Search found 91 matches

by fire4fun
Wed Jan 16, 2019 12:48 pm
Forum: Investing - Theory, News & General
Topic: Real value of NYC real estate, 1899-1999.
Replies: 52
Views: 6249

Re: Real value of NYC real estate, 1899-1999.

This is just one alternative to the 4% rule where you need a much larger portfolio so that you don't run out of money. Nope, historical total return of real estate is comparable to equity (see https://www.cbsnews.com/news/history-says-home-real-estate-is-a-bad-investment/ ). The 4% rule of thumb doesn't depend very much on asset class. If your entire portfolio is real estate, you would need to go with a lower SWR because you can't incrementally sell small pieces of your principal but are forced to live off income. If it's half or less, probably a decent idea to hold some real estate for inflation protection but not a big deal either way. What are you talking about? Investing in real estate does not depend on drawing down from a large sum o...
by fire4fun
Tue Jan 15, 2019 7:05 pm
Forum: Investing - Theory, News & General
Topic: Real value of NYC real estate, 1899-1999.
Replies: 52
Views: 6249

Re: Real value of NYC real estate, 1899-1999.

When my real estate passed the $5,000 in net monthly income threshold, that same portfolio contained about $600,000 in real estate equity. Can a $600,000 Index Fund portfolio pay you $5,000 per month? Can it pay you that with a $0 tax burden? The answer to both questions is "No". My sister and BIL have done very well with rental properties. They were lucky enough to buy when prices were good, and have mostly good tenants. But it is a "job", albeit part time for them. Frankly it is a job I don't want. But they are happy with it. Different strokes for different folks ;) Edit: if you are doing this as a side job you need to consider how many hours you put into it. Likely more than a simple annual rebalance. I do track the ...
by fire4fun
Tue Jan 15, 2019 3:25 pm
Forum: Investing - Theory, News & General
Topic: Real value of NYC real estate, 1899-1999.
Replies: 52
Views: 6249

Re: Real value of NYC real estate, 1899-1999.

This is just one alternative to the 4% rule where you need a much larger portfolio so that you don't run out of money. Nope, historical total return of real estate is comparable to equity (see https://www.cbsnews.com/news/history-says-home-real-estate-is-a-bad-investment/ ). The 4% rule of thumb doesn't depend very much on asset class. If your entire portfolio is real estate, you would need to go with a lower SWR because you can't incrementally sell small pieces of your principal but are forced to live off income. If it's half or less, probably a decent idea to hold some real estate for inflation protection but not a big deal either way. What are you talking about? Investing in real estate does not depend on drawing down from a large sum o...
by fire4fun
Tue Jan 15, 2019 1:32 am
Forum: Investing - Theory, News & General
Topic: Real value of NYC real estate, 1899-1999.
Replies: 52
Views: 6249

Re: Real value of NYC real estate, 1899-1999.

I found this paper very interesting though I am not in a position to critique the authors' methodology, and I admit I did not try. https://economics.mit.edu/files/5887 They looked at the value of Manhattan commercial real estate , 1899-1999, and concluded: 1. In real terms there was no long term appreciation- in fact prices were 30% lower in 1999 than in 1899 when adjusted for inflation 2. There was tremendous volatility, with fluctuations (gains or losses in real terms) of 20-50% per decade 3. The data was consistent with studies of historical residential real estate prices in Boston and residential rents in NYC, Chicago and SF, and real estate values in Amsterdam since 1628 (I believe that was the quoted year) The implication being that ...
by fire4fun
Mon Jan 14, 2019 10:29 pm
Forum: Investing - Theory, News & General
Topic: Are REITs better to purchase when interest rates are high or low?
Replies: 68
Views: 6020

Re: Are REITs better to purchase when interest rates are high or low?

The “dividends” from REITs include three components: ordinary income, capital gains, and return of capital. I know of someone who had direct real estate for years. No mortgage and minimal depreciation and in great shape. Cash flow positive and taxed at ordinary rates. Same as a very large portion of a REITs dividend. Hopefully that helps! Yeah, with no mortgage you would end up paying some taxes. I'm telling you of my personal situation where I use leverage specifically to combine with depreciation deduction so that I don't have to pay any taxes, despite positive income in my bank account every month which I live off of. The tax treatment of direct real estate investment and REITs are not the same. Like I said, when you can start paying ze...
by fire4fun
Mon Jan 14, 2019 9:23 pm
Forum: Investing - Theory, News & General
Topic: "Dirt Simple Wins Again. Couch Potato Portfolio"
Replies: 20
Views: 5897

Re: "Dirt Simple Wins Again. Couch Potato Portfolio"

I'm a fan of both Taylor's Three-Fund Portfolio and Scott Burns' Couch Potato portfolio. My personal portfolio is a mix of both portfolios. It retains the ideas of 50/50 stocks/bonds (Couch Potato), equal allocation to assets (Couch Potato), and the choice of four assets: Domestic stocks (Three-Fund Portfolio & Couch Potato) International stocks (Three-Fund Portfolio) Nominal bonds (Three-Fund Portfolio) Inflation-indexed bonds (Couch Potato) The result is a very simple portfolio which I like to describe like this: 25% each of (domestic / international) stocks / (nominal / inflation-indexed) bonds How did that portfolio do for you in 2018? I held 45% of my equity in international and that didn't turn out too well..
by fire4fun
Mon Jan 14, 2019 9:16 pm
Forum: Investing - Theory, News & General
Topic: [Deleted]
Replies: 31
Views: 5729

Re: Asset Allocation of the 0.1%

Didn't know what a Family Office was until stumbling across this thread and reading this Wikipedia article: https://en.wikipedia.org/wiki/Family_office Seems very opaque and esoteric to me. I would imagine Buffets 90/10 allocation to trustees would be just as optimal for the 0.1% as the disclosed allocation listed. I would imagine almost any reasonable or unreasonable asset allocation would work, at least for a generation or two. How would wealthy families cross-shop or evaluate “Family Offices” though? How would a boglehead train their heirs and/or board members of a family foundation to properly assess and vet these outfits? Seems very Godfather Part III to me when looking at the wikipedia graphic below. https://i.imgur.com/ubwhLmD.jpg M...
by fire4fun
Mon Jan 14, 2019 9:02 pm
Forum: Investing - Theory, News & General
Topic: Are REITs better to purchase when interest rates are high or low?
Replies: 68
Views: 6020

Re: Are REITs better to purchase when interest rates are high or low?

Well said. REITs are taxed the same as direct real estate. A lot of folks don’t realize that. This statement is false. The dividends that you earn on a REIT you will pay short or long capital gains taxes on. I've been investing real estate for over 11 years and despite consistently netting more than $5,000 of income into my bank account each and every month, I have still yet to pay taxes on rental real estate. Legally. When you start paying zero taxes on your REIT income, call me. When I will be able to not pay any taxes on income from REITs, and not pay any taxes on capital gains via a 1031 exchange with a REIT, then I'll decide to invest in it. The reality is, I control my leverage percentages (LTV), depreciation, and 1031 exchange the d...
by fire4fun
Mon Jan 14, 2019 2:45 pm
Forum: Investing - Theory, News & General
Topic: [Deleted]
Replies: 31
Views: 5729

Re: Asset Allocation of the 0.1%

>> Commodities have a place, the vehicle makes the difference. For some investors "commodities" are sometimes simply a byproduct of other investments. Oil/NG is the primary example that comes to mind. If you are a mid sized oil producer, you always have some unsold crude and your inventory fluctuates based on your contracts. It just so happens that in my area there a quite a number of "family offices" that have significant oil holdings. >> Overall seems a balanced distribution In some ways yes, in some ways no. Many would not consider a portfolio with 16.2% bonds to be "balanced". A lot of the "private equity" opportunities I've seen are invested in various forms of property and equivalents. This mea...
by fire4fun
Mon Jan 14, 2019 2:39 pm
Forum: Investing - Theory, News & General
Topic: [Deleted]
Replies: 31
Views: 5729

Re: Asset Allocation of the 0.1%

Whakamole wrote: Mon Jan 14, 2019 1:54 pm
fire4fun wrote: Sun Jan 13, 2019 7:47 pm A lot of the "private equity" opportunities I've seen are invested in various forms of property and equivalents. This means that as much as 40% or more of the ultra-wealthy's Family Estate is in real estate.
I don't know where you are getting this from. Private equity can include a lot of things. Do you have a cite on that 40% number?

It just seems that since you joined the forum last month, you've really been pushing real estate.
The "cite" is in the OP. Did you look at it? 22% private equity and 18% property = 40%.
by fire4fun
Sun Jan 13, 2019 7:47 pm
Forum: Investing - Theory, News & General
Topic: [Deleted]
Replies: 31
Views: 5729

Re: Asset Allocation of the 0.1%

A lot of the "private equity" opportunities I've seen are invested in various forms of property and equivalents. This means that as much as 40% or more of the ultra-wealthy's Family Estate is in real estate.

This should come as no surprise when we look at history. Since the ancient times people would defend their property and we would go to war over it, with land often being the primary reason for conflict. Something to think about.
by fire4fun
Sun Jan 13, 2019 4:06 pm
Forum: Investing - Theory, News & General
Topic: Did you ever "win" big?
Replies: 133
Views: 12890

Re: Did you ever "win" big?

Attributing everything in life "fate" or "luck", is not only intellectually dishonest, its pure laziness. actually, continuing to believe in free will after science has shown otherwise "is not only intellectually dishonest, its [sic] pure laziness." https://www.google.com/search?client=firefox-b-1-ab&q=science+disproves+free+will I am not talking about free will. I have heard enough Sam Harris' podcasts to see where he stands on it. Whether want I choose to do is free will or not free will is irrelevant to this discussion. What I am saying is, if you eat french fries knowing full well the potential downstream effects, don't be surprised if you get cancer or diabetes in 20 years. Telling yourself that we ar...
by fire4fun
Sun Jan 13, 2019 12:07 pm
Forum: Investing - Theory, News & General
Topic: Did you ever "win" big?
Replies: 133
Views: 12890

Re: Did you ever "win" big?

I would urge anyone reading this thread to consider a few things I have observed about men, specifically, in their conversation with other men (I cannot really speak to the female gender case). Men pretty much always lie or exaggerate about certain things. My benchmark for this is my close friends, who I would argue are less prone to these things, vs. "bloke chat" in more general contexts like over a beer in the pub. This is funny stuff..............it reminds me of my neighbor.......he always seems to win each time he goes to the casino.... There's this ole' saying about those kinda folks...... There are two type of people that leave a casino..............losers and liars......... 8-) Well it would be funny if it weren't so true...
by fire4fun
Sun Jan 13, 2019 12:01 pm
Forum: Investing - Theory, News & General
Topic: Did you ever "win" big?
Replies: 133
Views: 12890

Re: Did you ever "win" big?

Ask for your cancer example. We know that cancer is a heterogeneous group of diseases with many complex interactions, most of which are still not understood. However, you fail to understand one important concept. For example, I know that eating certain processed foods, heated up starches that form acrylamide, etc are potentially cancer-causing. If I even eat some of these in my whole life, this means that if I get cancer I should not be a surprise. means that I did not do everything in my power to prevent this, despite knowing what things may contribute to cancer. ... Here's the thing, only 15% of my assets are in index funds. That is for a very specific reason. I don't want a large portion of my net worth in something that I have zero con...
by fire4fun
Sat Jan 12, 2019 10:04 pm
Forum: Investing - Theory, News & General
Topic: Are REITs better to purchase when interest rates are high or low?
Replies: 68
Views: 6020

Re: Are REITs better to purchase when interest rates are high or low?

The “dividends” from REITs include three components: ordinary income, capital gains, and return of capital. I know of someone who had direct real estate for years. No mortgage and minimal depreciation and in great shape. Cash flow positive and taxed at ordinary rates. Same as a very large portion of a REITs dividend. Hopefully that helps! Yeah, with no mortgage you would end up paying some taxes. I'm telling you of my personal situation where I use leverage specifically to combine with depreciation deduction so that I don't have to pay any taxes, despite positive income in my bank account every month which I live off of. The tax treatment of direct real estate investment and REITs are not the same. Like I said, when you can start paying ze...
by fire4fun
Sat Jan 12, 2019 9:28 pm
Forum: Investing - Theory, News & General
Topic: Are REITs better to purchase when interest rates are high or low?
Replies: 68
Views: 6020

Re: Are REITs better to purchase when interest rates are high or low?

Well said. REITs are taxed the same as direct real estate. A lot of folks don’t realize that. This statement is false. The dividends that you earn on a REIT you will pay short or long capital gains taxes on. I've been investing real estate for over 11 years and despite consistently netting more than $5,000 of income into my bank account each and every month, I have still yet to pay taxes on rental real estate. Legally. When you start paying zero taxes on your REIT income, call me. When I will be able to not pay any taxes on income from REITs, and not pay any taxes on capital gains via a 1031 exchange with a REIT, then I'll decide to invest in it. The reality is, I control my leverage percentages (LTV), depreciation, and 1031 exchange the d...
by fire4fun
Sat Jan 12, 2019 9:22 pm
Forum: Investing - Theory, News & General
Topic: Did you ever "win" big?
Replies: 133
Views: 12890

Re: Did you ever "win" big?

I don't think picking 1 or 2 stocks is a good idea. We are in agreement there. What I am referring to as 1 or 2 big wins are things like investing in a business which can be your own (not on the stock market), investing in real estate, or your human capital. Those are the things that can help you secure a big win, instead of waiting until you are 65 to have $1-2M in the bank. I have never bought an individual stock and I've probably more against it than you. So all that you are typing is preaching to the choir. If I'm going to sacrifice now, I want the rewards soon, in 5 years, and later. Not just later. Anyone using that lottery agreement sounds like they are giving up and just want to settle for average. They don't think they have it in ...
by fire4fun
Sat Jan 12, 2019 9:10 pm
Forum: Investing - Theory, News & General
Topic: Are REITs better to purchase when interest rates are high or low?
Replies: 68
Views: 6020

Re: Are REITs better to purchase when interest rates are high or low?

That's why you diversify geographically, providers, property type, investment niche, etc., all within real estate. REITs aren't "investing in real estate." You have zero control, don't get any of the tax incentives, and get washed down profits. You can't control financing options, cash out refinance, how the property is managed, purchase significantly below value, etc. with a REIT. Not even in the same universe. Go ahead and buy a REITs, you don't get any of the benefits of investing in real estate. Warren Buffet has said that diversification is for those who don't know what they are doing. Diversification is a word that financial advisors and financial planners throw around a lot. Did you ever stop to think why they are all stil...
by fire4fun
Sat Jan 12, 2019 7:55 pm
Forum: Investing - Theory, News & General
Topic: Are REITs better to purchase when interest rates are high or low?
Replies: 68
Views: 6020

Re: Are REITs better to purchase when interest rates are high or low?

Repair costs are factored into your analysis. 5% repair 5% vacancy 8% property management cost (whether or not you manage yourself) of gross rents, if it still cash flows then you have a great investment property. That has nothing to do with what I said. Please re-read. I said "what about diversification?". Having one rental properties is not diversified. Your repairs will not be a predictable 5% of anything. You might be lucky and spend a lot less than average, or you might be unlucky and pay a lot more than average. This is the concept of risk. If instead of one rental property you own a million, you can now talk about averages and predictable costs. This is the whole reason why mutual funds exist. That's why you diversify geog...
by fire4fun
Sat Jan 12, 2019 4:39 pm
Forum: Investing - Theory, News & General
Topic: Did you ever "win" big?
Replies: 133
Views: 12890

Re: Did you ever "win" big?

Investing solely in index funds hoping to get the market return and then maybe when you're in your sixties or seventies you can do the things I mentioned above, doesn't interest me. I want control over my life and not be at the whims of the economy or stock market. It may interest you but that's the beauty of life. People are different. So naturally you spend your time on a board dedicated to investing passively in index funds. :confused Makes one wonder why you're here. It's still 15% of my portfolio so of course I want to learn about it. Its not chump change. I'm fully aware that index funds are not something that pays me an income stream but I have other things that take care of that. Similar to the winning the lottery comment, life is ...
by fire4fun
Sat Jan 12, 2019 2:55 pm
Forum: Investing - Theory, News & General
Topic: Did you ever "win" big?
Replies: 133
Views: 12890

Re: Did you ever "win" big?

Answer to your first question. Most people aren't willing to work hard, sacrifice, be creative, go against the grain, and take risks. Two counterpoints to this illogical argument: 1. How do you explain the average hedge fund manager who underperformed the market over the past 15 years (links already provided)? Don't these fine folks meet all your definers above (work hard, sacrifice, be creative, go against the grain and take risks)??? 2. so by your logic, anyone who never picked a winning stock that could have made them rich has never worked hard, never sacrificed, is not creative, never went against the grain and never took a risk? Do I have that right? Your statement makes no sense. I said its MUCH more common than winning the lottery. ...
by fire4fun
Sat Jan 12, 2019 12:26 pm
Forum: Investing - Theory, News & General
Topic: Are REITs better to purchase when interest rates are high or low?
Replies: 68
Views: 6020

Re: Are REITs better to purchase when interest rates are high or low?

What about diversification? I would be terrified to own a property and then have a major repair. Repair costs are factored into your analysis. 5% repair 5% vacancy 8% property management cost (whether or not you manage yourself) of gross rents, if it still cash flows then you have a great investment property. That has nothing to do with what I said. Please re-read. I said "what about diversification?". Having one rental properties is not diversified. Your repairs will not be a predictable 5% of anything. You might be lucky and spend a lot less than average, or you might be unlucky and pay a lot more than average. This is the concept of risk. If instead of one rental property you own a million, you can now talk about averages and ...
by fire4fun
Sat Jan 12, 2019 12:15 pm
Forum: Investing - Theory, News & General
Topic: Did you ever "win" big?
Replies: 133
Views: 12890

Re: Did you ever "win" big?

That lottery comparison is brought up so often on here like it's going out of style. The odds of winning the lottery is one in hundreds of millions. And you have no control over the outcome. The odds of having a big win like a very successful business or investment that makes you very rich is much much more common . Plus, the latter can be controlled through hard work, genetics, disposition, and research. That comparison is so far off the mark it's actually laughable. If that were true then why isn't everyone rich? If that were true why doesn't everyone beat the market? If that were true why did most hedge funds grossly underperform the market over the past 10-15 years when the "odds" (as you say) of picking successful investment...
by fire4fun
Sat Jan 12, 2019 1:05 am
Forum: Investing - Theory, News & General
Topic: Vanguard explains the increase in ex-us allocation
Replies: 34
Views: 5825

Re: Vanguard explains the increase in ex-us allocation

Many leading analyst are basically giving their future 10-year guidance with over whelming consensus that US stocks will under perform relative to International and Emerging Markets. Some are even predicting US bonds will out perform US large cap equities over next ten years due to rising interest rates. This is mainly due to future EPS earnings growth decline and raising interest rates that will also result in P/E contraction. From what I've found for the next 10-15 years, many analyst are projecting 3-5% US equities, 3-4% US Agg Bond, 6-8% Developed International, and 7-8% Emerging Markets. It'll be interesting to see how the next 10 years go wit I've seen many projections of poor US performance for the next decade, but not any projectio...
by fire4fun
Sat Jan 12, 2019 1:02 am
Forum: Investing - Theory, News & General
Topic: Did you ever "win" big?
Replies: 133
Views: 12890

Re: Did you ever "win" big?

I've had a few winners but they were more than cancelled out by losers. +1 One of the big problems with stock picking is that if you pick 20 stocks then just by dumb luck a couple of them will do much better than the stock market. I have also gone to the horse races and bet on a dozen races and won a couple. The thing about life is, sometimes you just need 1 or 2 big wins, and you never have to work again. You've won. Haters will say "got lucky" because that's all they could say. They never took action so they are stuck rationalizing their own life and decisions. 1 or 2 big wins? That sounds like the lottery. Oh right, buying individual stocks is the same as playing the lottery. Why? Because only 4% of all the companies back to 1...
by fire4fun
Sat Jan 12, 2019 12:58 am
Forum: Investing - Theory, News & General
Topic: Are REITs better to purchase when interest rates are high or low?
Replies: 68
Views: 6020

Re: Are REITs better to purchase when interest rates are high or low?

Whakamole wrote: Fri Jan 11, 2019 5:36 pm
fire4fun wrote: Fri Jan 11, 2019 3:55 pm Warren Buffet has said that diversification is for those who don't know what they are doing. Diversification is a word that financial advisors and financial planners throw around a lot. Did you ever stop to think why they are all still working in their 60s? :wink:
Very true, Warren Buffett is in fact working in his late 80s. Not sure why anyone would take advice from him.
He chooses to work. Those financial advisors have to work. If they retired today they would be scared to run out of money. I wouldn't take advice from someone who sells an idea that hasn't achieved himself.
by fire4fun
Fri Jan 11, 2019 3:57 pm
Forum: Investing - Theory, News & General
Topic: Are REITs better to purchase when interest rates are high or low?
Replies: 68
Views: 6020

Re: Are REITs better to purchase when interest rates are high or low?

MotoTrojan wrote: Fri Jan 11, 2019 3:22 pm
Jesteroftheswamp wrote: Thu Jan 10, 2019 8:56 pm I have a friend who said not to purchase REITs right now because interest rates are too high. It begs the question is there a better time to buy based on interest rates? When they are high or low? When are rates considered high vs. low? When is best? I know most will say do not time the market, but certainly REITs will behave differently based on interest rates. What are some things to keep in mind?
Interest rates are at a historical low, no?
Not quite. 30 year fixed mortgages (owner occupied) are at about the 5.375% range. They could be had for around 3.75% at the lowest point. Still "low" by historical standards, definitely not a historical low though.
by fire4fun
Fri Jan 11, 2019 3:55 pm
Forum: Investing - Theory, News & General
Topic: Are REITs better to purchase when interest rates are high or low?
Replies: 68
Views: 6020

Re: Are REITs better to purchase when interest rates are high or low?

What about diversification? I would be terrified to own a property and then have a major repair. Repair costs are factored into your analysis. 5% repair 5% vacancy 8% property management cost (whether or not you manage yourself) of gross rents, if it still cash flows then you have a great investment property. That has nothing to do with what I said. Please re-read. I said "what about diversification?". Having one rental properties is not diversified. Your repairs will not be a predictable 5% of anything. You might be lucky and spend a lot less than average, or you might be unlucky and pay a lot more than average. This is the concept of risk. If instead of one rental property you own a million, you can now talk about averages and ...
by fire4fun
Fri Jan 11, 2019 2:23 pm
Forum: Investing - Theory, News & General
Topic: Did you ever "win" big?
Replies: 133
Views: 12890

Re: Did you ever "win" big?

I've had a few winners but they were more than cancelled out by losers. +1 One of the big problems with stock picking is that if you pick 20 stocks then just by dumb luck a couple of them will do much better than the stock market. I have also gone to the horse races and bet on a dozen races and won a couple. The thing about life is, sometimes you just need 1 or 2 big wins, and you never have to work again. You've won. Haters will say "got lucky" because that's all they could say. They never took action so they are stuck rationalizing their own life and decisions. Actually no. Luck has a very large impact on results in life. There are scores of books out on the subject. The realty of luck (good and bad) has nothing to do with huma...
by fire4fun
Fri Jan 11, 2019 11:01 am
Forum: Investing - Theory, News & General
Topic: Did you ever "win" big?
Replies: 133
Views: 12890

Re: Did you ever "win" big?

Watty wrote: Fri Jan 11, 2019 5:54 am
aristotelian wrote: Fri Jan 11, 2019 5:17 am I've had a few winners but they were more than cancelled out by losers.
+1

One of the big problems with stock picking is that if you pick 20 stocks then just by dumb luck a couple of them will do much better than the stock market.

I have also gone to the horse races and bet on a dozen races and won a couple.
The thing about life is, sometimes you just need 1 or 2 big wins, and you never have to work again. You've won. Haters will say "got lucky" because that's all they could say. They never took action so they are stuck rationalizing their own life and decisions.
by fire4fun
Fri Jan 11, 2019 10:53 am
Forum: Investing - Theory, News & General
Topic: Are REITs better to purchase when interest rates are high or low?
Replies: 68
Views: 6020

Re: Are REITs better to purchase when interest rates are high or low?

Sorry to lazy to read all the replies so apologize in advance if I am repeating. I believe Vanguard or someone else did a study showing there is NO correlation between REIT price changes and interest rates. So it would seem this is one I would put in the urban legend section. Only makes sense as it is naive to think a WHOLE subasset class moves based on one single economic indicator. Good luck. That doesn't surprise me. With my personal investing, I have seen the same thing. The interest rates rise, so it becomes a little more expensive to buy property. However, don't forget this affect your renters as well. That extra $200 payment per month would prevent a lot of borderline people from buying a home. So this increased rental rates and low...
by fire4fun
Fri Jan 11, 2019 10:44 am
Forum: Investing - Theory, News & General
Topic: Are REITs better to purchase when interest rates are high or low?
Replies: 68
Views: 6020

Re: Are REITs better to purchase when interest rates are high or low?

danielc wrote: Fri Jan 11, 2019 9:42 am
fire4fun wrote: Fri Jan 11, 2019 12:22 am My advice - own real property. Better returns, second to none tax incentives, more control, wealth building legacy. REITs aren't worth the paper they are printed on IMHO.
What about diversification? I would be terrified to own a property and then have a major repair.
Repair costs are factored into your analysis. 5% repair 5% vacancy 8% property management cost (whether or not you manage yourself) of gross rents, if it still cash flows then you have a great investment property. People do don't do well in real estate where never investors - merely accident landlords who didn't know what they didn't know.
by fire4fun
Fri Jan 11, 2019 12:22 am
Forum: Investing - Theory, News & General
Topic: Are REITs better to purchase when interest rates are high or low?
Replies: 68
Views: 6020

Re: Are REITs better to purchase when interest rates are high or low?

My advice - own real property. Better returns, second to none tax incentives, more control, wealth building legacy. REITs aren't worth the paper they are printed on IMHO.
by fire4fun
Wed Jan 09, 2019 5:23 pm
Forum: Personal Investments
Topic: Large cash position .. any point in bonds?
Replies: 10
Views: 1824

Re: Large cash position .. any point in bonds?

10.5% is in securities, 9.5% is in cash. What's the remaining 80%? Also might be some confusion on terms on my end… I understand securities to be any financial asset that can be easily traded. Not sure if you are talking about equities, bonds, or both? The remaining 80% is in real estate equity, agriculture, interests in businesses, and gold. I am not sure that any of those are easily traded :D What I meant was securities = paper assets = stocks and bonds Hope that clears things up! So, if you put that cash into bonds, your portfolio of investable assets would be about 50/50. I can't fault that, but wonder if you need a reasonable pile of cash to maintain your other assets. Bonds are not liquid, I take it? I want that cash to be available ...
by fire4fun
Tue Jan 08, 2019 11:17 pm
Forum: Personal Investments
Topic: Large cash position .. any point in bonds?
Replies: 10
Views: 1824

Re: Large cash position .. any point in bonds?

stimulacra wrote: Tue Jan 08, 2019 11:12 pm 10.5% is in securities, 9.5% is in cash. What's the remaining 80%?

Also might be some confusion on terms on my end… I understand securities to be any financial asset that can be easily traded. Not sure if you are talking about equities, bonds, or both?
The remaining 80% is in real estate equity, agriculture, interests in businesses, and gold. I am not sure that any of those are easily traded :D

What I meant was securities = paper assets = stocks and bonds

Hope that clears things up!
by fire4fun
Tue Jan 08, 2019 11:13 pm
Forum: Personal Investments
Topic: Fiancée Thinks I'm Putting Too Much Towards Retirement/ Not Enough Towards Short-Term Goals
Replies: 136
Views: 12913

Re: Fiance Thinks I'm Putting Too Much Towards Retirement/ Not Enough Towards Short-Term Goals

Some points, take them or not as you see fit: 1) If you're not on the same page with finances, step back and work to get on the same page before you get married. 2) Once you get married, the money is OURS. Joint. 3) Don't even think about buying a house together when you aren't living together. I'd recommend at least 6 months of living together before considering buying a house. 4) But I wouldn't consider buying a house yet. At this point, you have a huge (way too huge IMO) wedding expense coming up. Don't manufacture a crisis by buying a house also. Get married (spending less), live together (saving one rent), and then start considering buying a house when OUR money says you can afford it. Plenty of people have got married and kept accoun...
by fire4fun
Tue Jan 08, 2019 11:02 pm
Forum: Personal Investments
Topic: Would your FIRE plan work had your journey started 1965?
Replies: 66
Views: 5316

Re: Would your FIRE plan work had your journey started 1965?

OP, I save 1 year of expense every year. My AA range from 70/30 to 60/40. This FIRE plan works under any stock market condition. KlangFool How is it possible to save 1 yr of expense every yr? Are you projecting lower or equal expenses in the future? mtmingus, 1) I am not projecting anything. I am saving 1 year of current annual expense every year. 2) I am aiming for Financial Independence. Hence, I am using current annual expense. <<How is it possible to save 1 yr of expense every yr?>> 3) It is possible when you come from a culture/country where the average gross saving rate is 30+%. It is how normal people live in that culture/country. KlangFool Just a guess -- China? I've been very impressed by the intelligence and hard work nature of e...
by fire4fun
Tue Jan 08, 2019 10:58 pm
Forum: Personal Investments
Topic: Large cash position .. any point in bonds?
Replies: 10
Views: 1824

Large cash position .. any point in bonds?

Something that has been on my mind recently. Sorry if its too simpleminded of a question. Just reviewing my allocation, as of 1/1/19, it looks like 10.5% of assets are in securities, 9.5% are in cash. This is common that I hold quite a bit of cash in the case that some interesting opportunity comes around. Out of the 10.5% in securities, nearly 50% is in the G-fund. The recent market drop threw me for a loop. So I wrote an IPS, which helped a bit. So, now still a bit stuck. So my question is, if I want a 50/50 allocation, is there any reason why I shouldn't be all stocks given the cash position is usually close $$ value to all the securities in my portfolio. Both my need and willingness to take risk is quite low these days. Appreciate your ...
by fire4fun
Tue Jan 08, 2019 10:49 pm
Forum: Investing - Theory, News & General
Topic: Talk me out of a 60/40 AA
Replies: 116
Views: 21729

Re: Talk me out of a 60/40 AA

Alexa9 wrote: Tue Jan 02, 2018 7:23 pm I read online that The Big Crash is coming THIS YEAR! Now that I think about it, I read that the last 10 years. I think they were right in 2008. The truth is nobody knows nothing, so protect your butt with bonds.
Peter Schiff WAS RIGHT AGAIN !! :wink:
by fire4fun
Sun Jan 06, 2019 3:08 pm
Forum: Personal Investments
Topic: Stopping 401k to buy up cash-flowing real estate?
Replies: 24
Views: 2323

Re: Stopping 401k to buy up cash-flowing real estate?

Hello all, A little backstory. Wife and I are self employed wedding photographers (29 and 32 yrs old, respectively), and have a pretty good idea that we won't be doing this as our primary source of income beginning in our 40's, mid 40's at the most. Not saying it's impossible, but we just don't see many wedding photographers 40+ yrs old killing it anymore, at least not in our market. So, our 5-year goal is to steadily replace our income (6 figures) with cash-flowing, buy-and-hold real estate, so that we have 1) an income, and 2) equity in property. Doing this in the span of 5 years or so requires us to throw a ton of our paycheck toward purchasing these properties (with cash). We're 100% debt free with only $35k in 401k and a hefty emergen...
by fire4fun
Sat Jan 05, 2019 10:35 am
Forum: Investing - Theory, News & General
Topic: US Stock Market Returns in the 21st Century
Replies: 92
Views: 6276

Re: US Stock Market Returns in the 21st Century

The first 19 years of the 21 st century are now history. Here are the real average annual returns for the US stock market over those 19 years. A period which includes a nine year bull market as well as two market crashes. US stock market annual average real returns from 12/31/99 through 12/31/2018. Annual average real return with dividends reinvested 3.0% Annual average real return without dividends reinvested 1.1% Link to calculation tool for stock market returns - https://dqydj.com/wilshire-5000-return-calculator/ BobK PS - The inflation data for December 2018 is not in yet and was extrapolated from the November CPI data by the above tool. I would expect the one month CPI extrapolation error to be very small and have a negligible impact ...
by fire4fun
Fri Jan 04, 2019 10:06 pm
Forum: Investing - Theory, News & General
Topic: US Stock Market Returns in the 21st Century
Replies: 92
Views: 6276

Re: US Stock Market Returns in the 21st Century

So, for investors that were 100% US Stocks, their 19 year return was 3% real (with reinvested dividends). But, few people are 100% US Stocks for 19 years. I wonder how things would have been for someone maintaining a specific AA who rebalances? The rebalancing bonus from selling bonds to buy stocks in 2008 is enormous (3x if my capital gains calculations are correct). The same is likely true for people rebalancing out of stocks at the recent all-time highs. While the data are interesting. For me, they aren't all that realistic. Bonds don't return that much, even when they perform well. If order for bonds to budge the quote 3% real return in any significant way with a 60/40 allocation, they would have to return at least 10% CAGR over the la...
by fire4fun
Fri Jan 04, 2019 6:20 pm
Forum: Investing - Theory, News & General
Topic: US Stock Market Returns in the 21st Century
Replies: 92
Views: 6276

Re: US Stock Market Returns in the 21st Century

mad_pear wrote: Fri Jan 04, 2019 6:01 pm What about the last 24 years? Or the last 17?
24 or 17 years wouldn't be "21st century returns". 17 years would be an incomplete version of that.
by fire4fun
Fri Jan 04, 2019 5:52 pm
Forum: Investing - Theory, News & General
Topic: US Stock Market Returns in the 21st Century
Replies: 92
Views: 6276

Re: US Stock Market Returns in the 21st Century

Had I wanted to cherry pick recent return data to show really bad results, I would have picked real US stock returns for the 9 year period from early March 2000 to early March 2009. Real stock market return for nine years (March 2000 through March 2009) annual average return -8.4% cumulative return over the nine years -61.0% And in early March of 2009 no one knew whether the bleeding would continue or not. Instead I picked the returns for the last 20 years and the returns for the first 19 years of this century. It seems reasonable to me to ask how well have the US capital markets done over the last 20 years. Apparently some people think that's an unfair question. :wink: How dare someone have the termity to show US and global stock market r...
by fire4fun
Fri Jan 04, 2019 12:18 pm
Forum: Investing - Theory, News & General
Topic: US Stock Market Returns in the 21st Century
Replies: 92
Views: 6276

Re: US Stock Market Returns in the 21st Century

POLO wrote: Fri Jan 04, 2019 11:58 am I'm sure this conversation has be had countless times, but how many of you dumped your millions into the US equities market exactly on the last trading day of 1999? Exactly during the time the market was at its peak? This is why even the "90's Japan" argument doesn't make sense to me. The market was lower in the years before and after and continue to trend updwards, meaning someone did a hell of a lot better than 3.0%.
And someone did worse.
by fire4fun
Fri Jan 04, 2019 12:18 pm
Forum: Investing - Theory, News & General
Topic: US Stock Market Returns in the 21st Century
Replies: 92
Views: 6276

Re: US Stock Market Returns in the 21st Century

JoMoney wrote: Fri Jan 04, 2019 11:50 am
fire4fun wrote: Fri Jan 04, 2019 11:46 am
PaulF wrote: Fri Jan 04, 2019 11:31 am Why do you think that the year 2000 belongs to the 21st century?
I would say it definitely does. Remember when people were celebrating the new century and new millennium? Although I was young, I recall that celebration took place on 12:01 AM 1/1/2000, NOT 12:01 AM 1/1/2001.
When Did the 21st Century Start?
https://www.timeanddate.com/counters/mil2000.html
Assuming time zero, which is year zero, the 21st century would have started in 2000. Of course the B.C.E. / A.D. "Year 0" start point is arbitrary but the point still stands.
by fire4fun
Fri Jan 04, 2019 11:46 am
Forum: Investing - Theory, News & General
Topic: US Stock Market Returns in the 21st Century
Replies: 92
Views: 6276

Re: US Stock Market Returns in the 21st Century

PaulF wrote: Fri Jan 04, 2019 11:31 am Why do you think that the year 2000 belongs to the 21st century?
I would say it definitely does. Remember when people were celebrating the new century and new millennium? Although I was young, I recall that celebration took place on 12:01 AM 1/1/2000, NOT 12:01 AM 1/1/2001.
by fire4fun
Fri Jan 04, 2019 11:42 am
Forum: Investing - Theory, News & General
Topic: US Stock Market Returns in the 21st Century
Replies: 92
Views: 6276

Re: US Stock Market Returns in the 21st Century

The first 19 years of the 21 st century are now history. Here are the real average annual returns for the US stock market over those 19 years. A period which includes a nine year bull market as well as two market crashes. US stock market annual average real returns from 12/31/99 through 12/31/2018. Annual average real return with dividends reinvested 3.0% Annual average real return without dividends reinvested 1.1% Link to calculation tool for stock market returns - https://dqydj.com/wilshire-5000-return-calculator/ BobK PS - The inflation data for December 2018 is not in yet and was extrapolated from the November CPI data by the above tool. I would expect the one month CPI extrapolation error to be very small and have a negligible impact ...
by fire4fun
Thu Jan 03, 2019 11:44 pm
Forum: Personal Investments
Topic: 2019 Lump Sum IRA Contribution
Replies: 28
Views: 2669

Re: 2019 Lump Sum IRA Contribution

I contributed 6k in to each of our tIRA accounts yesterday and waiting for it to post in to the settlement fund and then convert to Roth. Will need to wait a couple of more days before buying anything since I TLH'd early last month. I did the same, awaiting funds to post to settlement fund. Is there is a faster way to do it? like below. 1) In DEC last week or so, ACH funds to taxable MMF or whatever 2) Funds will be cleared / available by JAN 1st. 3) On Jan 1st, contribute to IRA (and do backdoor immediately) Seems slow this year for some reason (I'm with Vanguard). I was checking my history for last year and I contributed on 1/3/18... it settled the next day on 1/4/18... then I immediately converted the same day. I'm hoping it settles tom...
by fire4fun
Thu Jan 03, 2019 11:42 pm
Forum: Personal Investments
Topic: 2019 Lump Sum IRA Contribution
Replies: 28
Views: 2669

Re: 2019 Lump Sum IRA Contribution

hawaii-60 wrote: Thu Jan 03, 2019 11:36 pm I put 6k into my Roth. All went into VTSAX. I had been doing everything into the Target Retirement 2055 fund but with the downturn of the market, I wanted to take advantage. Retirement is 20 years out.
Do honestly think there is even a remote chance that this is the bottom and you bought "on sale"? I'll bet you a dollar to a donut that you ain't seen nothing yet 8-)