Too Hot Investment Thread

I have a small percent of portfolio in them. They tend to do better than average during inflationary spells. They get hit harder than average during economic downturns.

The problem now is their yields have gotten so low that the risk return tradeoff is questionable.

 

With interest rates so low, there's not a lot of reason to in my mind. Although, always make sure you have enough equity so that PMI is not required. PMI is a monumental waste.

 

This is one of the most debated topics among financial nerds. Personally I'm not going to pay off a low interest mortgage if I don't have to. I'd rather have the liquidity, keep some in ibonds and have enough to max out retirement accounts when we can..we actually did a cash out recently, although our mortgage isn't huge.

A lot of people seem to get satisfaction from paying it off. You can argue that you can't get 2-3% guaranteed return elsewhere.

Having a low fixed rate mortgage can be an inflation hedge, depending on how the proceeds are invested.

 

It is the same concept, the difference is gold has served that role for thousands of years, and at least has some level of unique utility. Whether Bitcoin retains its allure remains to be seen

Recently read an interesting appraisal from Ray Dahlio. One of the biggest questions / threats is if governments decide to squash it or regulate it.

 

Not that you asked me but emerging markets will be big over the next decade or so.

To start with you could buy EEM to get some broad emerging markets exposure.

After you are comfortable with this, I would look at India in particular, low debt, positive demographics, very strong economic growth and the market is relatively cheap.

Due to these factors I look at these emerging market plays as set it and forget it. Check back in 8 - 10 years. Think of being able to turn back time and get into China in the 90's....that's India today.

Brazil would be another one I would look at.

The US stock market is probably ok for this year due to states reopening and so much money in the system. When it goes I expect to see a lot of money in the stock market moving into emerging markets.

 

Thank you!

 

Holy crap. I just learned that some maniac owns 36 billion dogecoins.

Mysterious Address With $3 Billion in Dogecoin Sends Cryptic Binary Messages to Elon Musk – Altcoins Bitcoin News

The Elon theory sounds right to me.

 

What if you are buying a home for $100k and in order to avoid paying PMI you have to put $20k down, let's say PMI rate is 1.5% of the loan....

What if you put zero money down, take that $20k and can make a 10% return on that $20k somewhere else.....is PMI a waste then?

 

No problem, I like your Bitcoin diversification.

Don't ever sell your Bitcoin, especially if you have 25 years until your "supposed to" retire.

 

That is the plan. I've had people try to convince me to sell but I have a long term plan and I'm sticking to it.

 

My son gets irritated that I insist on pronouncing it “doggie coin”.

 

FWIW, here's a cool guide we followed for a long time. Not saying this is the holy grail, cause we've strayed from it's path, but certainly helpful to get some people going in the right direction:

 

EDIT: Of course. Link

 

Thanks for this. It's basically the course I'm on at the moment. I'm definitely reconsidering paying off our mortgage early since it is a 2.5% loan.

 

Yeah I may throw a tiny amount at it just for fun.

 

how many times have you thought about buying a stock but didnt and then kicked yourself for it? That doesnt mean you should just start buying stocks. PMI isnt a waste in your scenario because you already know you got a 10% return. But what's the risk? You could just have easily taken that $20K and got a negative return as well. Interest on a home loan is deductible (less so now than before). Interest on PMI is not.

 

Paying off the mortgage gives the benefit of not having to have a cash flow to service the debt. Yes, with current interest rates, one can leverage some good investments, however, if the financial poop meets the fan, one still has to make payments or face losing their RE. Ever seen that happen before Sergeant? Yep, like 4 crashes, and number 5 is warming up in the bullpen.

My crib is paid for, I carry zero debt, and can live off my investments. I did buy some bitcoin and it more than pays for my beer budget. However I am hesitant to go further than that with the crypto class.

 

It doesn't have to necessarily be a stock. With every investment there are risks, including buying a home. People get sentimental about their primary residence but it's just an investment.

Sometimes PMI isn't even 1.5% of your loan, sometimes it's lower. Even as low as .5%.

I was merely pointing out the PMI isn't the absolute worst thing to pay, no matter what, end of discussion. This kind of mentality can cost you money.

There are scenarios our there where putting the $20k somewhere else and paying PMI would actually increase your income and net worth, making paying PMI a good investment.