Too Hot Investment Thread

Paying off her mortgage can be debated, and there's certainly emotional considerations involved in that decision, too.

But the car - if that's also a low interest rate (as most are nowadays), why bother paying it off. Zero risk and she's making money on a 1% loan.

IANAFA

 

My mortgage was 4.375% and I paid it off just because I could and it feels great to have no debt - car was purchased with cash. About 1/3 of our investments are in an account dedicated to producing income (currently $2K/month) and I will be shifting money towards that account from the mortgage I no longer have to pay with the goal of protecting assets.

 

One thing to remember in retirement is that getting a mortgage can be pretty tough since you typically have only minimal income. You can have have a big net worth but only limited income and the bank will still say no thanks. Need a plan before you retire, especially for housing.

 

Not going to read through the whole thread so I'm sure someone else may have said this,
but when it comes to investing/saving, other than some individual stocks of companies in industries I'm very familiar with, I've always differed to what guys like Buffett and Munger suggest. Buy S&P ETFS continually and you'll probably do as well in the long run as if you try to either time the market or chase a hot stock. Also, save A LOT and live well within your means. So far that strategy has worked very well for me.

I work with a lot of people in their 20's and I always am trying to get them to understand the value of compounding interest and time. I'll give them an example of how a 25 year old making $50K a year, every year for his/her entire life can retire a millionaire if they can put $500/month into a S&P 500 ETF using historical returns. They seldom believe me at first but it's simple math. So far I've been successful in getting a few to increase and/or start their investments in IRAs and 401Ks.

 

Yes/no. Having low interest debt is fine if you can use the money to secure a higher interest rate. Just depends on the risks you want to take. If you have a 1% car loan, you can almost certainly earn greater than that in investments...until the market drops and you panic and lock in the loss. So need to be disciplined.

 

nowadays, 4.375% is a high interest mortgage

 

That entered into my decision to pay it off - what was left was relatively small $24K anyway. I had that mortgage for less than 2 years.

 

Around 30 years old, I confided to a few of my college friends that my wife and I would be able to retire before 50 (we're now tracking closer to before 45). Two of them separately asked me how I was doing it and were very interested in my investment advice. When I started talking to them about a monthly budget and savings rate, their interest fizzled. I guess they wanted a silver bullet to make them rich overnight...

The big secret to accumulating wealth is that it can be very simple and surprisingly quick, but "surprisingly quick" still takes years and requires planning and discipline.

 

What you're saying 100% makes sense when you work out the math. But it does ignore psychology, which is a huge part of financial security.

There's a reason that Dave Ramsey's debt snowball method (tackle the smallest debt balance 1st, next smallest second, etc.) has proven more effective for many to eliminate their debts, as opposed to the mathematically more prudent strategy of paying down the highest interest rate first, regardless of total balance.

 

Or a VW Thing

 

should have suggested crypto currencies back then

 

Get Rich Slowly works. Congratulations

 

Amazon acquired MGM today. Who knows how this might help their bottom line but I find it interesting that Amazon and Jeff Bezos now owns The Apprentice.

 

Here are some dividend stocks that I feel comfortable recommending. Please let me know if you have any questions about a specific company, or if you would like some more ideas within a specific sector. See my post #420 for dividend ETFs as well. You could put together a low maintenance dividend portfolio with a handful of ETFs and Stocks from these two posts. My preferred broker is Schwab and they provide you with morningstar’s research reports for free which give a nice summary of a company and their valuation and prospects. Also, please remember that a high dividend yield (over 5%) usually signals higher risk. Interest rate risk is another consideration. Utility and Real Estate stocks usually go down as interest rates go up. Banks and other financial stocks usually go up as rates go up. So I like to pair the two to hedge some of that risk. For example if I wanted to buy DUK (Utility) and NHI (REIT) I would pair those with two financials like PRU and JPM. If you are interested in growth stocks I updated my post #29.

ABBV - Abbvie - 4.53% Div - 9 PE

AMGN - Amgen - 2.95% Div - 15 PE

AVGO - Broadcom - 3.13% Div - 17 PE

BK - Bank of NY Mellon - 2.4% Div - 13 PE

CSCO - Cisco Systems - 2.8% Div - 16 PE

CVS - CVS Heath - 2.3% Div - 11 PE

DUK - Duke Energy - 3.82% Div - 19 PE

IBM - IBM - 4.58% Div - 13 PE

JNJ - Johnson & Johnson - 2.5% Div - 18 PE

JPM - JP Morgan - 2.22% Div - 12 PE

LMT - Lockheed Martin - 2.71% Div - 14 PE

MRK - Merck - 3.37% Div - 12 PE

NHI - National Health Investors REIT - 6.62% Div - 18 PE

NVS - Novartis - 3.6% Div - 14 PE

O - Reality Income REIT - 4.08% Div - 50 PE (Pays a monthly dividend)

OLP - One Liberty Properties REIT - 7.05% Div - 41 PE

PEP - Pepsi - 2.9% Div - 24 PE

PFE - Pfizer - 4.01% Div - 10 PE

PNC - PNC Financial - 2.4% Div - 15 PE

PRU - Prudential Financial - 4.38% Div - 8 PE

SO - Southern Co - 4.14% Div - 19 PE

TFC - Truist Financial (Suntrust/BB&T) - 2.97% Div - 13 PE

VZ - Verizon - 4.45% Div - 11 PE

WELL - Welltower REIT - 3.25% Div - 80 PE

I'm hesitant to put these two energy names on the list because the sector has been so bad the last few years, but if you want to take that risk, these are the two I would look at.

CVX - Chevron - 5.15% Div - 19 PE

KMI - Kinder Morgan - 5.89% Div - 16 PE


Full Disclosure: I am not a professional money manager, please do your own homework and invest at your own risk.

 

I would also like to give a recommendation to my good friend who is a money manager and recently started his own firm in the Tampa area. His main product is an income oriented portfolio of about 40 stocks. He is a value investor, but I would categorize his portfolio as GARP (growth at a reasonable price). I believe the portfolio was yielding around 3% at the beginning of the year. He also does ETF portfolio's for a lower cost. If you are interested in an active money manager check him out at Homestead Financial Partners – Building a better future

 

Been thinking about adding KMI. You know anything interesting about a good entry point?

 

No, not really. It’s one I’ve been back and forth on. I think it looks pretty fairly valued at the moment so if oil prices hold steady I think will continue its slow climb higher. Next earnings date looks to be July 21.