Investing 102 - Page 254 - Lateral-g Forums

**glassman** · #**2531** 02-01-2013, 07:40 PM

I agree mike, with the key word being "if"....me too, if I stay, still up in the air. I like the idea of NO mortgage.

Bucketlist2012 · #**2532** 02-01-2013, 07:54 PM

Quote:

Originally Posted by glassman

I agree mike, with the key word being "if"....me too, if I stay, still up in the air. I like the idea of NO mortgage.

Yes, I may be moving near Family in the next several years, depending on a lot of things...Health or too high of rates in a few years.

But plan A is to secure another low fixed 30 year just in case I stay here...

I do like the idea of NO mortgage, but only if when I buy the rates are too high..Then maybe I would pay cash..Or at least 60 to 70% .
But the rates would have to be in the 8 or 9% range for me to consider paying more down...

But I cannot wait any longer about IF I am moving in a few years...Just in case I don't...

**GregWeld** · #**2533** 02-01-2013, 07:55 PM

I paid all cash for a house once -- it was a huge mistake. You're losing the use of the capital to invest to make money and grow....

With interest rates this low anyone is foolish to pay off early or put too much down.

Think of it this way... I get a bit more than 4% in TAX FREE muni bonds... and a mortgage is less than that and you get to deduct the interest payments... so in actual fact you can make more money on your money than you're paying.

The 'key' to making a return - called ROI (return on investment) is to put down 20% -- say on a 500K house... so we'll call that 100K down.... if the house sells later for 600K -- you've doubled your "INVESTMENT" which was the cash you put down. Not bad... not bad at all.

If you pay all cash for the house -- 500K -- and sell for 600K -- you've only earned 20% on your money.

Bucketlist2012 · #**2534** 02-01-2013, 08:07 PM

Greg,

You know I agree with you... It took me a while to convince the Wife a few years back. When the rates were 4.6%, I told her no paying the house off, no paying early, and no extra payments..

Now she is Investment smart and totally gets it...So I don't have to convince her anymore..

Only if the rates were like in the 1990's would I consider a Paid for home...Rates in the double digits..But now ? It is a no brainer...

A new 30 year fixed at 3.75%....My Wife is totally on board with going full term..

My Sister ? The opposite...She paid it off and then could not cash out money to invest when the rates went down...She is stuck ...No Liquidity.

High Credit card debt, and Student Loans...I gave up giving advise that she won't listen to and tells me she knows what she is doing..

Did I mention her Investment advisor is Chase at 1.4% with all Chase Investments ?

**GregWeld** · #**2535** 02-01-2013, 10:55 PM

I think the problem with money management "in general" is that we grow up with ideas and thoughts from our past/parents/etc. EVERYONE wants a paid off house... Well YEAH! But it doesn't make FINANCIAL sense if you have adequate cash flow and adequate assets to retire on. It's simple math rather than simple thinking.

The key to "retirement" --- is not about how much money is coming in -- it's about how much money is going OUT... if you don't have much going out you can make it with not that big of a nest egg. The problem with most people is that they don't have ANY plan. So til the day they retire - they're spending like the pay check will never change... If you're 35 and have a 30 year mortgage and you pay it off the month you retire... then you don't need "X" coming in to pay the mortgage. This is all a manor of actually sitting down with pad and pencil and doing a simple spread sheet. How old you are - when you plan to retire - what you owe MONTHLY when will things be paid off - and make sure you don't owe a ton of dough come retirement time. The thing with a fixed rate mortgage was that you should be making double in 20 years and still have that cheap mortgage payment. Now days people are buying bigger more expensive houses and they're like 55 years old - and they have a 10 year variable rate mortgage that's set to go UP at the same time they're set to retire. That's just DUMB. Sorry. DUMB DUMB DUMB. Do ya really want to be 70 years old and a greeter at Wal Mart to make ends meet?

Make a plan -- realistic -- and stick to it and don't fudge the numbers. Do so at your own peril. Retirement is what you were SUPPOSED to be working for. You can have a nice relaxed retirement - or you can struggle to keep the lights on and watch as everything around you is falling apart.

So here's what you really HOPE FOR! You have a fixed rate 30 year mortgage at 4% --- and INTEREST RATES go to 10%... I LOVE inflation. I can make a killing in income in an inflationary environment. If you already own your house on or near retirement and your savings are earning TWICE what you're paying out --- PERECT! I'd love to be able to park money is a CD at 9 or 10%! I'd double my income!

Bucketlist2012 · #**2536** 02-01-2013, 11:13 PM

Ya Greg, Planning is critical..

Take me for instance..I was forced into retirement 3 years ago due to two Strokes, A Brain lesion that turned into Seizures, and a major Heart infection and a Bad Heart valve.. I know, When I do things, I go BIG.

But I will be OK due to long term planning.. I had planned to work until I was at least 57 , But I had to retire at 50.

But like you said, it is how much is going out..I keep my monthly nutt going out reasonable , so I will make it. My Investments will generate enough for me. And like you said, this is the slow time...When Inflation hits ? I know my income will double with lower risk, a.k.a. CD ladders, ect... So if I can make it now, I will make it then.

I have no problem taking a 30 year loan at 53. Also I have plenty of equity. And locking in at 3.75% is just incredible.

Lucky I was living consumer debt free and had my Taxable account 90% of my Investments. So when tragedy struck, i was as ready as I could be...

We have to plan for the unknown sometimes...

**GregWeld** · #**2537** 02-01-2013, 11:22 PM

Quote:

Originally Posted by Bucketlist2012

Ya Greg, Planning is critical..

Take me for instance..I was forced into retirement 3 years ago due to two Strokes, A Brain lesion that turned into Seizures, and a major Heart infection and a Bad Heart valve.. I know, When I do things, I go BIG.

But I will be OK due to long term planning.. I had planned to work until I was at least 57 to 60, But I had to retire at 50.

But like you said, it is how much is going out..I keep my monthly nutt going out reasonable , so I will make it. My Investments will generate enough for me. And like you said, this is the slow time...When Inflation hits ? I know my income will double with lower risk, a.k.a. CD ladders, ect... So if I can make it now, I will make it then.

I have no problem taking a 30 year loan at 53. Also I have plenty of equity. And locking in at 3.75% is just incredible.

Lucky I was living consumer debt free and had my Taxable account 90% of my Investments. So when tragedy struck, i was as ready as I could be...

We have to plan for the unknown sometimes...

Mike that's the key!

A mortgage of any kind is a no biggie IF you have adequate income.... Then it's smart to use cheap mortgage money! But you and I know that you have to have the assets etc to back it up.

What I'm saying is that people who DON'T have adequate assets and retirement income - looking at a mortgage for a bigger house etc -- and retirement is right around the corner. That's a plan alright -- a plan for disaster!

I have a mortgage on my main house and this new Sun Valley house -- but it's peanuts on a monthly basis compared to my income and assets - so I don't even think about it. But I certainly know that most aren't quiet as lucky as I have been. Retirement income is precious and ya just gotta plan for it is all.

Bucketlist2012 · #**2538** 02-01-2013, 11:34 PM

AMEN Greg..

I had to train the Wife...She wanted to move up, ect... and I said no..We stay within our means and if things go well, we increase our spending later.
I would rather die with assets left than have to be a Walmart greeter..

And I could never have written the script for what happened to me...I almost didn't make it... I Had the Notary and the Attorney writing my Trust on my deathbed.

For you readers...WRITE A WILL AND A TRUST NOW.. Do not wait...

So that is why you haven't seen me at any events yet..Still recovering..

But like you said, Inflation will come, and that will be good for guys like you and me...Low Debt and Liquidity to Invest both no risk, and still Invest in the Market..

**GregWeld** · #**2539** 02-02-2013, 11:07 AM

If you check your accounts -- AT&T (T) paid you a nice dividend after the market closed on Friday.... AND it went up in price too!

Gotta love that!!

EEEEEEEEHHHHHHAAAAAAA

**glassman** · #**2540** 02-02-2013, 11:30 AM

Greg and mike, the key the readers need to know here is PLANNING.

I committed the investment sin from 98 to 08 of invest and forget, 1100 a month from age 31 to 41. I now have 3k a month to "play with". I am still getting started and learning. I don't have much knowledge to contribute here and am taking in much more than I'm putting out....

Have a plan
Manage your debt, keep it at an absolute minimum.

I like the idea of being "homestead" in case sh$t really hit the fan, both in our market and the global market. Why do I feel this? Don't know, been in other countries where 90% of the populas has absolutely nothing. It's hard to watch as I look at my own belly. My wife and I are also fairly charitable ...

I would like to be out in 10 or so years, puts me at 55 ish.

No/ low overhead, just like you said greg....