Best Posts in Thread: Now that were officially the Communist States of America
I am 100000000% with you on "the economy." However, don't make the mistake of thinking that has one iota of anything to do with "the markets" anymore. It simply doesn't. Debt, debt, debt... fuels "the markets," "the economy" does not.
My (simple) view hasn't changed = get out of debt where possible, and don't add any debt. There are some spends we were anticipating, and maybe those get deferred where possible. 2022 has son's Bar Mitzvah ($5k event, maybe it gets a little smaller?) and daughter is of age for a car (she pays half, but total will be under $2k since it IS her first car), wife turns 50 (bottle of wine and send her off on a ladies week at the beach for under $150), and we have our 20th Anniversary (trip to Glacier National Park maybe gets kicked an extra year out).
Goal is to get out of credit cards in 2021 (if bonuses are still a thing, which I doubt), pay off the last current car loan. Maintain ~12% retirement investment from paychecks, but NOT start up the Roth's for another year due to fear over gov't changes to most retirement funds AND to focus on debt payments. House addition and new deck get pushed another few years out. Retirement 401k is in stocks, primarily. I figure to ride it out there and suffer along with whatever happens to the rest of America. I feel I won't be any worse off as I've always viewed it as a risk to crash at any point anyway.
Look...you a$$holes go reminisce about having a man date at some streetside cafe in another thread...this thread is for us comrades to figure out the best way to survive a cold, dark, china flu infested Russian winter....now piss off or I'll call @BMF to get this thread back to our harsh, cold near future reality.
But where do you get a low risk 3-5% return right now? Equities on average are now very expensive relative to earnings. If you bought an index fund back in the late 90s it would have taken decades to get to a 5% annualized return.
Rates on bonds are dismal and if interest rates do go up they'll lose their value.
Real estate is also expensive when you look at price to rent ratios. Not quite as expensive as equities, but still expensive. If you own rental property that is financed, your return on equity erodes as you pay off the loan. Even if you refinance to take money out, your return shrinks as price to rent increases. So it might make sense to sell now.
Of course even if equities, bonds and real estate don't look particularly attractive right now on average as asset classes, there are certainly opportunities within each class to make money if you are comfortable with the risk.
But what are those opportunities? I think that's what concrete is really asking in this thread. I'm interested in everyone's thoughts on that as well.
People under 40, 45 years old have no clue how good the rates are right now....but it's caused artificial inflation of the housing market.
Honestly, the one in bold is the one to consider because interest rates will still be at incredibly stupid lows historically even if they rose to 5% in two years (which they won't, and if they do, we're in apocalypse mode anyway). That said, no good way to time that, you'll just have to best guess based on available data.
For historical perspective, a HS friend posted this on Facebook three days ago...
Lori & I are cleaning out old files. I had mortgage paperwork from 1991 with a 9.5% rate!
We refinanced in 1994 at $8%!
I’ve always had good credit so these were competitive rates.
I'm holding some 'risky' stocks that I think I'm going to dump, but I'll hold my blue chips (like Apple, Amazon, etc). I'm not sure if I'll dump any of my mutual funds (I dumped a large percentage before the election, so I'm only holding about 15% of my portfolio in mutual funds). If the market tanks, I won't lose too much.
I'm going to sit on the sidelines with any aggressive investing unless I see a good buy opportunity.
As discussed in other threads, we're moving this year and plan to rent (in Florida). So the real estate market concerns me.
My only hope is that Joe Manchen is the cancel out vote in the Senate when the dems go ape-sh*t w/ things like packing the court or adding DC/PR as new states....and we can ride it out until 2022 and win back the House.