2020 Investment Thread

[afm199]

Sounds to me like you're doing the exact right thing. Lots of articles out there that show that constant investment in indexes (e.g., S&P500) with dividend reinvestment over time beats most any active strategy.



I thought they crippled the sweep function a while back. It used to automatically sweep into money market funds, but they killed that, don't recall why.

It no longer sweeps into MM funds because they want you to manually switch it. Why? Because the way they make money now is by holding your sweep funds in almost zero accounts and reinvesting it, while paying you shit interest.

 

[Bowling4Bikes]

Disclaimer: If anyone does the opposite of what I do, you probably will be doing a smart thing. I consider it a miracle I make money on the market.

haha, I'm sure that's not true.

Out of sheer curiousity, as I'm now closer to retirement than when I started my career, why do you continue to invest? I typically read that retirees become super conservative with their money, so I figure you are playing with money you can afford to lose. Is it fun for you? Gives you something to do? Maybe because you need to?

No worries if you don't wanna answer.
cheers

 

[Blankpage]

Cause mo money mo bitches

 

[Removed 3]

Pls say that again when you are 74 y.o. Bp

 

[byke]

"Wake up damn it!"

 

[Blankpage]

Well I don’t wanna get to 74 then, you can have it.

 

[afm199]

haha, I'm sure that's not true.

Out of sheer curiousity, as I'm now closer to retirement than when I started my career, why do you continue to invest? I typically read that retirees become super conservative with their money, so I figure you are playing with money you can afford to lose. Is it fun for you? Gives you something to do? Maybe because you need to?

No worries if you don't wanna answer.
cheers

Because some stubborn old assholes live to 95, and if I die and leave money to my loved ones, all the better.

The last thing in the world I want to be is old and broke.

 

[afm199]

"Wake up damn it!"

Tell me!

 

[Removed 3]

John McCain's Mom lived up to 106 y.o. That is amazing


It is true that people are living longer. Don't pay too much attention to what the latest average lifespan is du jour. There is much to live for. Do everything possible to earn income, spend wisely and avoid racking up debt

 

[afm199]

Well I don’t wanna get to 74 then, you can have it.

It's not so bad. You can leer at the wiminz and stare at their chests and smile, and they think you're their gramps.

And the senior discounts on Dependz! Awersome!

 

[jt2]

haha, I'm sure that's not true.

Out of sheer curiousity, as I'm now closer to retirement than when I started my career, why do you continue to invest? I typically read that retirees become super conservative with their money, so I figure you are playing with money you can afford to lose. Is it fun for you? Gives you something to do? Maybe because you need to?

No worries if you don't wanna answer.
cheers

Here's why:

https://www.forbes.com/sites/wadepf...o-success-rates-updated-to-2018/#2546f0cf6860

 

[byke]

Spent some time this weekend looking into property rentals and I see that people purchasing rentals like to at least hit that 1% ratio of a 200k house bringing in 2k/mo in rent. California is super fkd up in the ratio which much of the country enjoys. A couple down the street sold their house earlier this year for 400k and it could probably be rented for 2k. Another will probably sell theirs for 300k and it's worth maybe 1500/mo in rent. I don't know how people have rentals in the bay, the leverage would be crazy.

 

[afm199]

Here's why:

https://www.forbes.com/sites/wadepf...o-success-rates-updated-to-2018/#2546f0cf6860

Yep. 4% is my max, and I aim for less.

 

[Killroy1999]

"I don't need to make anything because they pay for themselves and I'll own them all in 20-30 years" is a fast track to bankruptcy.

I know you are positive on rental property since you are looking into, but for everyone consider the scenario that you only break even at the end of the day.

You invested ~25% to buy the property, the renters paid for all your expenses and at the end of the mortgage, you own the place with monthly rent income.

Other 'gravy' things to consider are the appreciation of the property, market rent increases, tax deductions.

You can also leverage equity in real estate with home equity lines of credits- partly solving the liquidity problem.

Good article on Real Estate vs Stocks https://www.investopedia.com/investing/reasons-invest-real-estate-vs-stock-market/

 

[jt2]

Spent some time this weekend looking into property rentals and I see that people purchasing rentals like to at least hit that 1% ratio of a 200k house bringing in 2k/mo in rent. California is super fkd up in the ratio which much of the country enjoys. A couple down the street sold their house earlier this year for 400k and it could probably be rented for 2k. Another will probably sell theirs for 300k and it's worth maybe 1500/mo in rent. I don't know how people have rentals in the bay, the leverage would be crazy.

Honestly, I never concerned myself with ratios per se when looking at a rental investment. For me, it was about overall cash flow during the holding period with the objective being long term appreciation as the goal.

Negative cash flow sucks, but in this market in CA, otherwise is impossible unless you're coming in with a wheelbarrow full of cash which makes the overall investment less worthwhile.

 

[byke]

I know you are positive on rental property since you are looking into, but for everyone consider the scenario that you only break even at the end of the day.

You invested ~25% to buy the property, the renters paid for all your expenses and at the end of the mortgage, you own the place with monthly rent income.

Other 'gravy' things to consider are the appreciation of the property, market rent increases, tax deductions.

You can also leverage equity in real estate with home equity lines of credits- partly solving the liquidity problem.

Good article on Real Estate vs Stocks https://www.investopedia.com/investing/reasons-invest-real-estate-vs-stock-market/

The main problem I see is the fiscal bandwidth, which I suppose comes down to what all you're encompassing with, "renters paid for all your expenses". If you can *truly* do that, that's great. When I say "truly", I mean to where you're properly saving for the time when three of your twelve properties need a roof and you've set aside however many tens of thousands to get that taken care of. If renters truly pay for all your expenses, then there's no problem with it and if you can manage it until they're paid off, or have solid equity, then you can retire with a killer nest egg.

Honestly, I never concerned myself with ratios per se when looking at a rental investment. For me, it was about overall cash flow during the holding period with the objective being long term appreciation as the goal.

Negative cash flow sucks, but in this market in CA, otherwise is impossible unless you're coming in with a wheelbarrow full of cash which makes the overall investment less worthwhile.

Well, taking on a half million in debt to make 1k/mo is bogus. You gotta draw the line somewhere. I get that income is income, but it's also about what you can manage if things go south and if you can make 1k/mo with 100k debt versus 1k/mo with 500k debt, it's a no brainer, you gotta leave the state.

 

[NorCalAthlete]

I think like anything else it's good to not put all your eggs in one basket, and having SOME real estate (eventually) is always a good thing.

Someone further along than I am can probably add to this but I think ideally one should have :

• Stocks
• Bonds
• Real estate
• A small business
• Roth IRA / 401k
• High yield savings account for emergency fund

Regarding the small business, I'd actually lean towards having at least one for tax purposes and one for investing purposes - as in, actually being an angel investor (or more serious investor) in something that can take off, while providing ways to minimize your tax burden (and having something to do in retirement to keep you busy / focused / energized / whatever).

 

[byke]

^^^Word.

 

[Killroy1999]

The main problem I see is the fiscal bandwidth, which I suppose comes down to what all you're encompassing with, "renters paid for all your expenses". If you can *truly* do that, that's great. When I say "truly", I mean to where you're properly saving for the time when three of your twelve properties need a roof and you've set aside however many tens of thousands to get that taken care of. If renters truly pay for all your expenses, then there's no problem with it and if you can manage it until they're paid off, or have solid equity, then you can retire with a killer nest egg.

Yes, to truly pay for itself, I suggest the following when running the numbers on a property.

--25% Down Payment
--Property Taxes
--Insurance
--At least 1 month vacancy per year
--8% property management of rent
--10% maintenance of rent
--HOA fees
--Use a CPA for taxes
--ect. look for more expenses

I have put roofs on my properties, but I got insurance to always pay for it.

Its good to hear actual horror stories so you know what you are getting into:

I had a Tennent die of natural causes and stink up the place - then make the news. My property manager found out when someone forwarded the news clip to him. The roommate came home and even though the body was out of there, it was uninhabitable for a period of time because of the odor. My property manager quit then, but its OK, because my current property manager is making me so much more now.

 

[byke]

That really sucks about the tenant. Seems like a pretty responsible list and it's great you're doing things proper. I'm still cautious of "not making money" approach for things that popup, but if you're making it work over time, then good on ya.

I gotta ask a silly question, is there a pre-tax account/medium to save for repairs?