Query - I can buy home A or home B, and finance 100%. A costs USD 100k, B costs 200k. If I buy A, I will put the monthly savings on mortgage payments (approx $550) into an investment account. If a house will appreciate as an investment, will my eventual net worth be lower if I buy house B? Will it be higher? Or is it a wash? If it is a wash, is it fair to suggest that someone can buy the most expensive house they can afford, and the real cost of living there is no more than living in a cheaper house? Are the only increased costs taxes, insurance and (probably) utilities? This just occurred to me yesterday, and the zero-opportunity-cost concept is an eye opener. Agree or disagree?
A couple issues about this. First, it's true that if you buy a big house, the principal payment is basically taking money from one pocket and putting it into another pocket. It is fairly similar to investing it, since it's increasing your net worth. The problem is, the extra expenses and what if something happens. What if you fall ill, lose your job, etc.. It's a lot harder to lower your mortgage and housing expenses then it would be to lower your voluntary retirement plan payments. Second, a larger house has more expenses, and some of these, you did not account for. There would be higher maintenance expenses, unless the house is the same size, just newer. If the house is bigger, you'll need a bigger budget for decorations, cleaning, etc. Unless you're fine with empty rooms. And, what if the housing market collapses? I think the average increase of the stock market is higher then that of the housing market. So, by that reasoning, you'd be better off parking your money in stocks.
Focusing on your principal residence as an investment is a bad idea in my opinion. You have a lot more to factor in when buying and selling; personal issues such as distance from work, personal taste, etc. You'll be emotionally invested in the house, never a good idea with investments. That can greatly skew your view on it. When you buy investment properties, your major concern is ROI. This isn't to say it can't be an investment, but if you go in choosing your home focusing primarily on investment you're going to either hate living there, or have a bad investment.
A house is not an investment, a house is a house, it's consumption. For starters you live in a house this wears it down and requires repair over time. Sure you can repair and even improve on it, but if you do not plan on selling it shortly afterwards, you are consuming those repairs and improvement over time. This brings me to my second point, you do not plan to sell your house if the fundamentals turn sour. For that your house is too much connected to your social and economic environment in a way that stocks are not. A stock may or may not be difficult to sell, but the difficulty of selling it usually does not depend on your livelihood and your social environment. Third point, if you take a look at the Case-Shiller housing index you'll also see that housing is a very poor 'investment' historically speaking. Any excess money you put in housing beyond your satisfaction is bound to be a poor way to spend your money. The idea that stones is great for money has more to do with the past picture we have of a rich land-owning nobility, but is hardly supported by modern evidence. In short do not call a house an investment if you are not willing to treat it that way.
What are A & B valued at? If B is $200k but valued at $300k and A is $100k but valued at $140k I'd go with B. Do either require any additional investment? Ie, new floors, counters, etc? How long do you plan on living in the location? Could it be permanent? I bought 3 pieces of property intending to build on each one but then jumped ship when I found a choicer spot. In the end I bought an already constructed house and am sitting on these properties until someone makes me the right offer. It's much easier to flip raw land than it in houses right now, especially in the North East.
This is a fucking retarded question and you are smarter than it. If you were drunk when you posted it then fine, if not then repost and I will explain why you are an idiot.
Has anyone here heard of/have an opinion of Peter Shiff? There are a lot of youtube videos of him so I'm not gonna link anything, but I was just wondering if anyone here had an opinion about his nearly apocalyptic views. Is an inflationary recession a real threat? Is the bond market a huge bubble waiting to pop and destroy the dollar? I'm learning quite a bit about macro economics but I'm still mostly an idiot and have a hard time weeding out bad information. The guy was pretty much spot on about the housing bubble years before it happened and when most other people didn't even consider it, so he seems to have a pretty good track record.
Peter Schiff is mostly a hack. While he could be right (eventually) about hyperinflation, it seems to be the only thing he can talk about. I'll have to dig up the article I am thinking about, but due to Schiff being early to the hyperinflation/apocalypse trade he lost his clients like 50+% of their money on junior gold miners and precious metals. When he talks about inflation he seems to mistakenly equate an increase in the money supply to inflation. You have to have both an increase in the money supply and a higher "velocity" of money. Despite our gov't best efforts, our printing presses haven't injected money into the economy. You can see this from the lack of businesses hiring and a "recovery" that includes the joys of 9.8% headline unemployment and around 16% as an unofficial measurement. Is the bond bubble going to burst? Who knows -- But it's rather bizarre that treasuries are still having money funneled into them with their pitiful yields. You can look at some of the bond ETFs like JNK and tell me how much it makes sense that people are continually bidding up shitty debt right now. The plus side to this is that at least companies are getting funded at this point, and we don't have to deal with constant bankruptcies no matter the industry you are in. Is the dollar going to collapse? Eventually, sure, but anyone telling you it's going to collapse on such and such date has no idea what they are talking about. They might be right with the thesis, but the market can act irrationally for a lot longer than most people think. At some point people will stop buying treasuries, but for now nobody wants to plunge money into the stock market due to lack of capital expenditures and high unemployment. I think a lot of it has to do with money being cheap via zero interest rate policies (ZIRP). When you can borrow so low and then just buy basically risk-free treasuries why fuck around with stocks? You're more likely to stay higher in the capital structure than to buy equities. That's my $.02 for now.
Well equating an increase in the money supply to an increase in inflation is not that an odd of an idea. Mostly since Friedman (that is to say not that other people have not claimed it before), it has been established that inflation is always and everywhere a monetary phenomenon. Basic Macro however predicts a basically decreasing inflation and eventual deflation in this particular situation rather than inflation, so I wouldn't put my money on Schiff here. Inflation will be a problem when the government will monetize its debt, but to be honest I find that to be highly unlikely. As for the article that was mentioned by Bob, I read a similar claim, but that his clients have recouped their losses and more. It was only a very temporary situation that hardly applied to his long term clients. I am sure the man is a good and shrewd investor, doesn't make him a good macroeconomist at the same time though. I would like to see some data though, to see to what extent he is talking his book. Same goes for someone as Taleb.
I sold the hell out of all my equity holdings two weeks ago. I am undecided on chances of double dip but regardless I feel there is 6-10% decline in the next few months. I will either buy back in November or hold off for later if double dip is apparent.
I might be wrong, but I think Taleb made most of his money, and became independently wealthy, during the 1987 crash. I think he was essentially betting on the very "tail risk" he talks about... So I don't think he invests money for people at this point. With regard to Schiff talking his book -- to a certain extent all of the talking heads are, so it wouldn't surprise me if he was holding a ton (no pun intended) of precious metal related stocks and Gold for his clients. As far as inflation goes. If the money doesn't circulate and is just being used to fortify balance sheets at the big banks, I'd say it's going to be tough to find meaningful inflation or hyperinflation. A lot of the run-up in Silver and Gold seems to be from more of an apocalypse viewpoint, than inflation being right around the corner. That's not to say that we won't have commodities going up quickly. But I think that is more of a function of higher competition for each commodity or some other event like Russian wheat crops. As for me, I've been in and out of equities for rather short time periods lately. I'd love to say I could find stocks I am comfortable with holding for 2-3 years, but I think we will be in a trading range for 5-10 years, or until there is a meaningful decrease in unemployment. I'm short treasuries for a trade right now and long a derivatives clearing house and another small, cheap tech name.
I don't know about his 1987 record, what I do know however is from following Falkenstein's blog and writing in general that Nassim doesn't really have much of a trackrecord. I haven't so far seen his trackrecord to disprove what Falkenstein has been saying. (He has been associated with people investing money for other people as a consultant with his Black Swan protocol). Falkenstein on the track record: <a class="postlink" href="http://seekingalpha.com/article/222053-nassim-taleb-s-selective-returns" onclick="window.open(this.href);return false;">http://seekingalpha.com/article/222053- ... ve-returns</a> Falkenstein on Taleb in general: <a class="postlink" href="http://www.efalken.com/papers/Taleb2.html" onclick="window.open(this.href);return false;">http://www.efalken.com/papers/Taleb2.html</a> What he basically argues here is that Taleb's arguments amount to the 'nirvana fallacy' Don't get me wrong here, I like most of Taleb's writings, but there is something about the man that makes me think he is merely selling snake oil.
I don't know if this is the proper thread, but I thought it fit. I bought a timeshare last May with the intention of actually going. For the first half of the year I actually went pretty often and thought it was great. Since my girlfriend and I broke up several months back, I haven't really gone and do not intend on going back. As of now I still owe $5,000 on this thing and it really sucks. Any ideas on how to get rid of this thing? I'll be moving out of my current situation hopefully in February and this would put a huge dent in my finances if I still need to pay it on a monthly basis, especially considering I don't even use the damn thing.
'Sub-letting' or selling seems obvious. You can 'afford' to take a loss, mostly because in the case of the alternative you'll probably lose more money. Don't be wed to the idea that you can make your money back; the important thing is to take a decision after which compared to the situation of not taking that decision you're better off. I don't know if there is such an option here as re-financing, but since you're not using it, it seems to me that you'd be speculating with borrowed money then. Bottomline; if owning it doesn't make you happy, get rid of it for an amount of money that does.
What restrictions are there on your timeshare? Can you sell individual weeks yourself or do you need to allow the management company that holds the paper on the place do that?
Figured here was as good a place as any to ask.. Is anyone here in the Canadian financial world? I just have a couple quick questions I wanted to ask, not in anyway about investments or anything, more specifically around the CSC and that area. Shoot me a pm or something if you have the time. Thanks in advance
This might/probably is the wrong forum. I have been googling my brains out. My boyfriend has worked for the same company for the past ten years. It is a printing company and they are shutting down. Some union delegate told him that if you go on unemployment you can defer house payments for up to a year. While I have some income, I was hoping he could use this time to go back to school. I don't think we will be able to afford house payments and school for both of us. I loathe the thought of living off the government, but if we could defer the payments for six months we would be able to be caught up 100% on all other bills and payments. Otherwise, we are going to be doing some really creative math for a little while.
In a year or two I will inherit about $300,000 from my grandfather (already dead, I'm not estimating when he will die) and I am looking to educate myself on how best to invest it. I'm not looking for specific advice on how to invest it since I assume this will vary hugely depending on who I talk to. So I guess what I am asking is can someone give me advice on books or websites that I can read in order to learn more about investing?
<a class="postlink" href="http://www.fool.com" onclick="window.open(this.href);return false;">www.fool.com</a> has always been a favorite of mine It really depends on your goals with the money, long-term vs. short-term; end result, etc.
The Intelligent Investor by Benjamin Graham is a good place to start; I'd recommend the edition edited by Zweig. A Random Walk Down Wall Street by Malkiel is a book that actually should be read in combination with the first one. Both books are relatively 'old', but are in my opinion still a good place to start when you're new to investing. Let me emphasize it again, it's a good place to start, that's it. Don't start investing in this new period just yet based on only those two books. As for sites/blogs: <a class="postlink" href="http://blogmaverick.com/2010/08/25/the-best-investment-advice-you-will-ever-get/" onclick="window.open(this.href);return false;">http://blogmaverick.com/2010/08/25/the- ... -ever-get/</a> Mark Cuban's blog, not necessarily on investment persé but a lot of good advice related to investing. Abnormal Returns is pretty decent too; it's an aggregator Seekingalpha is another good one. But just remember that more information is not always better, there's a lot of noise out there that will only serve to confuse you.