This doesn't make any sense to me. I don't even pay down any principle on my mortgage, I pay the interest only. I do this because my money is earning twice as much as the interest I am paying. Until that changes I don't see how paying off a low rate mortgage (at 3.5%) is a better idea that investing that money (and earning 7%). I suppose your way is safer though...
I'm not saying it can't work for anyone on the entire planet. For the most part it is trading some return for some security (as is most insurance) You gotta look at each one on their own.
Can it have value to a small subset? Sure. They can thank the laws for that because otherwise it would be worthless.
That is a an awful way to defend your logic.
If I use your resoning then tarrot card readers, faith healers that will heal you for 10k would be real.
Just because millions of people do it does not mean it's smart.
if you max out your 401-k starting in your 20's, you'll retire with in excess of 7 figures in the bank
1,500 per month earning only 4% for only 30 years = 1,050,000
40 years = 1,779,000
if it were to earn 6%, not an unreasonable expectation,
1,508,000 and 2,953,000 respectively
the value of compounding interest is astonishing
this simple illustration is the primary reason I'm an advocate for privatizing social security. Everyone would retire with great benefits and an asset they can leave to their beneficiaries
I want everyone to have what the teachers already have
i guess it's a matter of what you consider 'ripoff'
some consider paying more than you should for something a ripoff
if you bet a favorite -50000 when you can bet it elsewhere at -110, i'd consider the -50000 a ripoff, but if you win the bet the novice will say you came out the same.
laying down a huge chunk of change for guaranteed income is like betting on a favorite at -50000... yeah you're more than likely to win but think about if you instead made a bunch of favorite bets at -110
once you turn that money over to the insurance company it's gone, now they use your money to make a bunch of investments and in turn give you the crumbs while they eat the feast.
an index fund is a non-managed fund comprised of all the stocks in a sector or even the whole market.
the fees are low because no one has to manage it, the whole market funds outpace EVERYTHING and EVERYBODY over the long term
good luck
some consider paying more than you should for something a ripoff
if you bet a favorite -50000 when you can bet it elsewhere at -110, i'd consider the -50000 a ripoff, but if you win the bet the novice will say you came out the same.
laying down a huge chunk of change for guaranteed income is like betting on a favorite at -50000... yeah you're more than likely to win but think about if you instead made a bunch of favorite bets at -110
once you turn that money over to the insurance company it's gone, now they use your money to make a bunch of investments and in turn give you the crumbs while they eat the feast.
an index fund is a non-managed fund comprised of all the stocks in a sector or even the whole market.
the fees are low because no one has to manage it, the whole market funds outpace EVERYTHING and EVERYBODY over the long term
good luck
Yeah pretty much.
I actually don't think beating the market is that hard for the individual investor (it's not easy but not impossible) but for mutual funds with all their limitations, fees and even loads it is pretty damn hard over a large sample.
Even most hedge funds with their 2/20 commissions lose to the market, the ones that beat it usually either aren't open to the public or closed to new investors once they become successful.
A lot of crappy financial products out there but someone paying these fees is better than them not investing at all so it is easy not to notice.
Someone like Jordan Belfort I find to be very overrated as a con man. Just rip people off legally and don't do jail time. It isn't that hard if you're a good salesman.
don't get me wrong, I don't mind paying fees, I don't like to pay fees, but I know they are necessary.
just like mowing my lawn, it's cheaper if I do it, if I have someone else do it I have to pay them, but paying someone $100 an hour to mow my lawn? no freaking way
a lot of the hedge funds aren't about beating the market, they are about getting your wealth into different asset classes that are not correlated to the market. and it's not in case one goes down the other goes up... it's more if this house burns down I'll move into my other house.
politicians are always on the look out to take from the few and give to the many, that's how they keep getting elected. we live in a country where our leaders are chosen on their ability to persuade people to vote for them, not on their ability to get things done. that being said the wealthy have to constantly battle and work and find ways to protect their wealth.
just like mowing my lawn, it's cheaper if I do it, if I have someone else do it I have to pay them, but paying someone $100 an hour to mow my lawn? no freaking way
a lot of the hedge funds aren't about beating the market, they are about getting your wealth into different asset classes that are not correlated to the market. and it's not in case one goes down the other goes up... it's more if this house burns down I'll move into my other house.
politicians are always on the look out to take from the few and give to the many, that's how they keep getting elected. we live in a country where our leaders are chosen on their ability to persuade people to vote for them, not on their ability to get things done. that being said the wealthy have to constantly battle and work and find ways to protect their wealth.
Most people don't save much money after they start working at a young age like 17, up to 25........
Even so, let's say they spend all their money partying/having fun, eventually you gotta start saving.
If you can afford to put away $100 every week for 50 weeks, & do this from age 25 until you retire at 65 years old, that's 40 Yeats of saving $100 a week, that's a total of $200,000.......
That's a nice pile of cash that you will need to live comfortable for the rest of your retired life.
I'm assuming you weren't laid off for much time during these years......but this day & age, its very hard to do.
The people growing up & working from the 1960's thru 2,000 could do it because there wasn't much uncertainty as there is in today's society.
Anyway, if you have a decent job & save like I stated above the $200,000, it will go a long way including the social security check you receive, & any investments, & hopefully a house that's been paid off after all these years.
Of course this is easier for someone that's not married & has no kids to save money.
If youre gonna incest your money in the stock market, make sure you spread your money around.
Even so, let's say they spend all their money partying/having fun, eventually you gotta start saving.
If you can afford to put away $100 every week for 50 weeks, & do this from age 25 until you retire at 65 years old, that's 40 Yeats of saving $100 a week, that's a total of $200,000.......
That's a nice pile of cash that you will need to live comfortable for the rest of your retired life.
I'm assuming you weren't laid off for much time during these years......but this day & age, its very hard to do.
The people growing up & working from the 1960's thru 2,000 could do it because there wasn't much uncertainty as there is in today's society.
Anyway, if you have a decent job & save like I stated above the $200,000, it will go a long way including the social security check you receive, & any investments, & hopefully a house that's been paid off after all these years.
Of course this is easier for someone that's not married & has no kids to save money.
If youre gonna incest your money in the stock market, make sure you spread your money around.
pile of cash in savings?
only earning 1% ?
what to do with it?
figure out your expenses for 6 months, leave that in savings, consider it your emergency fund, you need to keep this money in risk free accounts at all times.
if you have any left over then:
Do you have any debt? pay it down, better yet pay it off
still have money left?
if you have earned income and it's not over the limits, roth ira
still have money left?
now you are ready to start investing.
you need to set some goals, what and when and how much cash will you need?
new car in a year?
bigger house in 5 years?
extra income starting now?
retire in 10 years?
see where I am going?, you need clear and defined goals so you can put together a plan. otherwise you're like the guy from idiocracy saying "i like money"
only earning 1% ?
what to do with it?
figure out your expenses for 6 months, leave that in savings, consider it your emergency fund, you need to keep this money in risk free accounts at all times.
if you have any left over then:
Do you have any debt? pay it down, better yet pay it off
still have money left?
if you have earned income and it's not over the limits, roth ira
still have money left?
now you are ready to start investing.
you need to set some goals, what and when and how much cash will you need?
new car in a year?
bigger house in 5 years?
extra income starting now?
retire in 10 years?
see where I am going?, you need clear and defined goals so you can put together a plan. otherwise you're like the guy from idiocracy saying "i like money"
Good post by buddyboy, jstack read it a few times and take action
reluctant to add further as not enough infirmation as to goals posted. With said , a few thoughts ;
you said 'investing '. I think you're looking at saving for retirement ? To better the bank's 1% high interest savings account ? I'll make a few
generalizations ;
For investing purposes , at 1% return you're not beating the rate of inflation . The power of your money is eroding . There is a very high probability that inflation will rise under the new govt . The market is anticipating this - mortgage rates shot up and yellen has warned they will raise interest rates as much as 3 times in 2017. We've hit the bottom for cheap rates , bond yields are telling you this . Add to this protectionist policies and staples/buying shit will be more expensive . be frugal
a few notorious , iconic investing gurus have warned of lower investment returns over the next decade including Bogle (founder of vanguard ( they have an educational aspect at their site , their fees r rock bottom ) ..I do NOt know if his position has changed post Trump victory
with that in mind , as buddleboy stated : eliminate debt , if its not making you money get rid of it- that's bad debt . Beholden to no one . Educate yourself on the basics of investing . It's not hard ..all there at your fingertips . ego and emotion erode returns , destroy them. If a market drop
of 10-30% makes you scared ? Your asset allocation is way off . Consider a well respected professional handling your money
reluctant to add further as not enough infirmation as to goals posted. With said , a few thoughts ;
you said 'investing '. I think you're looking at saving for retirement ? To better the bank's 1% high interest savings account ? I'll make a few
generalizations ;
For investing purposes , at 1% return you're not beating the rate of inflation . The power of your money is eroding . There is a very high probability that inflation will rise under the new govt . The market is anticipating this - mortgage rates shot up and yellen has warned they will raise interest rates as much as 3 times in 2017. We've hit the bottom for cheap rates , bond yields are telling you this . Add to this protectionist policies and staples/buying shit will be more expensive . be frugal
a few notorious , iconic investing gurus have warned of lower investment returns over the next decade including Bogle (founder of vanguard ( they have an educational aspect at their site , their fees r rock bottom ) ..I do NOt know if his position has changed post Trump victory
with that in mind , as buddleboy stated : eliminate debt , if its not making you money get rid of it- that's bad debt . Beholden to no one . Educate yourself on the basics of investing . It's not hard ..all there at your fingertips . ego and emotion erode returns , destroy them. If a market drop
of 10-30% makes you scared ? Your asset allocation is way off . Consider a well respected professional handling your money
