Tax reform may well change that so that you get to not pay the Government $0 for paying the bank interest on your mortgage. Look for tax reform to limit the mortgage interest deduction in some way going forward. The last tax reform bill (1986) tried to kill the deduction, but only managed to kill the interest deduction for debt other than mortgage (interest paid on credit cards, personal loans, etc used to be deductable before the '86 tax reform)
If I can make more than 4% on an investment then it's better to invest in X than pay off the mortage. I do pay an extra $26.xx a month already just so they take exactly $1,500 from my account. That will pay off my $232k loan, I think 18 months early if I remember right. If a 4% "safe" option isn't out there then what aggressive options are floating around you all are getting into.
As everyone else has already said, just look into low cost index funds. The stock market has returned 6% historically since its inception. Sure you can beat that number, but the risk increases. As for your mortgage, there are real tax savings to having the write off whether people believe you or not. Math doesn't lie, you are either paying more taxes or you're not. And the time value consequence to not investing that money now, compared to when you payoff the mortgage by paying early is no comparison. My advice, is if you don't want to really learn all of this, find a Certified Financial Planner that charges a flat fee to tell you what to do.
I'm all about learning it, and I spend too much time on google doing as such. I'm just not sure how reliable those sources of information are. Sites like Investopidea or motley fool seem like a wealth of info, but InfoWars is a wealth of info as well, so i'm skeptical of the quality of what I read on the interwebz
I have an investment in an LLC I maybe selling my share, it's raw land holdings. If I sell and reinvest in something different (more land, stocks, IRA) can I avoid capital gains taxes?
Sure. Just be sure to print out this thread so you can refer to it when you get audited. WERA BBS > IRS Tax Lawyer all day every day!
I'm curious to know what some of you think about the idea that "if everyone is in an index fund and not stocks or other investments, the market will become more and more inefficient". I heard this recently as commentary on Vanguard taking in more money than all other similar firms combined.
On its own, no, its not an investment strategy. Combined with the other things I mentioned, it adds up. Now, if the home interest write-off goes away, sure... it becomes a liability and home sales/prices take a dive, which would make them a much less attractive investment anyway.
Seems like a nice argument to make if you are an active manager or make a living selling investments. 1 major change needs to be made the system, voting rights should go to ETF holders NOT the ETF company. At the rate we are now going, 3 or 4 investment companies will hold significant voting rights to all companies by controlling these ETF's. In effect, instead of individual companies competing with each other those investment companies by virtue of ownership will hold the votes to minimize competition to maximize all returns. For example, if I own a significant stake in Southwest and American Airlines maybe I don't introduce a low-cost fare to certain destinations.
You can get a whole 10 oz at spot on JMBullion.com. I guess you could get more if you ship it to other addresses... I've bought from them many times. Fast shipping. Pay with an echeck for the lower prices. https://www.jmbullion.com/starter-pack/
No, this was a guy who trades and used to be a floor trader in Chicago. I guess the same argument could be leveled there. Was an interesting idea that I hadn't given much thought. There's a LOT of lazy investors out there.
I think you have to do it into another land deal. I believe its a 1030 land exchange or something of that nature.
An index fund consists of stocks. I've heard that argument before and think its hog wash. Way too many people in this world with money in US equities. I've done a lot of reading and researching the last few years about active vs passive managing. I'm on both sides of the fence. There are times there are merits to both, and why I don't have all my money in either strategy. For long term, simple investors, I think the passive route is the way to go. The fees really add up over time with an active manager, and historically, only 1 in 5 outperform the market. I still like and use my guy I use at Merrill Lynch, but we've moved a lot of money away from him since we have some really good options through my wife's physician's group. If you're using an active manager, and are just scared shitless to go the passive route, then I'd urge my manager to look into low cost ETF's instead of all the front loaded mutual funds with ridiculous fees. I know plenty of active manager's are already mainly using ETF's, but a lot are not still. For those that are looking into a robo-investor with low fees, look into Betterment. They offer some nice services and are one of the better I looked in to.
The argument is that active investors are the ones who keep management honest and also short overpriced stocks, so with them not "policing" the equities market all stocks will essentially become equal; I too think it's a horseshit argument spread by active "dinosaurs". OP: 1) DO invest in ETFs and/or blue chip stocks (if you need some idiosyncratic risk in your life to feel complete) 2) DO NOT payoff your mortgage early. Here's an example: My mortgage is 4%. My tax rate is 40%. My effective mortgage rate is now 4% * (1-.4) = 2.4%. Assuming you can take the proceeds from what is essentially a 2.4% loan and invest them in the stock market at (pick a number, but it's obviously greater than 2.4%) 6%, you're making 3.6%/year on the money that you're not prepaying to your mortgage company. There's tons of other reasons called out upthread (the biggest being that you can't get that money back until you sell), but the math is the biggest and bestest reason. 3) DO NOT overweight in commodities - commodities may go up, they may go down, but none of us knows that and unless you're willing to lose your nest egg, you're foolish to materially overweight in any asset class. *This is not investment advice, blah blah blah. Investing contains risk, blah blah blah. My opinion is my own and may not reflect the blah blah.
It's amazing how effectively the banks have foisted the mortgage interest writeoff ""strategy"" upon everyone. Actually, when I was typing that I thought about how effectively DeBeers convinced everyone that a man who wanted to marry a woman had to first spend three months' salary on a "special" rock that they rigidly controlled the market for, and the surprise diminishes somewhat. It's not what you know or don't know that gets you into trouble most often... it's what you know that just ain't so.
In your words, what is it that we don't know? Perhaps more to the point, could you walk us through how your strategy/math works out using the same example I used above (pasted below to avoid any confusion). "2) DO NOT payoff your mortgage early. Here's an example: My mortgage is 4%. My tax rate is 40%. My effective mortgage rate is now 4% * (1-.4) = 2.4%."
