Author Topic: Buckle up folks  (Read 21074 times)

ysette9

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Re: Buckle up folks
« Reply #50 on: February 18, 2016, 02:12:51 PM »
This is probably some naivety on my part (I mostly didn't pay attention during the great recession and didn't have that much invested at that point anyway), but I just don't get why people are paying attention so closely and so upset. Markets go up and down. If this is news to anyone then you clearly aren't ready to be investing. If a 10% temporary correction throws your finances out of whack then you have the wrong asset allocation. if a 10% correction makes you panic and lose sleep at night then you have the wrong asset allocation and need to spend some quality time educating yourself about the bigger picture.

We are down about $100K from the end of 2015 but my reaction so far has been "meh". I suppose that means that our AA of 95% stocks is an acceptable fit for our risk tolerance.

tj

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Re: Buckle up folks
« Reply #51 on: February 18, 2016, 02:15:22 PM »
Just curious, has anyone fully cashed out?

Well bit slow to catch this, but I'll bite since no one else did.
I went to cash on 12-22-15 with SPX at about 2055. I think we'll see a run up to 2040-2060 range and at that point I'll consider going short the market again. I think pain(opportunity) is just starting.

I get MPT and all that, but the bull market is over, and 'paper losses' are real folks. Yes I might miss gains before I get back into some VTI etc.. but it feels good to remember you can choose NOT to be in the market.
This doesn't make sense to me. Why would you to to cash only to invest it again after a run-up?

kurtnyc

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Re: Buckle up folks
« Reply #52 on: February 18, 2016, 02:23:29 PM »
ah, well there are two ways to do this. one if you want to be long only read "Ivy Portfolio" you find that statistically market volatility can be reduced and increase returns with very simply methods. the other reason is as I state, I went short and will again. you can do this easily with a no leverage inverse ETF like SH. with is just the inverse of SPY. As an instrument it carries no more risk than SPY.

I get this isn't for everyone, and not in the MMM 'mode' but the info might be helpful to someone, looks like this conversation is going on in this post right now.  http://forum.mrmoneymustache.com/investor-alley/why-i-am-reducing-mkt-exposurehave-been-since-2015/

DarkandStormy

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Re: Buckle up folks
« Reply #53 on: October 12, 2017, 09:01:56 AM »
I don't understand how people aren't buying equities these days with every spare dollar they have. Do you really believe that "this is the big one" and that within a couple of years from now the market won't recover and surpass its previous highs? If you don't need the money to live on, why not put it to work?

Because adding "new" money to the broad stock market at todays valuation offers less than 1% annual return over the next decade along with a double-digit potential drawdown. This is essentially risking dollars to make pennies. There are better opportunities right now other than the stock market, and that is where my money is headed.

Whoops!

Scortius

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Re: Buckle up folks
« Reply #54 on: October 12, 2017, 10:14:04 AM »
I don't understand how people aren't buying equities these days with every spare dollar they have. Do you really believe that "this is the big one" and that within a couple of years from now the market won't recover and surpass its previous highs? If you don't need the money to live on, why not put it to work?

Because adding "new" money to the broad stock market at todays valuation offers less than 1% annual return over the next decade along with a double-digit potential drawdown. This is essentially risking dollars to make pennies. There are better opportunities right now other than the stock market, and that is where my money is headed.

Whoops!

S&P 500:
Feb 12, 2016 - 1,865
Oct 12, 2017 - 2,554

That's a 37% gain over a year and a half.  Yup, that guy sure avoided the 40% dip...

I moved my 401k in late Aug from out of the market into safer bonds and for the year I am up a little.

Will move into stocks at a later date when I see market is ready.

No reason to see my 401k go down 40% and waste a year or two to just get back that 40%.

I have followed the market for years and know about trading and would not suggest this for most people.

I'm glad following the market for years is all it takes to be able to call broad long-term market movements.
« Last Edit: October 12, 2017, 10:18:33 AM by Scortius »

tyort1

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Re: Buckle up folks
« Reply #55 on: October 12, 2017, 10:22:12 AM »
I don't understand how people aren't buying equities these days with every spare dollar they have. Do you really believe that "this is the big one" and that within a couple of years from now the market won't recover and surpass its previous highs? If you don't need the money to live on, why not put it to work?

Because adding "new" money to the broad stock market at todays valuation offers less than 1% annual return over the next decade along with a double-digit potential drawdown. This is essentially risking dollars to make pennies. There are better opportunities right now other than the stock market, and that is where my money is headed.

Whoops!

Man, I <heart> you.  Thanks for digging up these old fear/panic threads.  I provides much needed perspective to some of our more skittish/gullible members here.  Plus, you know, comedy.

DarkandStormy

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Re: Buckle up folks
« Reply #56 on: October 12, 2017, 11:01:15 AM »
ah, well there are two ways to do this. one if you want to be long only read "Ivy Portfolio" you find that statistically market volatility can be reduced and increase returns with very simply methods. the other reason is as I state, I went short and will again. you can do this easily with a no leverage inverse ETF like SH. with is just the inverse of SPY. As an instrument it carries no more risk than SPY.

I get this isn't for everyone, and not in the MMM 'mode' but the info might be helpful to someone, looks like this conversation is going on in this post right now.  http://forum.mrmoneymustache.com/investor-alley/why-i-am-reducing-mkt-exposurehave-been-since-2015/

2/18/16: SH is at 44.04.  It peaks early on 2/19/16 (to 44.10) and has not been at that level since.
Today: SH is at 31.06.

Unless you are making constant day trades (and making the calls the right way w/r/t to SPY v. SH) you've lost money and an incredible amount when compared to just keeping it invested.

tyort1

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Re: Buckle up folks
« Reply #57 on: October 12, 2017, 11:29:54 AM »
ah, well there are two ways to do this. one if you want to be long only read "Ivy Portfolio" you find that statistically market volatility can be reduced and increase returns with very simply methods. the other reason is as I state, I went short and will again. you can do this easily with a no leverage inverse ETF like SH. with is just the inverse of SPY. As an instrument it carries no more risk than SPY.

I get this isn't for everyone, and not in the MMM 'mode' but the info might be helpful to someone, looks like this conversation is going on in this post right now.  http://forum.mrmoneymustache.com/investor-alley/why-i-am-reducing-mkt-exposurehave-been-since-2015/

2/18/16: SH is at 44.04.  It peaks early on 2/19/16 (to 44.10) and has not been at that level since.
Today: SH is at 31.06.

Unless you are making constant day trades (and making the calls the right way w/r/t to SPY v. SH) you've lost money and an incredible amount when compared to just keeping it invested.

Gee I wonder why no one ever comes back here and reports any huge losses on things like this?  I can only think of 2 reasons.  First, maybe they got out of that position when things went south and never bothered to tell anyone they abandoned that strategy or Second (and more likely), they actually did lose huge amounts of money with their "smart market analysis" and are ashamed to come back here and admit it. 

risky4me

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Re: Buckle up folks
« Reply #58 on: October 12, 2017, 11:58:18 AM »
I have to admit that I moved an education fund that I am the trustee of to bonds recently. I chose to leave my own money to ride out any storm, but as a trustee your main responsibility is to keep the money safe, not try to be a hero and get the best possible returns. Another factor is the money will be utilized in the next few years so I don't have the luxury of riding out a storm like I do with my own money.

DarkandStormy

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Re: Buckle up folks
« Reply #59 on: October 12, 2017, 11:58:45 AM »
^So many future tellers fail to come back with their tail between their legs.  Too much pride to admit they were wrong.

talltexan

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Re: Buckle up folks
« Reply #60 on: October 13, 2017, 10:03:11 AM »
wow, what a story. I remember how exciting that early 2016 period was, when the SP500 fell back below 1,900. Now, it feels like it may never stock going up!

Mr. Green

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Re: Buckle up folks
« Reply #61 on: October 13, 2017, 11:46:33 AM »
The OP said he invested half his cash the day before. I bet he's glad he did that now!

JAYSLOL

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Re: Buckle up folks
« Reply #62 on: October 13, 2017, 11:13:41 PM »
When this thread got revived I didn't notice it was old, got a couple posts in and was like "what the hell!?", checks stock prices, checks OP posting date - "ah, that explains it".  Thanks for reviving another epic market timing thread, always enjoy these type discussions

Exflyboy

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Re: Buckle up folks
« Reply #63 on: October 14, 2017, 07:13:42 PM »
Wow I don't even remember Feb 2016... Must have been REALLY significant.. Not.

tyort1

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Re: Buckle up folks
« Reply #64 on: March 12, 2018, 05:13:30 PM »
Is it considered piling on if I point out that my stasche:

Feb 2016 - $284,000

Today -       $379,000

I did it by NOT getting out of stocks or putting into cash for "dry powder" or trying to time the market.  Oh man I am so glad I didn't give in to the type of fear/worry/concern expressed by some of the people in this thread. 

Eric

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Re: Buckle up folks
« Reply #65 on: March 12, 2018, 05:23:52 PM »
Is it considered piling on if I point out that my stasche:

Feb 2016 - $284,000

Today -       $379,000


Only if that pun was intended.

thenextguy

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Re: Buckle up folks
« Reply #66 on: March 12, 2018, 06:05:33 PM »
Been buckled up for over a year! What are we waiting for!?

Kalergie

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Re: Buckle up folks
« Reply #67 on: March 13, 2018, 03:33:23 AM »
It's that feeling when you're on a roller coaster ride right in the beginning. Climbing and climbing towards the sharp down fall. You hear the rack wheels "clack-clack-clack-clack", any second now, we'll be going down. Problem is, we are all blind folded. Everyone "knows" the ride will be wild, we "will for sure" be going down in a fury. People around you are anxious, worried, how bad is it going to be? Some are looking forward to it. Buckle up. It will happen. But when? That's the exciting part of riding this roller coaster! :D

tyort1

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Re: Buckle up folks
« Reply #68 on: March 13, 2018, 10:18:31 AM »
It's that feeling when you're on a roller coaster ride right in the beginning. Climbing and climbing towards the sharp down fall. You hear the rack wheels "clack-clack-clack-clack", any second now, we'll be going down. Problem is, we are all blind folded. Everyone "knows" the ride will be wild, we "will for sure" be going down in a fury. People around you are anxious, worried, how bad is it going to be? Some are looking forward to it. Buckle up. It will happen. But when? That's the exciting part of riding this roller coaster! :D

Yes, that's good advice, if the takeaway is "keep your money in the market and just push through the fear".  Its bad advice if the takeaway is "a correction is coming, get your money out now!". 

Eric

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Re: Buckle up folks
« Reply #69 on: March 13, 2018, 11:07:56 AM »
It's that feeling when you're on a roller coaster ride right in the beginning. Climbing and climbing towards the sharp down fall. You hear the rack wheels "clack-clack-clack-clack", any second now, we'll be going down. Problem is, we are all blind folded. Everyone "knows" the ride will be wild, we "will for sure" be going down in a fury. People around you are anxious, worried, how bad is it going to be? Some are looking forward to it. Buckle up. It will happen. But when? That's the exciting part of riding this roller coaster! :D

I always wonder how people who are nervous when the markets are going great can handle it when they're not.  My guess is that they just handle both poorly.  Sounds pretty miserable to me.

boarder42

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Re: Buckle up folks
« Reply #70 on: March 13, 2018, 01:07:11 PM »
It's that feeling when you're on a roller coaster ride right in the beginning. Climbing and climbing towards the sharp down fall. You hear the rack wheels "clack-clack-clack-clack", any second now, we'll be going down. Problem is, we are all blind folded. Everyone "knows" the ride will be wild, we "will for sure" be going down in a fury. People around you are anxious, worried, how bad is it going to be? Some are looking forward to it. Buckle up. It will happen. But when? That's the exciting part of riding this roller coaster! :D

I always wonder how people who are nervous when the markets are going great can handle it when they're not.  My guess is that they just handle both poorly.  Sounds pretty miserable to me.

correct i fear deeply for the people in the pay down your mortgage crowd having the ability to withstand bumps in the road once they are FIREd- but in all likelihood they will have extremely oversaved due to irrational fears and actions anyways.

JAYSLOL

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Re: Buckle up folks
« Reply #71 on: March 13, 2018, 01:15:17 PM »
It's that feeling when you're on a roller coaster ride right in the beginning. Climbing and climbing towards the sharp down fall. You hear the rack wheels "clack-clack-clack-clack", any second now, we'll be going down. Problem is, we are all blind folded. Everyone "knows" the ride will be wild, we "will for sure" be going down in a fury. People around you are anxious, worried, how bad is it going to be? Some are looking forward to it. Buckle up. It will happen. But when? That's the exciting part of riding this roller coaster! :D

I always wonder how people who are nervous when the markets are going great can handle it when they're not.  My guess is that they just handle both poorly.  Sounds pretty miserable to me.

correct i fear deeply for the people in the pay down your mortgage crowd having the ability to withstand bumps in the road once they are FIREd- but in all likelihood they will have extremely oversaved due to irrational fears and actions anyways.

Some will have oversaved, that's true.  But many others will just give up and live on social assistance after they run out of the cash they didn't keep invested and then complain about (insert: government/economy/immigrants etc)

steveo

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Re: Buckle up folks
« Reply #72 on: March 13, 2018, 05:11:17 PM »
It's that feeling when you're on a roller coaster ride right in the beginning. Climbing and climbing towards the sharp down fall. You hear the rack wheels "clack-clack-clack-clack", any second now, we'll be going down. Problem is, we are all blind folded. Everyone "knows" the ride will be wild, we "will for sure" be going down in a fury. People around you are anxious, worried, how bad is it going to be? Some are looking forward to it. Buckle up. It will happen. But when? That's the exciting part of riding this roller coaster! :D

I always wonder how people who are nervous when the markets are going great can handle it when they're not.  My guess is that they just handle both poorly.  Sounds pretty miserable to me.


correct i fear deeply for the people in the pay down your mortgage crowd having the ability to withstand bumps in the road once they are FIREd- but in all likelihood they will have extremely oversaved due to irrational fears and actions anyways.

The problem with this comment is that different people are in different situations. I paid down my mortgage and in that time my house went from a value of about 580k to 900k. The return might even be more than that but I'm being conservative. Since paying off my mortgage I now also have more money to throw into investments. Paying off our house has been the best financial decision that we have made.

What works for me and I suggest the maths would back this up is the following:-

1. Pay off the mortgage
2. Invest in index funds as per my risk tolerance

I'm not worried about market volatility because I like my portfolio and I have back-up options which mostly consist of selling the house and downsizing.
« Last Edit: March 13, 2018, 05:16:15 PM by steveo »

VoteCthulu

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Re: Buckle up folks
« Reply #73 on: March 13, 2018, 05:36:41 PM »
The problem with this comment is that different people are in different situations. I paid down my mortgage and in that time my house went from a value of about 580k to 900k. The return might even be more than that but I'm being conservative. Since paying off my mortgage I now also have more money to throw into investments. Paying off our house has been the best financial decision that we have made.
I'm confused, would the property not have appreciated the same amount if you hadn't paid down the mortgage? There are good reasons for paying down a mortgage early, but I don't think how much the property value has risen is one of them.

steveo

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Re: Buckle up folks
« Reply #74 on: March 13, 2018, 05:48:48 PM »
The problem with this comment is that different people are in different situations. I paid down my mortgage and in that time my house went from a value of about 580k to 900k. The return might even be more than that but I'm being conservative. Since paying off my mortgage I now also have more money to throw into investments. Paying off our house has been the best financial decision that we have made.
I'm confused, would the property not have appreciated the same amount if you hadn't paid down the mortgage? There are good reasons for paying down a mortgage early, but I don't think how much the property value has risen is one of them.

It would have appreciated just as much. Paying that mortgage off though has been huge for us. The interest rate over that period was something like 3.5+% up to 5%. Those are also tax free returns. I was also leveraged. It was a very good decision to pay my mortgage down.

I live in Australia and the environment is different to the US. I still though like being debt free. I'm not trying to be the richest person. I'm looking for the best risk-adjusted return.

boarder42

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Re: Buckle up folks
« Reply #75 on: March 13, 2018, 07:22:58 PM »
The problem with this comment is that different people are in different situations. I paid down my mortgage and in that time my house went from a value of about 580k to 900k. The return might even be more than that but I'm being conservative. Since paying off my mortgage I now also have more money to throw into investments. Paying off our house has been the best financial decision that we have made.
I'm confused, would the property not have appreciated the same amount if you hadn't paid down the mortgage? There are good reasons for paying down a mortgage early, but I don't think how much the property value has risen is one of them.

It would have appreciated just as much. Paying that mortgage off though has been huge for us. The interest rate over that period was something like 3.5+% up to 5%. Those are also tax free returns. I was also leveraged. It was a very good decision to pay my mortgage down.

I live in Australia and the environment is different to the US. I still though like being debt free. I'm not trying to be the richest person. I'm looking for the best risk-adjusted return.

At those interest rates you increased your risk of total financial failure prior to total payoff of the house. Since you're looking for the best risk adjusted return you chose poorly.  Thanks for further proving my point that the risk for those who make the choice you did even when presented with the aftermath that they'd lost to the math which was the overwhelming likelihood. Are likely to make further poorer financial decisions in the face of the math and likely to let emotion override math in the face of a down turn in retirement.
« Last Edit: March 13, 2018, 07:30:33 PM by boarder42 »

steveo

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Re: Buckle up folks
« Reply #76 on: March 13, 2018, 08:18:36 PM »
The problem with this comment is that different people are in different situations. I paid down my mortgage and in that time my house went from a value of about 580k to 900k. The return might even be more than that but I'm being conservative. Since paying off my mortgage I now also have more money to throw into investments. Paying off our house has been the best financial decision that we have made.
I'm confused, would the property not have appreciated the same amount if you hadn't paid down the mortgage? There are good reasons for paying down a mortgage early, but I don't think how much the property value has risen is one of them.

It would have appreciated just as much. Paying that mortgage off though has been huge for us. The interest rate over that period was something like 3.5+% up to 5%. Those are also tax free returns. I was also leveraged. It was a very good decision to pay my mortgage down.

I live in Australia and the environment is different to the US. I still though like being debt free. I'm not trying to be the richest person. I'm looking for the best risk-adjusted return.

At those interest rates you increased your risk of total financial failure prior to total payoff of the house. Since you're looking for the best risk adjusted return you chose poorly.  Thanks for further proving my point that the risk for those who make the choice you did even when presented with the aftermath that they'd lost to the math which was the overwhelming likelihood. Are likely to make further poorer financial decisions in the face of the math and likely to let emotion override math in the face of a down turn in retirement.

Really. A risk free/tax free return of 5% is pretty good. I doubt the markets outperformed that and if they did it wouldn't have been by much. My top tier tax rate is 50% so if I sold my market returns I think I would have come off second best. I also decreased leverage which decreased risk. I obtained a great return. I also lowered my living expenses for life.

I wouldn't have done nearly as well based on my assessment of the situation if I had kept my mortgage as is and invested the money into the market.

You may be right via the math but I doubt it and even then it would be such a trivial win for the math it wouldn't be worth it. For a risk adjusted return I think I make the right decision.

hadabeardonce

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Re: Buckle up folks
« Reply #77 on: March 13, 2018, 10:23:25 PM »
I stay buckled up at all times: https://buckle-down.com/


stachestache

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Re: Buckle up folks
« Reply #78 on: March 14, 2018, 01:28:38 AM »
How the hell did I end up reading this.... *back to reading Simple Path to Wealth* ...

boarder42

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Re: Buckle up folks
« Reply #79 on: March 14, 2018, 04:37:53 AM »
The problem with this comment is that different people are in different situations. I paid down my mortgage and in that time my house went from a value of about 580k to 900k. The return might even be more than that but I'm being conservative. Since paying off my mortgage I now also have more money to throw into investments. Paying off our house has been the best financial decision that we have made.
I'm confused, would the property not have appreciated the same amount if you hadn't paid down the mortgage? There are good reasons for paying down a mortgage early, but I don't think how much the property value has risen is one of them.

It would have appreciated just as much. Paying that mortgage off though has been huge for us. The interest rate over that period was something like 3.5+% up to 5%. Those are also tax free returns. I was also leveraged. It was a very good decision to pay my mortgage down.

I live in Australia and the environment is different to the US. I still though like being debt free. I'm not trying to be the richest person. I'm looking for the best risk-adjusted return.

At those interest rates you increased your risk of total financial failure prior to total payoff of the house. Since you're looking for the best risk adjusted return you chose poorly.  Thanks for further proving my point that the risk for those who make the choice you did even when presented with the aftermath that they'd lost to the math which was the overwhelming likelihood. Are likely to make further poorer financial decisions in the face of the math and likely to let emotion override math in the face of a down turn in retirement.

Really. A risk free/tax free return of 5% is pretty good. I doubt the markets outperformed that and if they did it wouldn't have been by much. My top tier tax rate is 50% so if I sold my market returns I think I would have come off second best. I also decreased leverage which decreased risk. I obtained a great return. I also lowered my living expenses for life.

I wouldn't have done nearly as well based on my assessment of the situation if I had kept my mortgage as is and invested the money into the market.

You may be right via the math but I doubt it and even then it would be such a trivial win for the math it wouldn't be worth it. For a risk adjusted return I think I make the right decision.

Have you not watched what the market has done the last 9 years during which time you were likely paying off your mortgage. And you don't sell and pay taxes while you're earning. I'm mostly baffled how someone can even make this post. You present 0 data other than assumptions that male you feel better with out actually looking at what happened.  Everything here further points to your likelihood to try to time a market in FIRE. Your assessment wasn't an assessment at all it was an I don't think coupled with a terrible idea of selling.

steveo

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Re: Buckle up folks
« Reply #80 on: March 14, 2018, 06:20:22 AM »
The problem with this comment is that different people are in different situations. I paid down my mortgage and in that time my house went from a value of about 580k to 900k. The return might even be more than that but I'm being conservative. Since paying off my mortgage I now also have more money to throw into investments. Paying off our house has been the best financial decision that we have made.
I'm confused, would the property not have appreciated the same amount if you hadn't paid down the mortgage? There are good reasons for paying down a mortgage early, but I don't think how much the property value has risen is one of them.

It would have appreciated just as much. Paying that mortgage off though has been huge for us. The interest rate over that period was something like 3.5+% up to 5%. Those are also tax free returns. I was also leveraged. It was a very good decision to pay my mortgage down.

I live in Australia and the environment is different to the US. I still though like being debt free. I'm not trying to be the richest person. I'm looking for the best risk-adjusted return.

At those interest rates you increased your risk of total financial failure prior to total payoff of the house. Since you're looking for the best risk adjusted return you chose poorly.  Thanks for further proving my point that the risk for those who make the choice you did even when presented with the aftermath that they'd lost to the math which was the overwhelming likelihood. Are likely to make further poorer financial decisions in the face of the math and likely to let emotion override math in the face of a down turn in retirement.

Really. A risk free/tax free return of 5% is pretty good. I doubt the markets outperformed that and if they did it wouldn't have been by much. My top tier tax rate is 50% so if I sold my market returns I think I would have come off second best. I also decreased leverage which decreased risk. I obtained a great return. I also lowered my living expenses for life.

I wouldn't have done nearly as well based on my assessment of the situation if I had kept my mortgage as is and invested the money into the market.

You may be right via the math but I doubt it and even then it would be such a trivial win for the math it wouldn't be worth it. For a risk adjusted return I think I make the right decision.

Have you not watched what the market has done the last 9 years during which time you were likely paying off your mortgage. And you don't sell and pay taxes while you're earning. I'm mostly baffled how someone can even make this post. You present 0 data other than assumptions that male you feel better with out actually looking at what happened.  Everything here further points to your likelihood to try to time a market in FIRE. Your assessment wasn't an assessment at all it was an I don't think coupled with a terrible idea of selling.

I think you have no idea what you are talking about. Everything points to extreme arrogance on your side. You have presented no facts at all. I've presented the facts as I see it and I've done extremely well.

Maybe take a step back and have a think before you post anymore comments.

Alternatively get your figures together and tell me what I should have done with hindsight. I'd love to see how close you match the performance that I've actually achieved.

Let's do some simple figures to have a look at the situation:-

Start
200k invested in the market
600k invested in housing
300k debt

End

550k invested in the market
1200k invested in housing
Zero debt

Compared to:-

End

650k invested in the market (maybe) - this is pretty darn hard to guess but it's definitely not going to be that good. I'd also have to keep servicing a mortgage which is a burn for a long time.
1200k invested in housing
300k debt

I think it has probably worked out pretty well for me.

Go ahead and argue with the data. I bet you would have picked the perfect stock and done so much better than I have. Personally I'll stick with my approach. Thank you very much.

I'm also an index investor. I don't put my money into individual stocks or try and time the market. You obviously have some anger towards people paying off their mortgage and it comes out in bizare comments.
« Last Edit: March 14, 2018, 06:30:17 AM by steveo »

boarder42

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Re: Buckle up folks
« Reply #81 on: March 14, 2018, 09:18:34 AM »
The problem with this comment is that different people are in different situations. I paid down my mortgage and in that time my house went from a value of about 580k to 900k. The return might even be more than that but I'm being conservative. Since paying off my mortgage I now also have more money to throw into investments. Paying off our house has been the best financial decision that we have made.
I'm confused, would the property not have appreciated the same amount if you hadn't paid down the mortgage? There are good reasons for paying down a mortgage early, but I don't think how much the property value has risen is one of them.

It would have appreciated just as much. Paying that mortgage off though has been huge for us. The interest rate over that period was something like 3.5+% up to 5%. Those are also tax free returns. I was also leveraged. It was a very good decision to pay my mortgage down.

I live in Australia and the environment is different to the US. I still though like being debt free. I'm not trying to be the richest person. I'm looking for the best risk-adjusted return.

At those interest rates you increased your risk of total financial failure prior to total payoff of the house. Since you're looking for the best risk adjusted return you chose poorly.  Thanks for further proving my point that the risk for those who make the choice you did even when presented with the aftermath that they'd lost to the math which was the overwhelming likelihood. Are likely to make further poorer financial decisions in the face of the math and likely to let emotion override math in the face of a down turn in retirement.

Really. A risk free/tax free return of 5% is pretty good. I doubt the markets outperformed that and if they did it wouldn't have been by much. My top tier tax rate is 50% so if I sold my market returns I think I would have come off second best. I also decreased leverage which decreased risk. I obtained a great return. I also lowered my living expenses for life.

I wouldn't have done nearly as well based on my assessment of the situation if I had kept my mortgage as is and invested the money into the market.

You may be right via the math but I doubt it and even then it would be such a trivial win for the math it wouldn't be worth it. For a risk adjusted return I think I make the right decision.

Have you not watched what the market has done the last 9 years during which time you were likely paying off your mortgage. And you don't sell and pay taxes while you're earning. I'm mostly baffled how someone can even make this post. You present 0 data other than assumptions that male you feel better with out actually looking at what happened.  Everything here further points to your likelihood to try to time a market in FIRE. Your assessment wasn't an assessment at all it was an I don't think coupled with a terrible idea of selling.

I think you have no idea what you are talking about. Everything points to extreme arrogance on your side. You have presented no facts at all. I've presented the facts as I see it and I've done extremely well.

Maybe take a step back and have a think before you post anymore comments.

Alternatively get your figures together and tell me what I should have done with hindsight. I'd love to see how close you match the performance that I've actually achieved.

Let's do some simple figures to have a look at the situation:-

Start
200k invested in the market
600k invested in housing
300k debt

End

550k invested in the market
1200k invested in housing
Zero debt

Compared to:-

End

650k invested in the market (maybe) - this is pretty darn hard to guess but it's definitely not going to be that good. I'd also have to keep servicing a mortgage which is a burn for a long time.
1200k invested in housing
300k debt

I think it has probably worked out pretty well for me.

Go ahead and argue with the data. I bet you would have picked the perfect stock and done so much better than I have. Personally I'll stick with my approach. Thank you very much.

I'm also an index investor. I don't put my money into individual stocks or try and time the market. You obviously have some anger towards people paying off their mortgage and it comes out in bizare comments.

its really easy to calculate when did you start paying off your house and when did you end- thats the only data point we need.  with those interest rates we can assume reasonably it was sometime between 2009 and today.  which means if we go back and look at the avg market return over that time you would have come out far an away ahead investing.  I invest in index funds i dont stock pick.

your numbers are extremely wrong even if we dont use the gains from the past 9 years that were extremely high

Somehow you magically paid off 300k in debt in your scenario with the paid off house but didnt apply that 300k to the balance of the investment account if you assume 0 gains in the stock market
also the value of the property isnt relevant to this equation

Start
200k invested in the market
600k invested in housing
300k debt

End

550k invested in the market   - so since we're assuming 0 gains you put 350k into the market here
1200k invested in housing
Zero debt   - and you put 300k into a house here

Compared to:-

End

650k invested in the market - you put 450k into the market here
1200k invested in housing
300k debt
blew - 200k on something else???


but we cant assume 0 return on investment - the annualized return on investment since 2009 is 15% a full 10% higher than your worst mortgage rate. 

So you've stared math in the face and not even done any of it correctly. 

RichMoose

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Re: Buckle up folks
« Reply #82 on: March 14, 2018, 10:05:02 AM »
At those interest rates you increased your risk of total financial failure prior to total payoff of the house. Since you're looking for the best risk adjusted return you chose poorly.  Thanks for further proving my point that the risk for those who make the choice you did even when presented with the aftermath that they'd lost to the math which was the overwhelming likelihood. Are likely to make further poorer financial decisions in the face of the math and likely to let emotion override math in the face of a down turn in retirement.
While generally I'm not a huge fan of paying off the mortgage first in most situations myself, this line stood out to me.

@boarder42 I'm not sure how you measure risk-adjusted returns because there are several ways of doing that. However, I think everyone could agree that recency bias should not be a factor in that equation. The fact that the stock market went up 15% or so annually in the last few years is not very relative to the argument. It could just as easily have gone down 20% or more. We do know that the historical risk-adjusted return of stocks is approximately 0.4 as measured by the Sharpe Ratio.

Assuming @steveo maxed his tax-advantaged accounts (not sure entirely how that works in Aus), a risk-free rate of return of 4-5% in taxable accounts is actually quite good. The risk-free rate of return measured by Australia short-term government bonds is 2%, the Sharpe Ratio on mortgage paydown is then 2-3. That depends on how you want to input the standard deviation of mortgage interest...

In any event, "investing" in your mortgage principal certainly looks better than investing in short-term government bonds in just about every developed country since 2009. Comparing that to volatile stocks is plain silly when discussing risk-adjusted returns.

Scortius

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Re: Buckle up folks
« Reply #83 on: March 14, 2018, 11:24:01 AM »
At those interest rates you increased your risk of total financial failure prior to total payoff of the house. Since you're looking for the best risk adjusted return you chose poorly.  Thanks for further proving my point that the risk for those who make the choice you did even when presented with the aftermath that they'd lost to the math which was the overwhelming likelihood. Are likely to make further poorer financial decisions in the face of the math and likely to let emotion override math in the face of a down turn in retirement.
While generally I'm not a huge fan of paying off the mortgage first in most situations myself, this line stood out to me.

@boarder42 I'm not sure how you measure risk-adjusted returns because there are several ways of doing that. However, I think everyone could agree that recency bias should not be a factor in that equation. The fact that the stock market went up 15% or so annually in the last few years is not very relative to the argument. It could just as easily have gone down 20% or more. We do know that the historical risk-adjusted return of stocks is approximately 0.4 as measured by the Sharpe Ratio.

Assuming @steveo maxed his tax-advantaged accounts (not sure entirely how that works in Aus), a risk-free rate of return of 4-5% in taxable accounts is actually quite good. The risk-free rate of return measured by Australia short-term government bonds is 2%, the Sharpe Ratio on mortgage paydown is then 2-3. That depends on how you want to input the standard deviation of mortgage interest...

In any event, "investing" in your mortgage principal certainly looks better than investing in short-term government bonds in just about every developed country since 2009. Comparing that to volatile stocks is plain silly when discussing risk-adjusted returns.

Here come the mortgage paydown police!

But seriously, the reason Boarder is here is that Steveo is just flat out wrong in his analysis. While there are good reasons to pay down your mortgage, time and time again people make arguments in favor of paying off their mortgage using plainly incorrect math. A risk-free 5% return is nothing to sneeze at, but the comparison should be made using accurate calculations.


boarder42

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Re: Buckle up folks
« Reply #84 on: March 14, 2018, 11:42:59 AM »
At those interest rates you increased your risk of total financial failure prior to total payoff of the house. Since you're looking for the best risk adjusted return you chose poorly.  Thanks for further proving my point that the risk for those who make the choice you did even when presented with the aftermath that they'd lost to the math which was the overwhelming likelihood. Are likely to make further poorer financial decisions in the face of the math and likely to let emotion override math in the face of a down turn in retirement.
While generally I'm not a huge fan of paying off the mortgage first in most situations myself, this line stood out to me.

@boarder42 I'm not sure how you measure risk-adjusted returns because there are several ways of doing that. However, I think everyone could agree that recency bias should not be a factor in that equation. The fact that the stock market went up 15% or so annually in the last few years is not very relative to the argument. It could just as easily have gone down 20% or more. We do know that the historical risk-adjusted return of stocks is approximately 0.4 as measured by the Sharpe Ratio.

Assuming @steveo maxed his tax-advantaged accounts (not sure entirely how that works in Aus), a risk-free rate of return of 4-5% in taxable accounts is actually quite good. The risk-free rate of return measured by Australia short-term government bonds is 2%, the Sharpe Ratio on mortgage paydown is then 2-3. That depends on how you want to input the standard deviation of mortgage interest...

In any event, "investing" in your mortgage principal certainly looks better than investing in short-term government bonds in just about every developed country since 2009. Comparing that to volatile stocks is plain silly when discussing risk-adjusted returns.

you're confusing volatility and risk.  we know over time the market performs to avg.  What Steveo is not analyzing and what many who choose to pay down their mortgage vs invest fail to recognize is if their goals are inline with their strategy - its great to say i want to reduce my risk - but risk of what - financial failure is what the risk is in all scenarios.  Which is increased during the paydown period at these interet rates - there is no way around that - the risk of total financial failure is higher if one puts more money into a fixed illiquid asset.  You only have so much money coming in each month - one could invest in the market and get a pre inflation return of 10% avg over 30 years or one could put their money into their house and get a pre inflation return of 5% -  post inflation these numbers are 7% and 2% (since the purchase price of the house is fixed in time and doesnt index to inflation).  So if we're going to talk real returns the real return on the paying down of the house is avg inflation over 30 year periods - 3.3% should be duducted from your "Guranteed return"  so now we're sub 2% in real return.  And we've increased our risk of financial failure - But how did i do that my money is safe in my house - well you did it b/c of the follow scenario

1. you lose your income stream
2. you havent fully paid down your house
3. the bank still wants your full mortgage payment each month they do not care if you've paid 100k extra to the house

so if person A was paying down their house at 30k extra per year
and person B was investing - minus complete and total market collapse person B inherently has more liquidable capital to ride out the bumpy road above.

Compound that with the normal response of I've got a huge EF that i keep liquid - so now you've got even more money sidelined to counteract your increased risk - where as person b would likely be more inclined to keep said EF invested

Or the response of i've maxed my taxed deferred accounts so i have that buffer too- now you've added the tax risks associated if you have to tap those accounts.

All these roads lead the same place higher risk regardless of market voltility unless it goes to 0 - which is the death of capitalism and you wont care if you were paying down your house or investing.

Steveo repeatedily just threw out assumption about what market returns were duing their paydown time - while not looking at the actual numbers - once you look at the numbers a logical human would feel more secure not paying down a house - but when emotion is applied - it leads to my comment that started this debate -

That is if you are going to rashly apply emotion to house paydown with out even looking at what would have happened in hindsite and making grand(likely Wrong) market return assumption - then you're more likely to give into emotion during a downturn when FIREd when there is much more on the line than when you're in the earning stages.  Increasing your chances of financial failure again.

RichMoose

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Re: Buckle up folks
« Reply #85 on: March 14, 2018, 12:19:39 PM »
A) I have not confused volatility and risk. I just gave one example of measuring risk-free rate of return. I understand that Sharpe is far from perfect, but that doesn't mean volatility should be ignored. Volatility has huge impacts on investor returns, especially after factoring in investor behaviour. I believe it was the Dalbar study (could be wrong on that) which has shown a typical investor would have been better off buying 10-year Treasury bonds than investing in stocks or mutual funds over the past few decades. Volatility, not stock returns, was largely responsible for that.

B) @steveo said several times that he looks at risk-adjusted returns. You don't know how he views risk, it could be volatility that he's worried about. Maybe he's super cautious and if his house carried that big mortgage he might only be able to stomach a portfolio that's just 25% stocks. Regardless, he is bang on correct when he says that a 5% risk-free/tax-free return is decent. If you had the option of investing in a hypothetical ETF or mutual fund that promised a tax-free return of 5% each year like clockwork with no volatility and no investment risk in today's interest rate environment, you would be silly not to own it. Hell, I would leverage up 100x and buy it if I could.

C) You are not incorrect when you say that over long time periods you are better to invest in a stock portfolio than you are to pay down your mortgage. It's something that I personally feel strongly about for my own situation as well. However, that only counts if you have the stomach for volatility. Yes, a 7% real return is way better than a 3% real return. Yes, a big stock portfolio also offers unmatched liquidity. But don't confuse total potential returns over 30 years with risk-adjusted returns over shorter time periods.
« Last Edit: March 14, 2018, 12:21:20 PM by Mr. Rich Moose »

boarder42

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Re: Buckle up folks
« Reply #86 on: March 14, 2018, 01:19:31 PM »
A) I have not confused volatility and risk. I just gave one example of measuring risk-free rate of return. I understand that Sharpe is far from perfect, but that doesn't mean volatility should be ignored. Volatility has huge impacts on investor returns, especially after factoring in investor behaviour. I believe it was the Dalbar study (could be wrong on that) which has shown a typical investor would have been better off buying 10-year Treasury bonds than investing in stocks or mutual funds over the past few decades. Volatility, not stock returns, was largely responsible for that.

B) @steveo said several times that he looks at risk-adjusted returns. You don't know how he views risk, it could be volatility that he's worried about. Maybe he's super cautious and if his house carried that big mortgage he might only be able to stomach a portfolio that's just 25% stocks. Regardless, he is bang on correct when he says that a 5% risk-free/tax-free return is decent. If you had the option of investing in a hypothetical ETF or mutual fund that promised a tax-free return of 5% each year like clockwork with no volatility and no investment risk in today's interest rate environment, you would be silly not to own it. Hell, I would leverage up 100x and buy it if I could.

C) You are not incorrect when you say that over long time periods you are better to invest in a stock portfolio than you are to pay down your mortgage. It's something that I personally feel strongly about for my own situation as well. However, that only counts if you have the stomach for volatility. Yes, a 7% real return is way better than a 3% real return. Yes, a big stock portfolio also offers unmatched liquidity. But don't confuse total potential returns over 30 years with risk-adjusted returns over shorter time periods.


which brings me back to my point - which is a person like Steveo who has an inability to look at things from an analytical perspective to the point they dont even want to look at the math that they will be more likely to sell in a down turn - your point A -

my entire point was and still is if you're going to pay down your house at a low interest rate in lieu of the investing side AND not understand it - then you're likely to fail in FIRE planning anything that uses a large equity allocation since you cant take the time to understand the huge difference between those two.

there is inherently low risk in stocks short term volatility if it cant be stomached over paying down a low mortgage - that person needs to seriously re-evaluate their ability to hold any amount of stocks in FIRE

tyort1

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Re: Buckle up folks
« Reply #87 on: March 14, 2018, 01:55:26 PM »
A) I have not confused volatility and risk. I just gave one example of measuring risk-free rate of return. I understand that Sharpe is far from perfect, but that doesn't mean volatility should be ignored. Volatility has huge impacts on investor returns, especially after factoring in investor behaviour. I believe it was the Dalbar study (could be wrong on that) which has shown a typical investor would have been better off buying 10-year Treasury bonds than investing in stocks or mutual funds over the past few decades. Volatility, not stock returns, was largely responsible for that.

B) @steveo said several times that he looks at risk-adjusted returns. You don't know how he views risk, it could be volatility that he's worried about. Maybe he's super cautious and if his house carried that big mortgage he might only be able to stomach a portfolio that's just 25% stocks. Regardless, he is bang on correct when he says that a 5% risk-free/tax-free return is decent. If you had the option of investing in a hypothetical ETF or mutual fund that promised a tax-free return of 5% each year like clockwork with no volatility and no investment risk in today's interest rate environment, you would be silly not to own it. Hell, I would leverage up 100x and buy it if I could.

C) You are not incorrect when you say that over long time periods you are better to invest in a stock portfolio than you are to pay down your mortgage. It's something that I personally feel strongly about for my own situation as well. However, that only counts if you have the stomach for volatility. Yes, a 7% real return is way better than a 3% real return. Yes, a big stock portfolio also offers unmatched liquidity. But don't confuse total potential returns over 30 years with risk-adjusted returns over shorter time periods.


which brings me back to my point - which is a person like Steveo who has an inability to look at things from an analytical perspective to the point they dont even want to look at the math that they will be more likely to sell in a down turn - your point A -

my entire point was and still is if you're going to pay down your house at a low interest rate in lieu of the investing side AND not understand it - then you're likely to fail in FIRE planning anything that uses a large equity allocation since you cant take the time to understand the huge difference between those two.

there is inherently low risk in stocks short term volatility if it cant be stomached over paying down a low mortgage - that person needs to seriously re-evaluate their ability to hold any amount of stocks in FIRE

That might not be true.  Or maybe not true in the way you think.  For some people, their tolerance for risk goes down when they have a lot of debt.  So while they have a big mortgage, they might be uncomfortable having a lot of stocks (risky) at the same time they have a lot of debt.  BUT many times, if the big debt is removed (ie, the mortgage is paid off), then they do feel a lot more comfortable taking on higher risk. 

Or sometimes not.  Some people are just not comfortable with very much risk, regardless. 

Eric

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Re: Buckle up folks
« Reply #88 on: March 14, 2018, 02:33:42 PM »
It's that feeling when you're on a roller coaster ride right in the beginning. Climbing and climbing towards the sharp down fall. You hear the rack wheels "clack-clack-clack-clack", any second now, we'll be going down. Problem is, we are all blind folded. Everyone "knows" the ride will be wild, we "will for sure" be going down in a fury. People around you are anxious, worried, how bad is it going to be? Some are looking forward to it. Buckle up. It will happen. But when? That's the exciting part of riding this roller coaster! :D

I always wonder how people who are nervous when the markets are going great can handle it when they're not.  My guess is that they just handle both poorly.  Sounds pretty miserable to me.

For the record, the above statement was absolutely not referring to something as innocuous as paying off a mortgage.  It was directed instead at the "sit in cash and wait years for a correction" type people.

But feel free to carry on with your pay off the mortgage or invest debate.  It's a riveting one that I'm sure that a) you'll all end up agreeing on and b) you'll cover a lot of new ground and not at all say the same things over and over.

steveo

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Re: Buckle up folks
« Reply #89 on: March 14, 2018, 02:37:00 PM »
A) I have not confused volatility and risk. I just gave one example of measuring risk-free rate of return. I understand that Sharpe is far from perfect, but that doesn't mean volatility should be ignored. Volatility has huge impacts on investor returns, especially after factoring in investor behaviour. I believe it was the Dalbar study (could be wrong on that) which has shown a typical investor would have been better off buying 10-year Treasury bonds than investing in stocks or mutual funds over the past few decades. Volatility, not stock returns, was largely responsible for that.

B) @steveo said several times that he looks at risk-adjusted returns. You don't know how he views risk, it could be volatility that he's worried about. Maybe he's super cautious and if his house carried that big mortgage he might only be able to stomach a portfolio that's just 25% stocks. Regardless, he is bang on correct when he says that a 5% risk-free/tax-free return is decent. If you had the option of investing in a hypothetical ETF or mutual fund that promised a tax-free return of 5% each year like clockwork with no volatility and no investment risk in today's interest rate environment, you would be silly not to own it. Hell, I would leverage up 100x and buy it if I could.

C) You are not incorrect when you say that over long time periods you are better to invest in a stock portfolio than you are to pay down your mortgage. It's something that I personally feel strongly about for my own situation as well. However, that only counts if you have the stomach for volatility. Yes, a 7% real return is way better than a 3% real return. Yes, a big stock portfolio also offers unmatched liquidity. But don't confuse total potential returns over 30 years with risk-adjusted returns over shorter time periods.


which brings me back to my point - which is a person like Steveo who has an inability to look at things from an analytical perspective to the point they dont even want to look at the math that they will be more likely to sell in a down turn - your point A -

my entire point was and still is if you're going to pay down your house at a low interest rate in lieu of the investing side AND not understand it - then you're likely to fail in FIRE planning anything that uses a large equity allocation since you cant take the time to understand the huge difference between those two.

there is inherently low risk in stocks short term volatility if it cant be stomached over paying down a low mortgage - that person needs to seriously re-evaluate their ability to hold any amount of stocks in FIRE

I honestly think that you are crazy. You have no idea about my situation. I have done extremely well paying off the mortgage. I received a tax free 5% return (maybe more) and that enabled me to invest more into the stock and bond market over time.

My interest rate also wasn't low. It's come down past the point of me paying off my mortgage. Plus I was already invested in the stock market.

https://tradingeconomics.com/australia/interest-rate

I also think i understated the interest rates in Australia and you have no idea about the tax implications of my approach.

Don't though let the facts get in the way of your arrogant non-sensical opinion that is flat out wrong.

I have no problems with holding stocks. I've been a great buy and hold passive index investor. I have a plan that includes the drawdown phase as well. I've done extremely well buy paying off my mortgage. When you think about it basically everything that you have said is flat out wrong.

steveo

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Re: Buckle up folks
« Reply #90 on: March 14, 2018, 02:47:28 PM »
A) I have not confused volatility and risk. I just gave one example of measuring risk-free rate of return. I understand that Sharpe is far from perfect, but that doesn't mean volatility should be ignored. Volatility has huge impacts on investor returns, especially after factoring in investor behaviour. I believe it was the Dalbar study (could be wrong on that) which has shown a typical investor would have been better off buying 10-year Treasury bonds than investing in stocks or mutual funds over the past few decades. Volatility, not stock returns, was largely responsible for that.

B) @steveo said several times that he looks at risk-adjusted returns. You don't know how he views risk, it could be volatility that he's worried about. Maybe he's super cautious and if his house carried that big mortgage he might only be able to stomach a portfolio that's just 25% stocks. Regardless, he is bang on correct when he says that a 5% risk-free/tax-free return is decent. If you had the option of investing in a hypothetical ETF or mutual fund that promised a tax-free return of 5% each year like clockwork with no volatility and no investment risk in today's interest rate environment, you would be silly not to own it. Hell, I would leverage up 100x and buy it if I could.

C) You are not incorrect when you say that over long time periods you are better to invest in a stock portfolio than you are to pay down your mortgage. It's something that I personally feel strongly about for my own situation as well. However, that only counts if you have the stomach for volatility. Yes, a 7% real return is way better than a 3% real return. Yes, a big stock portfolio also offers unmatched liquidity. But don't confuse total potential returns over 30 years with risk-adjusted returns over shorter time periods.


which brings me back to my point - which is a person like Steveo who has an inability to look at things from an analytical perspective to the point they dont even want to look at the math that they will be more likely to sell in a down turn - your point A -

my entire point was and still is if you're going to pay down your house at a low interest rate in lieu of the investing side AND not understand it - then you're likely to fail in FIRE planning anything that uses a large equity allocation since you cant take the time to understand the huge difference between those two.

there is inherently low risk in stocks short term volatility if it cant be stomached over paying down a low mortgage - that person needs to seriously re-evaluate their ability to hold any amount of stocks in FIRE

That might not be true.  Or maybe not true in the way you think.  For some people, their tolerance for risk goes down when they have a lot of debt.  So while they have a big mortgage, they might be uncomfortable having a lot of stocks (risky) at the same time they have a lot of debt.  BUT many times, if the big debt is removed (ie, the mortgage is paid off), then they do feel a lot more comfortable taking on higher risk. 

Or sometimes not.  Some people are just not comfortable with very much risk, regardless.

It's interesting how Boarder has a lot of assumptions when it comes to stating his arrogant non-factual opinion. A lot of assumptions that in my case we can state have been proven to be false.

1. I have an inability to look at my financial situation analytically. I suppose that is true if you consider reading through MMM considered principles of investing and drawing down to a pretty detailed level. For instance I think my knowledge of portfolio construction and the drawdown phase is pretty darn good.
2. I'm likely to fail in FIRE planning. Well I'm doing pretty good right now.
3. I can't handle a large equity allocation. Well my target allocation is 70% stocks and 30% bonds. Currently I'm higher than that beacuse I am slowly moving more into bonds prior to retirement and hitting the drawdown phase. 70% stocks for people that actually understand portfolio composition from a drawdown perspective is actually really high. Don't let though the maths get in the way of arguing against this. I assume Boarder doesn't know this because he is obsessed with stating that equities are the best investment and paying down debt is dumb. It probably is for him though because he wants to increase his chances of failure rather than decrease them. He probably doesn't even understand these points because clearly he is uneducated on portfolio construction.
4. I have held stocks for a number of years and I intend to hold stocks for a number of years post this point. My approach to the drawdown phase has the potential to have me increasing my stock allocation relatively over the course of my retirement. This might not happen as it is dependent on the market however it is a distinct possibility. I intend to use Bonds at the start of my drawdown phase to mitigate against sequence of returns risk.
« Last Edit: March 14, 2018, 02:50:41 PM by steveo »

JonEll

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Re: Buckle up folks
« Reply #91 on: March 15, 2018, 11:04:44 AM »
Boarder, I wonder if you would be willing to run a side-by-side comparison of assumptions with Steveo's data. You are proclaiming analytical superiority- can you provide some evidence with charting or numbers? Refrain from the personal attacks and make your case for equities.

boarder42

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Re: Buckle up folks
« Reply #92 on: March 15, 2018, 11:39:00 AM »
Boarder, I wonder if you would be willing to run a side-by-side comparison of assumptions with Steveo's data. You are proclaiming analytical superiority- can you provide some evidence with charting or numbers? Refrain from the personal attacks and make your case for equities.

its not a personal attack to say someone is who does something is more likely to do something else - steveo took offense to that b/c they did it.

but Steveo has not provided that data needed - the only data needed is the pay off window when he started vs when he ended.  You'll see above i already discounted his wildly incorrect assumptions about what his market returns would have been - in trying to prove his house paydown was superior there was a surprising lack of money going towards investing even if we assumed 0 returns - an extra 200k was left out in the cold somewhere. 

The only data point needed is what day Steveo chose to start paying down 300k and when it was finished.  you could add the rate of paydown but we can assume linear and likely get there. 

The reason i can assume i'm correct is its like trying to find a needle in a haystack to find a paydown period that is superior to investing.  - basically you have to start and stop at the right times.  Steveo could do the research and give those dates and say ha i won i have no problem with that - but its unlikely those dates will be provided and i'd prefer honesty.  If you look at his claims above they are all assumptions that the market did worse - when he has the data to determine if it actually did i only have part of it -  So speaking in general since he is just "assuming" the market did worse - he is much less likely to be correct in his assumption b/c its a very rare circumstance that the stars align and you win.  2000-2009 is one of the few pay off windows that won b/c you would have been investing over time and had a big hit to your investments while the guy paying his mortgage would have ended up paying it off at a market bottom and switch to dumping in the rest of the mortgage payment along with the over payment - but again this is rare and to point to this event and say this is why i do it is taking a large chance on the future of your stache.

we can also reasonably assume he didnt hit that window b/c a quick google search shows that the variable rate climate that Australia is hit 9% just before the bubble burst in 08/09.  he commented his rate peaked around 5%

Normally i dont comment on those from countries without longer term fixed rates - but when you make claims you won against the market with 3-5% interest rates i dont care what country you're in this is highly improbable.  which is why i replied b/c almost all of his statements are blatantly false assumptions at least based on the data he's provided thus far.

Which brings me to my opinion that those who make rash emotional decision without looking at the numbers - which i think we can all agree appears to be the case here with the way his assumptions have been flowing.  Are more LIKELY to make rash emotional decisions when the market tanks in FIRE.

steveo

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Re: Buckle up folks
« Reply #93 on: March 15, 2018, 04:21:25 PM »
Boarder - sorry to prove you wrong factually again. It must be difficult for you.

I was being conservative when I initially listed the rates and when I checked it's clear that the rates were higher than 5%. Let's be honest. You have jumped the gun in trying to prove you have some analytical superiority when you don't. What were some initial extremely conservative comments about my approach which has worked really well was matched by your irrational arrogant response.

The variable rate hitting 9% when I had a mortgage shows how irrational your opinion actually is.

Try and be less arrogant in the future. You failed big time this time.

You got one thing right. Those who make emotionally rash decisions without looking at the numbers are more likely to fail in FIRE. You though in a humorous way actually were talking about yourself. Good luck on your journey because you will need it. If you need some education on investing you should make a thread and we can all help you out.
« Last Edit: March 15, 2018, 04:22:59 PM by steveo »

boarder42

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Re: Buckle up folks
« Reply #94 on: March 15, 2018, 06:23:30 PM »
Boarder - sorry to prove you wrong factually again. It must be difficult for you.

I was being conservative when I initially listed the rates and when I checked it's clear that the rates were higher than 5%. Let's be honest. You have jumped the gun in trying to prove you have some analytical superiority when you don't. What were some initial extremely conservative comments about my approach which has worked really well was matched by your irrational arrogant response.

The variable rate hitting 9% when I had a mortgage shows how irrational your opinion actually is.

Try and be less arrogant in the future. You failed big time this time.

You got one thing right. Those who make emotionally rash decisions without looking at the numbers are more likely to fail in FIRE. You though in a humorous way actually were talking about yourself. Good luck on your journey because you will need it. If you need some education on investing you should make a thread and we can all help you out.

So yet again you've provided no data. Probably bc it doesn't support what you did. I based my statements off bits and pieces of data you provided. If you'd post your actual dates we could show you the awfulness of your decision but you refuse.

I personally give 2 shits about your personal performance it's the incorrect statements you made  and failed to provide any of the data necessary for anyone to confirm your claims. It's akin to a stock pickers showing up and claiming to have beaten the market after the fact.
« Last Edit: March 15, 2018, 06:28:33 PM by boarder42 »

boarder42

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Re: Buckle up folks
« Reply #95 on: March 15, 2018, 07:10:33 PM »
Also if you'd said my rates were between 5-9% to start with the conversation would have never started bc that a different math problem. Than 3.5-5%

steveo

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Re: Buckle up folks
« Reply #96 on: March 15, 2018, 08:16:43 PM »
I based my statements off bits and pieces of data you provided. If you'd post your actual dates we could show you the awfulness of your decision but you refuse.

I personally give 2 shits about your personal performance it's the incorrect statements you made  and failed to provide any of the data necessary for anyone to confirm your claims. It's akin to a stock pickers showing up and claiming to have beaten the market after the fact.

I really couldn't care less about your irrational non-factual comments. Like I said if you need help it's a good idea to ask. You clearly are uneducated on the principles of investing and FIRE and clearly are someone who needs help as you are a candidate likely to fail when it comes to FIRE.

Hopefully you learn from this.

steveo

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Re: Buckle up folks
« Reply #97 on: March 15, 2018, 08:22:18 PM »
Also if you'd said my rates were between 5-9% to start with the conversation would have never started bc that a different math problem. Than 3.5-5%

Not trying to get in the middle of this cat fight, but...

It's always curious when the mortgage-pay-down folks are like, And paying down the mortgage made ton of sense for me because my mortgage rate was 7%... Especially curious when that same person could have refi'd into a better rate.  The best cure for a high mortgage rate is often to refi, not to pay down the principal on the mortgage. Considering the time period in question, I believe a refi would have made sense.

What I find curious is that people that have no facts on the situation state non-factual comments.

Here is something that Americans don't typically understand. When you fix an interest rate in a country where mortgages are managed true to market then if you refinance there is a penalty cost in relation to paying that mortgage off. In America you can fix and refinance down but in any country that has a properly functioning banking system this isn't possible.

I will state that this wasn't relevant to me however when you look at the facts it appears that paying down my mortgage was a good decision.

Obviously there are some posters (like yourself and Boarder) who irrationally view anyone paying down their mortgage as being irrational. Factually this isn't always the case and when you jump up and down trying to push your limited knowledge of mortgages onto everyone you end up stating irrational comments.

appleshampooid

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Re: Buckle up folks
« Reply #98 on: March 15, 2018, 08:26:31 PM »
I based my statements off bits and pieces of data you provided. If you'd post your actual dates we could show you the awfulness of your decision but you refuse.

I personally give 2 shits about your personal performance it's the incorrect statements you made  and failed to provide any of the data necessary for anyone to confirm your claims. It's akin to a stock pickers showing up and claiming to have beaten the market after the fact.

I really couldn't care less about your irrational non-factual comments. Like I said if you need help it's a good idea to ask. You clearly are uneducated on the principles of investing and FIRE and clearly are someone who needs help as you are a candidate likely to fail when it comes to FIRE.

Hopefully you learn from this.
You sound like a troll. Why not provide the data to prove that your statements are correct? The window in time you paid down your mortgage, the specific interest rates during that time period, and the amounts. Then anyone could verify your statements. You have provided no data, and with the limited data available boarder's position is more defensible in the recent low-rate environment.

waltworks

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Re: Buckle up folks
« Reply #99 on: March 15, 2018, 09:25:00 PM »
I think it can be simultaneously true that:
-It can be the "right" move for an individual who dislikes debt and/or is extremely conservative to pay off low interest debt like a mortgage rather than investing. Maximizing your money is not the same thing as maximizing your happiness.
AND
-It is almost always suboptimal financially to pay off very low interest debt rather than investing, if maximum speed to FIRE/maximum returns on your money is your goal (and you have a long time horizon).

And of course, if you don't provide useful data, you shouldn't make any claims either way.

-W