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.

 

[sapperJ24]

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 .

I was thinking of that first article when I posted, it got me over the hump the first time I bought in. Just feels scary throwin hard earned money into something that you have no control over! Seeing it again is a good reminder. That said, I prefer to buy a dip if I can.

And I'm sitting okay on ammo, could always use more right? And I like to keep my staples diversified with dried beans, rice, etc. in addition to cans.

 

[BuzzH]

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.

Good post here.

One of my best friends is who I ask a lot of these types of questions to. His advice has always been solid, always backed by extensive research and factual data.

The "safest" thing in my opinion is investing in the S&P 500 for long term. Tough to beat and very few financial advisors beat the S&P long term.

My plan going into retirement is to always have 18-24 months living expenses in cash. No less than 60-70% of my money in the S&P. Historically, most market down turns last 12-24 months (why I have 24 months in cash).

I also have enough diversity via a rental property cash flowing $1300/ month that we have paid off to provide cushion from a down turn. Add a nice pension, SS supplement under FERS, and affordable health insurance for us both. IMO there's too much down side to not keeping a significant amount of my portfolio in the S&P even in retirement. I would be betting against the top 500 companies in the largest economy in the world by being conservative keeping my money side lined. I dont want to miss out on 10-20-30% years. Is there risk? I dont believe a very high risk. But the first rule of investing is never take risk you arent comfortable with, it sucks if you have to constantly worry.

There is no one size fits all as situations and circumstances vary.

I like where my wife and I are right now.

 

[Irrelevant]

Ya'll realize there is no such thing as being debt free and owning a home right? You still have to pay someone to live there (property tax), and if you don't pay it, they will take your home just like the bank will if you don't pay your loan back. Hell my parents now pay more per month in property tax than they were paying for their mortgage. It's simply a fallacy that people would be wise to understand.

In terms of your initial question. I find the interface on Vanguard to be pretty bad. The few I've talked to, Fedelity is better. Robinhood is actually really nice, but I pulled the plug on it as it was too tempting for me to think I was smarter than I am. Vanguard's S&P500 is a good ETF, I prefer growth...