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Thread: Where to Invest Money Right Now?
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11-23-2022, 04:43 PM #401
The income tax is because you didn’t pay income tax when you contributed though, and the whole thing about 401k is shifting income & tax there on to a time when it will be lower. Not sure how that’s a thing against withdrawals - you had that pretax $ working for you already.
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11-23-2022, 05:13 PM #402
You raise a good point. Right now people are sitting on mortgages with historically low rates that we will likely never see again, and if you're in that situation then hanging on to the mortgage may make sense. As far as what your investments would be expected to make--don't be so sure. The run-up in stocks since about 1980, with rapid recoveries from downturns like the Great Recession and the pandemic, has let people get complacent about the risks.
A more important point is that the best investment is dependent on the investors age, income, goals, debts, risk tolerance, the economy etc etc. Where to invest money right now? is an unanswerable question, and I think most of us think of their individual circumstances when making recommendations for other people. (My son was just asking me what I thought about a friend of his who was advised by a CFP not to pay off her 7% med school loans, which doesn't seem like great advice to me.)
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11-23-2022, 05:14 PM #403
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11-23-2022, 05:15 PM #404I drink it up
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11-23-2022, 05:58 PM #405
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11-23-2022, 07:56 PM #406Rod9301
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I would be all for paying off a mortgage.
Having a mortgage and investing the proceeds is equivalent to investing with borrowed funds, ie margin.
I read a study a few years ago that showed that borrowing money to invest had never worked out. The study was done over 700 years or so.
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11-23-2022, 08:27 PM #407Hucked to flat once
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The point I was subtly trying to make. Not a lot of downside (10% penalty worst case vs what interest on cc cash advance or short term loan). I guess we all define our emergencies and what we're willing to do to get out of them. Back to some cash and a passport in an envelope...
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11-23-2022, 08:39 PM #408
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11-23-2022, 08:44 PM #409
I think you need to look at risks and probabilities. Paying of your 7% loan is the equivalent of a guaranteed 7% return; you’re not going to get anywhere near that kind of return from any investment, so you should pay that off first.
However, in my instance I have more than 20 year before retirement. I don’t think there’s ever been a 20 year period where stocks haven’t returned more than 2.75%, so it’s a pretty safe bet that putting the money into a stock index fund is going to provide a better return for my timeframe than paying off the mortgage would.
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11-23-2022, 08:50 PM #410
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11-23-2022, 09:35 PM #411
I have to agree with Rod--few people have the discipline and risk tolerance to earn more from their investments than their mortgage interest--nor was it easy to do until recently. Rod (I think) and I (definitely) are old enough to remember both double digit CD's and double digit mortgage rates. Which certainly affects our financial perspectives. The super low mortgage rate and inflation of recent years will affect the fianancial decisions of more recent generations for years to come as well, long after those conditions are gone (which is already.)
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11-23-2022, 09:41 PM #412
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11-23-2022, 09:47 PM #413
It could certainly be a generational thing, but if you’re currently holding a mortgage over 4% you probably did something wrong. If your mortgage is under 4%, you’re probably better off putting the money into retirement instead of mortgage.
I still think rod is a moron.
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11-23-2022, 10:44 PM #414
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11-24-2022, 09:10 AM #415
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11-24-2022, 10:05 AM #416
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11-24-2022, 12:06 PM #417
I don't disagree, except about Rod. (Better hope he doesn't challenge you to a ski-off; you wouldn't have to worry about long term investing)
My point is that investing is very psychological (there was a Nobel Prize for that insight) and is very much affected by our experiences when we're starting out. Why do so many people buy high and sell low? If someone is the kind of person that checks their portfolio every few days a CD might be a good idea.
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11-24-2022, 12:58 PM #418
Maybe we’re talking past each other, or maybe just coming from a different perspective, but I agree that psychology is an issue, which is exactly why I think it’s a bad idea to try to time the market or pick individual stocks. Your psychology is likely to lead you astray. Much better to make everything as automatic as possible to keep emotions out of it.
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11-24-2022, 02:07 PM #419Rod9301
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11-24-2022, 02:18 PM #420
a lot of people are mad at Ukraine for not wanting "peace" on Russia's terms
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11-24-2022, 03:41 PM #421
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11-24-2022, 04:03 PM #422
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11-24-2022, 08:47 PM #423Rod9301
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Buying when stocks are below fair value is not timing the market.
Buying stocks when they are expensive will not provide good returns.
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11-24-2022, 08:49 PM #424
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11-24-2022, 09:15 PM #425
How is that not timing the market? What’s your definition of timing the market if it’s not that?
Of course buying something that undervalued and selling something overvalued is a good strategy. The problem is that basically no one can achieve that consistently in practice.
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