Investment questions.

[Anarchist420]

Over the past 20 years, household average income has been about 200k it was quite a bit higher in the early and mid 90s but leveled off to being a little bit lower after '98.

As I've said before, my parents don't like paying debts off early but they invest in only stocks while keeping the rest in cash. They only have about $1.2mn in stocks and cash and they have always had someone else manage their money which means they never got hard assets and that was idiotic considering how much residential property I told them they shouldve bought up after the housing bubble collapsed

We consume everything we have because my parents are very traditional and always do what the majority does. They have also always had faith in the dollar and my mom wasn't even aware that it was the world reserve currency and about what happened with the pound back in the day.

They're going to mortgage their next house so they can piss more away investing in more worthless paper probably virginia tech annuities this time since my dad wants to have sex with his alma mater while ruling out buying physical gold, silver other commodities, or real estate.

That brings me to the question... Have my parents done a lousy job investing considering the above?

I would say yes, but they say they have done a good job since they haven't lost anything on paper (other than 2.5% lost one quarter a few years ago) and since they had a few quarters over the past 20 years with double digit gains. That is totally insufficient to me though considering that they don't have any hard assets theyve paid someone to manage their money and that they're about $300k in mortgage and home equity debt. I realize that investing in hard assets after the housing bubble collapsed wouldve required a lot of taxes to be paid (since they would be taking out of their 401k) which is why my parents didn't do it, but it was a stupid move in my opinion. Housing prices have gone way up in the past year which I knew would happen but my parents weren't sure.

 

[Vdubchaos]

Investing is simply a "nicer" word for Gambling.

Relying on someone to do it for you is a BAD move.

 

[Sluggo]

If your parents are comfortable with their situation, and have enough to care for themselves, what business is it of yours?

 

[halik]

Opportunity cost of mortgage in these rates are huge, you're talking like 2.xx% interest rates after tax benefits.

If your thesis is that hard assets are going up, you should be all means lever up to buy them. If housing goes up 5%, what's your ROI on a 500K place

a) put up 500K in cash

b) put up 100K in cash


Precious metals produce no income and have very little utility comparatively speaking. Real estate after the crash was a great play, but you need a lot of liquid cash. Sheriff's sales etc are all cash due EOD.

 

[purbeast0]

200k has been the household average income over the past 20 years? say what?

 

[DeviousTrap]

The tone of your post is insane and you're making some foolish assumptions... bonds are worthless paper? Having a mortgage is a bad idea? Hard assets are better? "Only" 1.2MM?

First of all, having a mortgage isn't even close to a bad idea and you need to drop that notion. Having a debt is also not an issue. The issue is having a debt level that you can afford to service, aka don't buy more than you can afford. In a low interest environment as long as you have the money to pay your mortgage, why wouldn't you finance your house? The potential growth rate that you'll earn on the cash leftover is more than the amount you're paying in interest.

If they've never had more than 1 down quarter, the person they're paying is doing an a pretty damn good job. You can get exposure to physical assets through stocks very easily, have you looked at their portfolios? A REIT (Real Estate Investment Trust), as an example, will move in a direct relationship to the property values of the area in which is owns the real estate. Your parents easily could have been capturing that in a diversified portfolio. And taking money out of a 401k to buy a physical asset as form of investment just stupid. You pay a penalty for no reason, when you could have invested in that same asset class through your tax-exempt fund.

 

[bignateyk]

Maybe you should move out of your parents basement and let them invest their money how they see fit.

 

[IronWing]

OP, you getting a job and contributing to the household income stream would be more benefitual to your parents' bottom line than any shift in investment stategy would bring.

 

[nageov3t]

If your parents are comfortable with their situation, and have enough to care for themselves, what business is it of yours?

not to defend A420, but what's wrong with taking an interest in your parents finances?

my dad's recently gotten really into coin collecting... it's his money and I'd never tell him how to spend it, but at least part of me worries about him getting taken advantage of and squandering their retirement savings (after what happened with his mom when the state took everything after she entered a nursing home, he's been obsessed with trying to hide money from the government *shrug*)

 

[Scarpozzi]

Investing = Risk

For some people, the reward isn't worth the risk. In real estate, despite the potential rewards, there's a lot of trouble too. Between insurance, property management, and taxes, those are all costs that come right off the top of any profits....and recovery of some areas is still taking place.

If they're content, that's great. I like individual stocks that pay dividends because they typically don't get devalued as quickly....but I also like mutual funds and index funds for easy diversification and growth.

 

[bignateyk]

not to defend A420, but what's wrong with taking an interest in your parents finances?

my dad's recently gotten really into coin collecting... it's his money and I'd never tell him how to spend it, but at least part of me worries about him getting taken advantage of and squandering their retirement savings (after what happened with his mom when the state took everything after she entered a nursing home, he's been obsessed with trying to hide money from the government *shrug*)

Because A420 has absolutely not clue about anything related to finances given that he's never actually had an income of any kind or left his parents basement.

 

[sdifox]

200k has been the household average income over the past 20 years? say what?

His Parents' household income.

 

[DaveSimmons]

Gold and silver are awful investments. Even in a Road Warrior or Zombie Apocalypse setting they are worthless -- try trading a silver bar for a can of food and you'll be laughed at. Guns, food, medicine are what you want for your expected collapse of society.

Until then, "worthless paper" stocks are a very good investment, especially if you pick low fee index funds like the total US stock market or the S&P 500.

Annuities are usually a bad investment because of high sales loads and tricky schemes that are outperformed by S&P 500 index funds. Most are probably still better than gold or silver though.

Real estate can be a good investment if you know what you're doing, either through direct ownership or investment trust funds, but it is not necessarily better than stock funds. It's also easier to mess up your investment compared to just buying and holding a stock index fund.

 

[bignateyk]

His Parents' household income.

He reminds me of Zach Galifianakis from the hangover. Except instead of being full of funny he's full of tea-bagger delusion.http://www.imdb.com/name/nm0302108/?ref_=tt_ov_st

 

[purbeast0]

oh lol ok. i read that and was like wtf.

 

[dank69]

Anarchist you have to pull a Costanza and assume everything you think is right is actually wrong. Do everything the exact opposite of what you think you should do. See a pretty girl and think she is way out of your league? Walk up to her and tell her you have no job and live in your parents' basement.

 

[Golgatha]

Gold and silver are awful investments. Even in a Road Warrior or Zombie Apocalypse setting they are worthless -- try trading a silver bar for a can of food and you'll be laughed at. Guns, food, medicine are what you want for your expected collapse of society.

Ammo man, don't forget the ammo.

 

[dank69]

Ammo man, don't forget the ammo.

Jesus Christ guys don't give Anarchist any ideas.

 

[DrPizza]

<stupidity snipped>
As I've said before, my parents don't like paying debts off early but they invest in only stocks while keeping the rest in cash.
<rant about parents snipped>
That brings me to the question... Have my parents done a lousy job investing considering the above?
<more stupidity and ranting about parents snipped>
I would say yes, but they say they have done a good job since they haven't lost anything on paper (other than 2.5% lost one quarter a few years ago) and since they had a few quarters over the past 20 years with double digit gains.

If your parents have been doing that well on the stock market, using someone who is apparently quite skilled - (only one losing quarter in recent years) - then it would be foolish to pay off the mortgage - which carries a tax-deductible write-off, while being able to invest that money earning a higher rate of interest.

Or to put it another way, let's say they have $300k in cash. They can purchase a property at $300k and own it outright. Or, they can take out a mortgage for the $300k, and invest their cash in stocks.

So, with an interest rate of around 4%, after 1 year, they will have gained about $12,000 of debt. But, for instance during this year, they might have earned 20% through stocks, or even more if they have a good investor working for them. So, they stood to gain $60,000, making it a net gain of $48,000. I've over-simplified this, since there are closing costs; PMI if they didn't have 20% down, tax deductible interest on the mortgage, tax on net gains in stocks, commission to the investor, etc. Still, with a good investor, and with the low interest rates we've had over the past decade, it's quite easy to come out ahead. Further, the bank is the one taking the risk on the mortgage - if a "bubble" bursts, they may be able to walk away, rather than lose money on that investment. I'm not positive, so someone please correct me, but if I recall correctly, for most people, historically, the long term gains in real estate only slightly outpaces inflation. (edit: confirmed and link below).


http://www.cbsnews.com/8301-505123_162-57369547/history-says-home-real-estate-is-a-bad-investment/

 

[stlc8tr]

Most of what the OP posted was kinda wacko but I do agree that only having $1.2M saved after 20 years of $200K income is really low. Especially after the claims of only having one losing quarter in 20 years.

 

[bignateyk]

Most of what the OP posted was kinda wacko but I do agree that only having $1.2M saved after 20 years of $200K income is really low. Especially after the claims of only having one losing quarter in 20 years.

The numbers are bullshit. If they had been investing in "worthless paper" like he suggests, they would have a ton of money.

 

[Anarchist420]

Most of what the OP posted was kinda wacko but I do agree that only having $1.2M saved after 20 years of $200K income is really low. Especially after the claims of only having one losing quarter in 20 years.

it is very low. They have always done super low risk investments when they shouhldve bought up residential property after the housing bubble popped. Or they could've bought up a house in nags head that was 430k in '97 and sold for over a million a year ago... their savings were more than half a million in '97, so they should ve bought it. And i really think the interest has been eating them alive (most of the 20 years weve had the mortgage, the interest was 9% then 6%) and the fact that we don't have any rental property is even more ridiculous than not having gold and silver.

The thing that is dumb about stocks is that they're paper which sucks when the world reserve currency status ends and they're ownership in some company that you don't really have any interest in.

I'm not ever going to have my own money to invest with, but if I did i would never invest in something without intrinsic value and I would never borrow money... it is always a trick.

Going into debt is stupid because if the banks all fail then you become homeless. That needs to happen to teach the banks a lesson and also to teach people a lesson to quit borrowing so much.
That said, I hope I don't live more than another ten years because my quality of life will be half of it what it is now if I'm alive 20 years from now.

 

[Capt Caveman]

it is very low. They have always done super low risk investments when they shouhldve bought up residential property after the housing bubble popped. I really think the interest has been eating them alive (most of the 20 years weve had the mortgage, the interest was 9% then 6%) and the fact that we don't have any rental property is even more ridiculous than not having gold and silver.

The thing that is dumb about stocks is that they're paper which sucks when the world reserve currency status ends and they're ownership in some company that you don't really have any interest in.

Going into debt is stupid because if the banks all fail then you become homeless. That needs to happen to teach the banks a lesson and also to teach people a lesson to quit borrowing so much.

Incorrect, retard. STFU, moron. There's a reason you're in a mental institution. Too bad, they give you internet access. Now, go take your meds.






There is zero reason for a personal attack such as this.

esquared
Anandtech Forum Director

 

[z1ggy]

OP why are you using capital letters and giving what seems to be some thought to grammar? Is this your 2nd (3rd?) personality coming out? If so, he's still as luney and crazed as the person who usually posts random ramblings on here.

And when the hell has the normal household income been 200k, ever?? Unless you specifically mean your family's household income...Then why the hell hasn't it gone up at all? You make no sense.

 

[Mxylplyx]

What is this guys story? OP, why do you refer to your parents household and property as if it's your own? Why do you say you are never going to have your own money to invest with? Based on what I have read, I get the sense that you have failed to ever move out of your parents home and make a life of your own, and yet are attempting to give your parents investment advice completely tainted by your anti-societal philosophies that I can only presume you developed via an internet connection rather than real world experience.

Am I close here?