Investment company?

[Walkathon]

Good thread with some different perspectives. I went with the low stress, payoff the house route. I would have done better financially if I'd have invested the money in a S&P500 fund, but I'm ok with not getting the extra gains. No kids, and two incomes (DINK) and we've been maxing out 401K's to hopefully both be done working in our late 50's if we can figure out the health ins puzzle.

 

[sapperJ24]

Somewhat related, any advice for someone with hesitancy to buy in when the markets are setting records?

Of course the adage of 'time in the market is more important than timing the market' remains true. The concern is getting left holding the bag or caught up in a pump and dump. It is difficult to not feel like some soon-to-be retiree is just waiting for a sucker like me so they can cash out. Lots of 'feelings' combating statistical performance.

Is it just faith in the stability and institutions of the country?

 

[Treeshark]

Is it just faith in the stability and institutions of the country?

Yes. The 100 year average rate-of-return is 10+% annually. This includes all of the nasty things that have happened to the economy during that time period.

It’s not a perfect, risk-free investment- but it has beaten everything else. My money says it will continue to do so.

*edit to add: this is assuming a plan for 10 or more years to retirement. If closer than that, I think it would probably be wise to back off the gas a bit with at least a percentage of holdings.

 

[npaden]

It's so hard for me to understand the desire to pay off a mortgage early unless it would be to refinance it to a lower rate.

I'm actually going to be sad to have mine paid off here in a few days. I've had enough money that I could have paid my mortgage off 10+ years ago easily in a lump sum if I had wanted to. I have more peace of mind with that money in a semi-liquid investment option available for whatever comes up than I would have with the mortgage paid off early.

The fact that Ive earned a lot more on the investment than I paid on interest on the mortgage is just a bonus. I paid cash for our last 2 vehicles but then when car loan rates dropped through the floor in 2021 I took out title loans at the local credit union. 1.9% interest on the newest one and 2.9% on the one a year older. $90k that I actually used to help buy some land. Those are both about to be paid off and I don't have a sense of relief.

With the recent proliferation of the 0% interest credit cards for 15 months I ended up with $50k of credit card debt at 0% interest for a while but just recently had to pay that all back. It hurt my credit score while it was outstanding because my credit usage was way up there, but I didn't really have any need to borrow anything during that time and now my credit score is back up over 800 since I paid it back.

I just look at investments and loans as financial tools. Shovels and rakes.

With that said, I do see that some people get themselves in trouble with loans. I don't see it as an issue with the tool, more of an issue that people are taking out bigger loans than they should and they they might have difficulty paying back.

 

[Treeshark]

With that said, I do see that some people get themselves in trouble with loans.

For sure. Way more people in the US have difficulty caused by bad debt than there are people using it well as a tool. I’d never scoff at someone paying off a mortgage early, there are way worse money “mistakes” than that.

It’s easy to be right taking a retrospective view, and add-in recency bias- off course the right math move in the past decade was investing vs paying down debt. That’s not so clear looking forward, there could be a large years-long correction right around the corner. No one knows for sure. As @Big Fin mentioned, it comes down to risk tolerance.

 

[westbranch]

Somewhat related, any advice for someone with hesitancy to buy in when the markets are setting records?

Of course the adage of 'time in the market is more important than timing the market' remains true. The concern is getting left holding the bag or caught up in a pump and dump. It is difficult to not feel like some soon-to-be retiree is just waiting for a sucker like me so they can cash out. Lots of 'feelings' combating statistical performance.

Is it just faith in the stability and institutions of the country?

This article is 11 yrs old now, an update would be interesting.

What if You Only Invested at Market Peaks? - A Wealth of Common Sense

What happens when you only invest at the peaks of the market by being the world's worst market timer.

awealthofcommonsense.com

Same blog has this recent post.

A 30% Decline in the Stock Market - A Wealth of Common Sense

Time traveling in the stock market.

awealthofcommonsense.com

A lot of faith involved. If it doesn't work out the better option will have been canned food and ammo. Most of on here are probably doing ok on the ammo side at least .

 

[Steiny77]

Hey, if you pay off everything and don't like the new feeling, you can always go get a new mortgage and go buy some new cars, boats, campers, etc. on credit.
The lenders would love to have your business.