GolfHos

Suppose you had enough cashish to payoff your mortgage, would you do so knowing that you can now keep a larger percentage of your take-home pay OR would you continue to pay off the mortgage on a monthly basis and "invest" the money in this currently *feces*ty economic climate?

Consider that if you have a relatively low interest rate on your mortgage to begin with, the effect interest rate (i.e. real rate minus the 30-35% kickback from Uncle Sam) is just about the same as what you'd earn on a 1-year CD. Of course, anything with a shorter maturity, and you'd actually be losing money.

If I had enough hashish to pay off my mortgage I think I'd rather go away to some Island or go deep into the woods and just smoke it until...what...oh my...cashish?

Nevermind.

(http://i97.photobucket.com/albums/l209/gvandel454/TV%20and%20Movie%20Stuff/emilylitella2.jpg)

Good question.  I have heard that paying off your mortgage is one of the worst things you can do.

I would take a percentage of the money, pay it down to a payment I like, but continue with a low fixed interest and continue to pay the mortgage.  The invest the rest.

Most likely not in the markets, but buy and operate a business.

Really depends on what you think inflation is over the remaining timeline, what you realistically think you can do with investing the money instead, and how secure you are that you will have steady income over the remaining timeline.

Say this happened to me four years ago.  Here's your chunk.  Pay off your house.

Today I would be fuxorred.  The value of what I had been given is now cut in more than half.

We're in the black on our mortgage, and we're lucky to live in a neighborhood and area where housing prices haven't cratered.  (Yet?)

So I'd either invest it safely, or I'd pay off the house and then continue to pull a mortgage-payment-equivalent out of take-home and invest that.  Probably a split, now that I think about it -- I wouldn't want the house to be an albatross if we had to move suddenly, but you can never have too big an emergency fund.

*fudge*.  I'd stuff that cash somewhere safe.  If I lost my job, we had to move,and the current house didn't sell briskly, we'd have the money to both put $$$ down on the new house and make payments on the old one until it sold.

You're probably not going to listen to me, but here it is anyway......

Invest it, and yes - in the market.  Given time, you will earn more with the investment than you would save on the interest.  Stuffing it into 'safe' investments like CDs, Money Markets etc. - isn't going to get you the same returns.  The time for stuffing money in 'safe' places (or mattresses) was a year ago - its too late now folks.

Good investing takes guts.  Our emotional investing strategies are to buy when its good and sell when its bad.  Well if you think about that for even one second, you will recognize that buying 'high' and selling 'low' is a *fudge*ed up investment strategy.  Isn't the point to do the opposite?  Without going into too much detail as to why - trust me, if you have the time to let it earn - sound investments in the market (blue chip stocks, quality mutual funds) right now will kick ass in a few years.

Oh - and Warren Buffet says he's investing in the markets again too.  Right now.  One of the worlds savviest investors is buying US stocks right now.  So no matter what you think of me - there ya go.

But which ones? 

I don't have an argument with any of that.  I wish I had money to sink in the stock market right now.  I think it's a great time to buy.

My point was simply paying off the house doesn't do much (for me) and to sink it all in stocks doesn't do much for me either.  I still have the house payment to make.  I would rather look for a way to get that money working for me.

He didn't really say.  Guess that's what makes him savvy.

Buy American.  I am. (http://www.nytimes.com/2008/10/17/opinion/17buffett.html)

Most likely BioFlim Inc.   Which as you know makes this product. (http://en.wikipedia.org/wiki/Astroglide)

It's all about matching what's appropriate for the country in tough times.

As I believe in making my money work for me, I'd buy a Ford Econoline van, line the interior with white faux fur, throw a rotating bed in the back, with a disco ball, banging sound system, and install maybe a wet bar. At the very least a small fridge. Then I'd get it painted sparkly purple and throw on a bunch of ground effects and a spoiler. Maybe get some airbrushing done on it too, like a Valkyrie, or maybe just some hot warrior looking chick riding a snake or something, but definitely a chick riding something. Oh, and I'd for sure get some mag wheels, that would be sweet.

 [sm_headbang]

So Buffet essentially thinks that, if he is buying big companies broadly (who knows if he is) that around 1985-1990 an essential shift in the value and behavior of DJIA (as a leading indicator of overall domestic equity performance)... such that a disjoint in the DJIA for example occurs and a new (log) slope should be present-- that we have truly floored out at around 8000-8500.   I wonder who else called this as a floor a while ago?  [sm_devil]  

Now if only I really understood the background on why this fundamental disjoint happened... it's pretty obvious (to me) that it did... at this point. (yes, it's a combination of many things, credit expansion, electronic trading explosion, equity bubbles, new derivative products, expansion in use of derivatives, different FED policies, many others, etc... but how do all these tie/work together... I need to research this more if I can find the time)

(http://img160.imageshack.us/img160/4480/djia2logsz4.jpg)


If you truly believe there is no disjoint, then the plot says we should floor out around 4000 or so.  SELL SELL SELL

The problem with the market is there really aren't any bluechips left that trade like bluechips. They're just as volatile as tech stocks right now. What day or even the hour of the day you jump in could mean the difference between making a profit on Day 1 vs. being stuck with the stock for several years just to make your money back.

Agree. I have no doubt that (assuming we do) when we come out of this nasty hyperpression, about 18 months from now.... you'll instantly see a new class of equity products or some other insane rampup in bubble standards (like commodities) and we'll see a 10k jump in the DJIA in less than 4 months.  Followed by another massive crashback 2-3 years later.  :sad3:

This relationship, and what it might mean, is no more impressive than what can be derived by analyzing leaves scattered at the bottom of my noon tea cup.

I actually didn't want this to be discussion that's solely about how much money you can ultimately make. There are other things to consider. If you pay off all your debt, there's got to be feeling of having a huge burden being lifted which you can't really quantify in monetary terms. Of course, there's also a feeling of security by having extra cash around. If you pay off the house, you lose immediate access to those assets, but it puts you in a position to accumulate money (through wages) much more quickly as well.

On the other hand, if you invest the money you continue having the burden of monthly mortgage payments plus you essentially  start off 4-5% in the hole every year. But obviously you have the potential to earn much more than that. Most investment instruments are more liquid than a house, but you also don't want to be forced into selling any of those investments at the worst possible time should you not be able to pay the mortgage for one reason or another.

You can make an argument that from 1985 - 2000 the growth is as your red line shows (or steeper) and from 2000-now it is much less. It's just a graph. Break it down any way you want and get different results.

Either way if I invest some money now in 20 - 30 years I will have more. Even if in 2 years we have aonther sell off it will grow again. You can see it happen all the time. I can count 11 in this chart alone if not more.

How long do you plan to stay in your house? 3 to 5 years?  20 years? Till you die? Consider that.

Which is why I agree Hobbit is right in what he posted, but why I wouldn't follow that path.  Warren Buffet isn't the slightest bit worried about getting laid off next month, and he has an assload of cash to tide himself over if he suddenly gets unplugged from the market game.  I do have the concern but not the cash-assload.  I do what I think best to position my family for a negative event in the near term.  (And I never said I wasn't continuing to pour money into retirement accounts.  Just not that hypothetical extra-extra cash.)

I kind of look at paying off the home mortgage as taking money out of my left pocket and putting it into my right pocket.


It's basically just a different place to park some cash.

However, I bet its a good feeling to most, that once the title is owned free and clear, you can't be driven out except by military force.

No doubt there are emotional appeals to paying off the house and ridding yourself of mortgage payments.  But I did answer the question of "what would you do?".   I would invest it - my opinion.  I have no idea how stable and secure your employment is.  I have no idea what other debt you may be carrying.  I have no idea how old you are or when you plan to retire.  I have no idea if you have kids' educations to fund.  All of these things can affect a decision.  I have a pretty secure employment position, have at least 15 years before retirement (probably 20, or more), have no kids, and answered accordingly.  YMMV, but my answer/opinion remains the same.  Because yeah; for me, it was about how much money can I ultimately make  ;)

That's an interesting way of looking at it.

An analogy that I thought of that has a shorter time horizon (which I realize may make all the difference in the world) is one of those 24 month no interest no payment financing dealies at Best(Butt)Buy. If you had the cash to pay for a plasma TV upfront, would you still opt for the financing deal just to have the extra cash around? Heck, you could put the money into a 2 year CD and make 5% on BestBuy's dime.

So no one else would buy mag wheels, then?

Obviously, everybody's risk tolerance is different based on their employment and family situation, but to me this is more of a philosophical question about where to draw the line between wanting make money and just flat-out being greedy.

Given reasonable employment security, it seems to me that continuing to pay a mortgage in order to have investment money is really no less risky than taking out a cash advance on one of those 3% forever credit cards and investing the money. The difference is that if you default on the mortgage they take your house. If you default on the credit cards you can tell them to *fudge* off and just have your credit ruined for 7 years.

Just wanted to revisit this after a discussion today with someone.  No idea what Buffet is buying, however.....

GE - a company that's clearly not going away, prices are down right now, dividends are up.
BP - same as above.  BP is also one of the few oil companies that actually IS putting money into alternative energy.
DHI - one of the largest home builders in the nation ('the' largest probably).  Housing will be respectable again one day, this company will be there.


* The above is being shared with a safe harbor wrapper around it.

after spending many nights lately wondering how we are going to pay the mortgage, i think you can guess what i would say. you never know what the future will bring.  :)

I'd invest it no question.  Either that or I'd add a new wing to the current house with it and invest the rest.

You're wrong about that one, but I do agree with your other points.  Every major oil company is spending money looking into alternative energy, and you can expect those expenditures to increase heavily in the coming years. 

Two of the largest projects I am involved with now deal exclusively with alternative energy sources, and I have been told to expect more capital $ being funneled in that direction.  Sorry I can't elaborate more, but believe me there isn't an oil company around that believes in long term sustainability with fossil fuels.

If it involves flux capacitors, or Mr. Fusion, just give us a little sign.

Adjust your underwear.

Its my understanding (not first hand knowledge) that BP is putting a larger percentage of money (investment-profit ratio) into alternative energy than others.

Well, from what I understand, that is exactly what BP wants you to think.  BP has had their respected eyes blackened following a few incidents in the recent years...namely the Texas City and Prudhoe Bay incidents.

I still believe BP is a good investment, but don't be shortsighted on some of the other less vocal proponents and owners of alternative energy.

Are you taking that as a sign -- or are you just into guys adjusting their underwear?

Well both I guess.

No different than getting a free Fleshight for voting 2 weeks ago really.

Win-win.

Geez, I hope nobody bought GE on 18th. It's trading down below 13 from 16+ just a couple of days ago and 20+ at the beginning of the month.

Speaking of Warren Buffett, he's feeling the effects of a *feces*ty stock market too. Berkshire Hathaway Class A is trading below 77K this morning, and yesterday it had the worst single-day loss since Black Monday in 1987. Just recently as September 19th, it closed at 147K. [sm_shock]

And it may go down more.  But that doesn't change my mind about it being a good stock to own right now - i.e., BUY status.

If ya'll want to be day traders, quit your jobs and let me know how it goes for you.  If you're trying to guess the bottoms on particular stocks, you're sure to miss them.  I'm investing for retirement, and suspect that most are as well - so again, it helps to ditch the day trader mentality.  Not only will it build a nice retirement nest egg for you (unless you're set to retire in the next 12 months), it also relieves stress.

Buying a stock because it SEEMS like a good buy is the daytrading mentality. Look at the fundamentals of the company, and you'll see that stock should be rated an "avoid". You need only take a cursory look at their lines of business to see that the company is at huge risk of collapsing--on a monumental scale. Aside from selling light bulbs and appliances to consumers, the main products GE sells aren't something you can find at a big box store and buy with a credit card. They manufacture *feces* like gas turbine engines for power plants, aircraft engines, and locomotives. With the current state of the credit market, who the hell is going to be buying these products? Why is GE seeking foreign investors (http://biz.yahoo.com/ap/081120/ge_asian_funds.html?.v=1) unless they had a liquidity problem? Right now, I can see GE falling to $5/share just as easily as I see it bouncing back to $20.

Seems like a good buy?  That's what I said?  Yeah, I must really be that simplistic.  I'm unaware of GEs diversified portfolio, I had no idea they were seeking additional partnerships (cus golly, they never do that), and I picked them because I like the pretty logo.  Gee, ya got me.  I'm just a fool.  Gosh, by simply googling 'GE' you know so much more than me.  I'll crawl back in my hole now.

Oh, pardon me. You must have some profound information about company that the rest of us aren't privvy to. Maybe you're even an employee or work for one of their suppliers. I guess that's the kind of advice that we, as investors, should all be seeking instead of doing our own research (even it may be through Google). I deserve to be ridiculed for even trying to do a simple, common sense analysis of how a company might be affected by the credit crunch. After all, it's GE. The bluest of all blue chips. It's just a figment of my imagination that it's fallen from nearly $600B in market cap to $130B. All those people and institutions who bailed on GE must have done their research through Google too. My apologies for doubting you.

Investors and  institutions have bailed on almost everyone. Market cap shrinkages like GE are not uncommon these days. There are good buys out there for long term investors.

Now, now, now, gentlemen.  That is enough of that.  Show some decorum, this is a Golf Board, afterall.

If you want to continue this, please take it to the yahoo finance message boards

Unless I say so, then it sets off gleeks contrarian trigger.  I swear, if I said the sky was blue he'd argue against me.