Financial Question

[LegendKiller]

Originally posted by: Naustica

Originally posted by: LegendKiller

Originally posted by: Naustica
You people who believe in 10% return from stocks are dreaming. Maybe you will but I bet 99% won't get anything near it over the next 30 years.

Says the failed trader.

No, I stopped drinking the Kool-Aid.

Yeah, I guess all of those emperical studies are full of shit.

Please, when you actually have some real numbers, let me know. Just because a failed "trader" says you can't get 10% returns, doesn't mean you can't. Weren't you a huge chartist?

I average 12.4% myself, after costs.

 

[ponyo]

Originally posted by: LegendKiller

Originally posted by: Naustica

Originally posted by: LegendKiller

Originally posted by: Naustica
You people who believe in 10% return from stocks are dreaming. Maybe you will but I bet 99% won't get anything near it over the next 30 years.

Says the failed trader.

No, I stopped drinking the Kool-Aid.

Yeah, I guess all of those emperical studies are full of shit.

Please, when you actually have some real numbers, let me know. Just because a failed "trader" says you can't get 10% returns, doesn't mean you can't. Weren't you a huge chartist?

I average 12.4% myself, after costs.

You're guaranteeing 10% return over the next 30 years? Your crystal ball must be better than mine and everyone else.

I'm a chartist? I guess everyone on Wall St is too.

12.4%? What 1 month? :laugh: I will be more than happy to wager that my portfolio is up more than yours this year if you want to compare e-peen.

 

[alphatarget1]

Originally posted by: jaha2000
Obviously i am talking to a financial planner about this, but of course his opnion is to invest so i want some other opnions.

My grandfather recently passed (it was expected, he was 90 and in poor health). I am going to be recieving a large sum of money out of this deal (500000+).
Little background, I am 26 years old and a Mechanical Engineer. I have a home that i purchased three years ago when they were giving mortgages away. I have an 80/20 loan with around 140,000. My other debt is minimal (less than 5000).
Seems to me the smart thing to do is to pay off my high interest 20% loan, and my other small debt and invest the rest. My financial guy just wants to pay off small debt and invest, not worrying about the mortage.
I would think it would be important to gain some equity in my home cause for all purposes at this point i have none? This will also lower my payment by 250 a month or so which is never a bad thing....
Ideas?

Dump 50% of that in a target date retirement fund?

 

[LegendKiller]

Originally posted by: Naustica

Originally posted by: LegendKiller

Originally posted by: Naustica

Originally posted by: LegendKiller

Originally posted by: Naustica
You people who believe in 10% return from stocks are dreaming. Maybe you will but I bet 99% won't get anything near it over the next 30 years.

Says the failed trader.

No, I stopped drinking the Kool-Aid.

Yeah, I guess all of those emperical studies are full of shit.

Please, when you actually have some real numbers, let me know. Just because a failed "trader" says you can't get 10% returns, doesn't mean you can't. Weren't you a huge chartist?

I average 12.4% myself, after costs.

You're guaranteeing 10% return over the next 30 years? Your crystal ball must be better than mine and everyone else.

I'm a chartist? I guess everyone on Wall St is too.

12.4%? What 1 month? :laugh: I will be more than happy to wager that my portfolio is up more than yours this year if you want to compare e-peen.

Did I guarantee anything?

Nope, 6 years. Education, intelligence, and time in field, matters quite a bit. But you'd not know that, would you?

 

[ICRS]

Originally posted by: Garet Jax

Originally posted by: jaha2000
Obviously i am talking to a financial planner about this, but of course his opnion is to invest so i want some other opnions.

My grandfather recently passed (it was expected, he was 90 and in poor health). I am going to be recieving a large sum of money out of this deal (500000+).
Little background, I am 26 years old and a Mechanical Engineer. I have a home that i purchased three years ago when they were giving mortgages away. I have an 80/20 loan with around 140,000. My other debt is minimal (less than 5000).
Seems to me the smart thing to do is to pay off my high interest 20% loan, and my other small debt and invest the rest. My financial guy just wants to pay off small debt and invest, not worrying about the mortage.
I would think it would be important to gain some equity in my home cause for all purposes at this point i have none? This will also lower my payment by 250 a month or so which is never a bad thing....
Ideas?

Don't forget to take into consideration that fact that you can claim mortgage interest. With the low rates on interest and the mortgage interest claim, it is better to invest your money if you expect to be able to earn > 4%-5% on it.

Since the earnings are also taxable, then the interest being tax exempt is moot. If your mortgage is 6% but you are only earning 5% you are loosing money.

 

[ICRS]

Originally posted by: LegendKiller

Originally posted by: Kroze
You're right and i'm wrong, you do what is right for you and I'll do what I've been doing.

Right now I'm on track to pay off my mortgage in 9 years and that's if I don't get a single pay raise in 9 years. After that, I'll be completely debt free.

I just can't imagine what i'll do with $90k a year with no debt/mortgage.

You won't be making more than your mortgage payment in investments. But hey, if that's the way you wanna roll, good for you. I'll just have more money in retirement.

But I assure you, not one person with any financial education or significant experience will agree with you.

You don't know what youa are talking about. I work in the mortgage industry and know plenty of people who would agree with him. While you may make more money, what you are doing has more risk.

On a side note where I work we still have people with 12% mortgages from the 80s still outstanding och.

 

[LegendKiller]

Originally posted by: ICRS

Originally posted by: LegendKiller

Originally posted by: Kroze
You're right and i'm wrong, you do what is right for you and I'll do what I've been doing.

Right now I'm on track to pay off my mortgage in 9 years and that's if I don't get a single pay raise in 9 years. After that, I'll be completely debt free.

I just can't imagine what i'll do with $90k a year with no debt/mortgage.

You won't be making more than your mortgage payment in investments. But hey, if that's the way you wanna roll, good for you. I'll just have more money in retirement.

But I assure you, not one person with any financial education or significant experience will agree with you.

You don't know what youa are talking about. I work in the mortgage industry and know plenty of people who would agree with him. While you may make more money, what you are doing has more risk.

On a side note where I work we still have people with 12% mortgages from the 80s still outstanding och.

Great, you work in the mortgage industry. More risk? Marginally. The chances that you'll lose 100%, without long-term recovery, over 30 years, is highly remote.

 

[Turin39789]

Originally posted by: LegendKiller

Originally posted by: Naustica

Originally posted by: LegendKiller

Originally posted by: Naustica

Originally posted by: LegendKiller

Originally posted by: Naustica
You people who believe in 10% return from stocks are dreaming. Maybe you will but I bet 99% won't get anything near it over the next 30 years.

Says the failed trader.

No, I stopped drinking the Kool-Aid.

Yeah, I guess all of those emperical studies are full of shit.

Please, when you actually have some real numbers, let me know. Just because a failed "trader" says you can't get 10% returns, doesn't mean you can't. Weren't you a huge chartist?

I average 12.4% myself, after costs.

You're guaranteeing 10% return over the next 30 years? Your crystal ball must be better than mine and everyone else.

I'm a chartist? I guess everyone on Wall St is too.

12.4%? What 1 month? :laugh: I will be more than happy to wager that my portfolio is up more than yours this year if you want to compare e-peen.

Did I guarantee anything?

Nope, 6 years. Education, intelligence, and time in field, matters quite a bit. But you'd not know that, would you?

Keep it up for 24 more years and I'll trust my money with you.

 

[dullard]

Originally posted by: LegendKiller
Nope, 6 years. Education, intelligence, and time in field, matters quite a bit. But you'd not know that, would you?

Legend, you just highlighted a massive flaw in your logic. Just about anyone could average 12+% when you start the bottom of the market. Your 6 years starts right around the market low, so of course you got a good return in that time! Once you put in a few market downturns (this pause isn't much of a downturn yet) your 12+% number will come back in line.

Historically (over the last century or so) ~10% has been achieved. ~5% from stock gains and ~5% from dividends. In the last decade, dividends have been slashed in half on average. Thus, if we follow history over the long haul, we'll get 5% from stock gains and 2.5% from dividends. I personally expect to get 8% returns. I'd be happy to get 12% or higher, but I would never expect that. You'd be crazy to expect it or to plan on it.

I use 10% for my posts here just because it helps eliminate complaints.

 

[LegendKiller]

Originally posted by: Turin39789

Originally posted by: LegendKiller

Originally posted by: Naustica

Originally posted by: LegendKiller

Originally posted by: Naustica

Originally posted by: LegendKiller

Originally posted by: Naustica
You people who believe in 10% return from stocks are dreaming. Maybe you will but I bet 99% won't get anything near it over the next 30 years.

Says the failed trader.

No, I stopped drinking the Kool-Aid.

Yeah, I guess all of those emperical studies are full of shit.

Please, when you actually have some real numbers, let me know. Just because a failed "trader" says you can't get 10% returns, doesn't mean you can't. Weren't you a huge chartist?

I average 12.4% myself, after costs.

You're guaranteeing 10% return over the next 30 years? Your crystal ball must be better than mine and everyone else.

I'm a chartist? I guess everyone on Wall St is too.

12.4%? What 1 month? :laugh: I will be more than happy to wager that my portfolio is up more than yours this year if you want to compare e-peen.

Did I guarantee anything?

Nope, 6 years. Education, intelligence, and time in field, matters quite a bit. But you'd not know that, would you?

Keep it up for 24 more years and I'll trust my money with you.

I trust plenty of my money, my wife's, her mom's, and my parents, to my knowledge. That's enough for me, don't really need you to validate.

 

[ICRS]

Originally posted by: LegendKiller

Originally posted by: ICRS

Originally posted by: LegendKiller

Originally posted by: Kroze
You're right and i'm wrong, you do what is right for you and I'll do what I've been doing.

Right now I'm on track to pay off my mortgage in 9 years and that's if I don't get a single pay raise in 9 years. After that, I'll be completely debt free.

I just can't imagine what i'll do with $90k a year with no debt/mortgage.

You won't be making more than your mortgage payment in investments. But hey, if that's the way you wanna roll, good for you. I'll just have more money in retirement.

But I assure you, not one person with any financial education or significant experience will agree with you.

You don't know what youa are talking about. I work in the mortgage industry and know plenty of people who would agree with him. While you may make more money, what you are doing has more risk.

On a side note where I work we still have people with 12% mortgages from the 80s still outstanding och.

Great, you work in the mortgage industry. More risk? Marginally. The chances that you'll lose 100%, without long-term recovery, over 30 years, is highly remote.

You dont have to lose 100%. The risk is your return will be lower than your mortgage rate. You can't show me anything 100% garauntee that will be higher than 6% over 30 years.

 

[LegendKiller]

Originally posted by: ICRS

Originally posted by: LegendKiller

Originally posted by: ICRS

Originally posted by: LegendKiller

Originally posted by: Kroze
You're right and i'm wrong, you do what is right for you and I'll do what I've been doing.

Right now I'm on track to pay off my mortgage in 9 years and that's if I don't get a single pay raise in 9 years. After that, I'll be completely debt free.

I just can't imagine what i'll do with $90k a year with no debt/mortgage.

You won't be making more than your mortgage payment in investments. But hey, if that's the way you wanna roll, good for you. I'll just have more money in retirement.

But I assure you, not one person with any financial education or significant experience will agree with you.

You don't know what youa are talking about. I work in the mortgage industry and know plenty of people who would agree with him. While you may make more money, what you are doing has more risk.

On a side note where I work we still have people with 12% mortgages from the 80s still outstanding och.

Great, you work in the mortgage industry. More risk? Marginally. The chances that you'll lose 100%, without long-term recovery, over 30 years, is highly remote.

You dont have to lose 100%. The risk is your return will be lower than your mortgage rate. You can't show me anything 100% garauntee that will be higher than 6% over 30 years.

I can't show you a guarantee your house won't burn down, the insurance company not honor the policy, and your land declared a hazardous site because of a previously undiscovered uranium deposit either.

 

[ponyo]

Originally posted by: LegendKiller

Did I guarantee anything?

Nope, 6 years. Education, intelligence, and time in field, matters quite a bit. But you'd not know that, would you?

6 years. And starting at the bottom too. Heck, when I was averaging well over 100%+ returns back in '97 to early '00, I thought I was going to do that forever too. Market has a way of humbling you. One thing I've learned over the 15 years trading/investing is that there's no guarantees and education and career means absolute nothing when it comes to investing. If it mattered, people at Long Term Capital would still be in business and the richest people on earth. The longer you trade/invest, the more you realize how tough this game really is. I traded and survived the Asian and Thai baht crisis back in 1997, Russian default, LongTerm Capital blowup and demise, dotcom boom/bust, 9/11 attack and aftermath, and current credit meltdown. The 5 years I traded for a living taught me and humbled me. I still sometimes wonder how I survived the dotcom meltdown considering I was on 100% margin most of that time. That experience has taught me to steer clear of leverage and eliminate debt whenever possible. That is why I chose to pay off my mortgage even though I've outperformed the market the recent years. That is why even though I'm up well in double digits this year, I'm super cautious and mostly in cash atm. 10% for the next 30 years is optimistic and you'll realize that the longer you stay in the game. If not, the market will humble you.

 

[imported_Lothar]

Originally posted by: Special K
However, 100% stocks have been shown to produce noticeably greater returns over the long run. If an investor is only concerned with long term performance, then I don't see any reason to not be 100% in stocks when one is young.

Intelligent Investor. Read it.

 

[Jadow]

In today's stock market, paying off your house isn't a bad idea at all IMO.

I have never met a person who regretted paying their house off and wish they'd invested the money instead.

Think of it this way, would you take out a mortgage on your house to invest in the stock market?

 

[Special K]

Originally posted by: Jadow
In today's stock market, paying off your house isn't a bad idea at all IMO.

I have never met a person who regretted paying their house off and wish they'd invested the money instead.

Think of it this way, would you take out a mortgage on your house to invest in the stock market?

That's not really a fair comparison because you typically cannot borrow against your house at the same rate as your primary mortgage was at. HEL and HELOC rates usually exceed the rate of a first mortgage, making it even more difficult to earn a greater return through investing it.

That's assuming the interest on a HEL/HELOC is tax-deductible. If it isn't, then the comparison is even less relevant.

 

[tfinch2]

Get a Ferrari and some high class escorts. Live it up the way your grandpa would want you to.

 

[fire400]

Invest safely, make the tides turn in your favor.

Pay off the house incrementally, but play smart, market is fluxin' good, it's not the 90's anymore, remember that.

Don't be so hard headed, have some bloody fun!