assume buying a house is a good investment is to commit the same error that got us into this mess. a house is a place to live. a rental is a place to leave. you should buy or rent only what you can afford.
you never get more % on your money than you have to pay a bank? really? my mortgage is 3.875%, before accounting for any tax benefit I have. i could buy Ally Corporate Bonds right now that pay 7% and mature in 5 years. As long as Ally does not go bankrupt, i make 7% if i hold until maturity. even if they go bankrupt, i can still very likely get my principle back. that's an example of a slightly riskier investment. I could easily diversify my investments among corporate, muni, and federabl bonds and earn 4% or more, and possibly earn some of it tax free.
sorry - as i said before....valid points for paying cash exist. but none of those valid points were made by that poster.
Quote:
Originally Posted by PolishMaidsDotUS
I would pay cash. It is a great investment and in case of hyper inflation your house will be worth much more dollars than you pay. Money on the other hand will go down in value. Dont forget about an "extra bonus" which is probably a housing market bottom and that alone make your investment worth much more in future. You never get more% on your deposit than you have to pay to the bank for a loan and stock market is a roller-coaster
Whole hyperinflation support for reason to buy house cash is very retarded. I mean seriously extremely retarded.
First, do you know even know what hyperinflation actually means in terms of accounting, economy, finance? Definition of hyperinflation varies a bit but two widely accepted standard is inflation exceeding 50% per month (Philip Cagan, he wrote the book) or 100% over 3 year (IASB).
Second, if hyperinflation were to happen in US. Owning a fully paid off house will be last of your worries, guaranteed. Who the hell cares if 200k worth house you paid off in 2011 when inflation is staring at you that's jumping 50% per month and your income can't keep up with inflation to be able to pay for everyday necessities like food, gas and pay for monthly expenses like utilities.
Not only that, valuation itself for any products, services, or just anythign tangible or intangible goods becomes pointless. Is the product you just bought worth paying 300 bucks? Won't it be worth 450 bucks by tomorrow? What is value of 1 share of corporation X cost? Is it what it's supposed to be? Apple has huge load of cash in USD, that's now in essence worthless. Apple stock will tank. Soon as people get paid, everyone will flood the stores to exchange the money to any goods they can get their hands on. Essentially turning out economy into trade system rather than monetary system since people will have no faith in value of currency.
I have already sent a message to Senior moderator about changing screen name.
I posted in this forum asking about advice how to change the name
I posted in this thread that I am going to change a screen name
I do not see forum floated with my answer
If it would be poorly executed SPAM (if spam would be my purpose) why do you add up to my "goal" by posting instead of marking it and putting me in your "ignore" list?
( I did not mention "Report post" since I think-hope u have done it before even posting that "answer")
Last edited by PolishMaidsDotUS; 08-26-2011 at 05:56 AM..
Whole hyperinflation support for reason to buy house cash is very retarded. I mean seriously extremely retarded.
First, do you know even know what hyperinflation actually means in terms of accounting, economy, finance? Definition of hyperinflation varies a bit but two widely accepted standard is inflation exceeding 50% per month (Philip Cagan, he wrote the book) or 100% over 3 year (IASB).
Second, if hyperinflation were to happen in US. Owning a fully paid off house will be last of your worries, guaranteed. Who the hell cares if 200k worth house you paid off in 2011 when inflation is staring at you that's jumping 50% per month and your income can't keep up with inflation to be able to pay for everyday necessities like food, gas and pay for monthly expenses like utilities.
Not only that, valuation itself for any products, services, or just anythign tangible or intangible goods becomes pointless. Is the product you just bought worth paying 300 bucks? Won't it be worth 450 bucks by tomorrow? What is value of 1 share of corporation X cost? Is it what it's supposed to be? Apple has huge load of cash in USD, that's now in essence worthless. Apple stock will tank. Soon as people get paid, everyone will flood the stores to exchange the money to any goods they can get their hands on. Essentially turning out economy into trade system rather than monetary system since people will have no faith in value of currency.
I have to agree with this
I have never considered corporate bonds of highly stable companies.
It is better option
And having house paid off is not a bad idea too IMO . You can always cash it and "hyper" inflation is a bet too. If Mr B will say today that QE3 is a no,no , than forget about hyper inflation.
Market bottom is not a valid point to paying cash. I agree with that. I just meant to put it under buying house altogether as a great decision with extra ¤200.000 cash in pocket.
My opinion, the real estate market is still falling and mortgage money is cheap. If you really want to buy and not rent then use the bank. I would wait though a mortgage at a higher rate can always be refinanced lost equity does not always come back.
rent.
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