Investing 102

[GregWeld]

Originally Posted by Bucketlist2012

^^^^^^

Exactly what Todd says..

Anyone who thinks that interest rates will be this low forever, better re think their strategy..

I paid credit card rates for a home loan once.. Never again..

I have a 4% loan now, and I am about to purchase another life changing property for 3.5%.

This is historically low, and down the road , this will put you in a position to be comfortable in a fixed loan when the Sh-t hits the fan..

Once you have the low rate home loan, you can then concentrate on Investing..

But we must live somewhere, so why not lock in historically low rates...

TOTALLY AGREE WITH THIS STATEMENT!!


BUY LOW - FINANCE EVEN LOWER. FIXED RATE ONLY.


THEN GET THE HOUSE ='s AN ATM thoughts OUT OF YOUR HEAD!

[Bucketlist2012]

Originally Posted by GregWeld

TOTALLY AGREE WITH THIS STATEMENT!!


BUY LOW - FINANCE EVEN LOWER. FIXED RATE ONLY.


THEN GET THE HOUSE ='s AN ATM thoughts OUT OF YOUR HEAD!

Amen Greg..

Fixed rate, House is HOME and not an ATM , and buy low..


The prices are rock bottom, and the rates are rock bottom...When do you EVER see BOTH of these happening together ?

Maybe never again....The time is now...

Just to get a HOME at these prices would be killer, or just to get the LOAN rate at 3%, would be life changing, but BOTH ????? OMG... 10 years from now, you will be KING.... It truly will change your life..

Being smart and lucky, are the tickets to success..

[glassman]

Sooooo true.....so many people did this the last ten years or so. No friggen common sense, like houses are really go up 30% a year forever....

[GregWeld]

So I was looking at McDonalds (MCD) this morning... and I did my usual look back at the chart and dividend etc.

The reason I'm writing about it this morning is because of our recent housing discussion. Which brought up a couple of key points I was trying to get people to at least think about.

Since 2008 MCD has DOUBLED it's dividend from .38 per share to .70 per share... and while doing that it also grew in price by 68%


Since 1990 it has price growth of 971%


How's your house done since then??


Which one of these investments would help you retire? 100K invested in your house or 10K invested in 1990 in McDonalds?

In 1990 a share of MCD was 7.00 and paid .02 dividend... it has split 2 for 1 twice since then so for every one share you bought you now have 4....

10K / 7.00 = 1428 shares -- now after splits = 5700 shares paying .70 per quarter or annually $16K.... Monthly that is $1300


AND I'M NOT CALCULATING REINVESTED DIVIDENDS --- I'm just doing the bare minimum net math - and that you've taken the cash dividend and pissed it away -- OR maybe you used it to pay down your house each quarter? LOL


Figure the extra 100K in your home equity would have saved you maybe $400 or 500 a month now? I don't want to do all the math -- I'm just putting this out there for "thinking" purposes... not a detailed breakdown of which is better etc just LOOK at it is all I'm saying. One is an investment that is now real NET WORTH and CASH FLOW one is just where you live. My thinking is that $1300 a month now is looking pretty good.

Oh -- yeah -- and your 10K investment is now worth 500K

[Bucketlist2012]

Greg...

Great points...Especially on a down day for Mickey Dee's...Long term it has been great.

And to your point of Housing vs. Investing...

My recent test was Buying a HOME in 2009, and adding six figures to my Investments , the same year.

Since I bought the HOME at the bottom, it hasn't gone down, but it sure hasn't gone up.

The money that I added to my Portfolio ? Haha, It pays my house payment and more...

My Wife in 2009 wanted to throw more money at the Home to increase the equity..We had long talks on why we shouldn't.

Thankfully she agreed with me, but she still gets nervous but knows we did the right thing Investing the money.

Sure at times the market has been up, down, and sideways, but it has and will outperform my HOME value..

Also I don't think of my Home as an Investment for profit, but a place to live, and I won't ever be taking money out of it..I am 52 with 27 years left on my loan..just like I want it..

I had friends that were able to buy their home for cash because they were afraid of the Market....Now they want to cash re-fi out...The bank won't let them..

They bank with chase , and they have their Investments with chase..Fools..

And they cannot get money out to pay off student loans, ect...I told them in 2009 , to get the house loan and to invest more....

They told me that their home was a guaranteed return....Yet now they struggle to work to pay the mortgage...

My Dividends pay mine...

[WSSix]

Sweet! That helps me realize renting right now isn't so bad. Yeah, I'd really like to be able to buy a house and not just rent. However, I'm nowhere near settled so now is simply not the time for me to buy unfortunately. I am putting my money into some stocks though instead of just spending away.

[Flash68]

Originally Posted by GregWeld

NOBODY ever made any money buying a house that they LIVE in... because when you take into account the payments and the upkeep and the taxes etc -- they've spent way more than they "made"... but it SOUNDS GOOD!

You're right for most people, but not me pal. I have killed it on both RE properties I owned and lived in. And before you say I got lucky on timing, the entry and exit was planned in both cases, with a little wiggle room built in. It is possible if you understand RE, which again is easier said than done. I've spent a lot of time and hundreds of hours over the past decade studying RE cycles, economics, etc (because I enjoy it) so to me that is an area I follow and understand at a higher level than say the stock market. The market is the market and can turn on a dime, but RE moves like a big ship and is easier to predict typically. Everyone has their niche I guess. I wish I lived in Todd's market and I'd do the same thing he's planning on doing.

My old saying is in partial agreement with yours... A primary residence is not meant to be an investment, but if you play it right and know what you're doing it sure can be a killer investment. Oh and you get utility out of it too. (from my Econ days)

Originally Posted by Bucketlist2012

I agree. I could pay off the house, but at 4% interest, why ? I make more being invested..

Exactly. My 30 year @ 4% will never be paid off early... unless I hit the lottery and get Weld cash.

Originally Posted by Vegas69

My game plan is to secure 4-5 single family homes at these low prices/rates in the next 2-3 years max. Cash flow them and have 4-5 free and clears in 15-20 years for residual income and continue to invest X amount into the market in meantime. I can play the primary mortgage by ear.

Love this plan.

[96z28ss]

Well I sold 2 house in an up market. Both I lived in for over 2 years which is tax free profit. no capital gains tax.
I bought in 1998 for $130k in 2004 sold it for $305k, in 2005 bought a house for $234k sold it in 2007 for $325k.
2 things I did wrong were from 2004 to 2007 was to not invest the money I had made and invest it. It sat in a saving account. 2nd mistake, In 2007 I bought a house that I was planing to do the same thing and dump it in 2 years. Took most of all the profits and put it down on the house, to keep the mortgage payment low. Economy stuck it to me good. Got to stay in this house longer than I thought, or just move on and buy cheap, start over.

[Flash68]

Originally Posted by 96z28ss

Well I sold 2 house in an up market. Both I lived in for over 2 years which is tax free profit. no capital gains tax.
I bought in 1998 for $130k in 2004 sold it for $305k, in 2005 bought a house for $234k sold it in 2007 for $325k.
2 things I did wrong were from 2004 to 2007 was to not invest the money I had made and invest it. It sat in a saving account. 2nd mistake, In 2007 I bought a house that I was planing to do the same thing and dump it in 2 years. Took most of all the profits and put it down on the house, to keep the mortgage payment low. Economy stuck it to me good. Got to stay in this house longer than I thought, or just move on and buy cheap, start over.

You did just what millions of other people did, and at least you've hung on and been okay. Many did not make it as you know.

The minute people like the secretary down the street and the metal bender starting "flipping houses" for six figure profits, I knew it was time to sell and rent. I told my friends and neighbors to do the same in 2005 and 2006. They wished they had listened because at Bay Area prices, many got their asses handed to them. I've been happy renting for 5 years and am getting back in now. This one will be for 10-12 years I reckon. I am not mobile and young and single anymore.

Hopefully if I read more of GW's stock posts and do what he says I can build an Ironworks pool down the road.

[96z28ss]

Originally Posted by Flash68

You did just what millions of other people did, and at least you've hung on and been okay. Many did not make it as you know.

The minute people like the secretary down the street and the metal bender starting "flipping houses" for six figure profits, I knew it was time to sell and rent. I told my friends and neighbors to do the same in 2005 and 2006. They wished they had listened because at Bay Area prices, many got their asses handed to them. I've been happy renting for 5 years and am getting back in now. This one will be for 10-12 years I reckon. I am notL mobile and young and single anymore.

Hopefully if I read more of GW's stock posts and do what he says I can build an Ironworks pool down the road.

We not exactly millions of people bought homes they couldn't afford and with less than 10% down. I put down $140k. I just didn't invest my money correctly but I'm learning from the big guys here