Investing Strategies. What is your move?

[ecotourist]

The Fidelity 500 Index fund has an expense ratio of 0.015%. Even the Vanguard index 500 fund has a higher expense ratio at 0.04%. But if you look at the expense ratios of the index 500 funds for ETFs, they're higher. Probably because the total assets in the funds are much lower than in Fidelity or Vanguard.

https://fundresearch.fidelity.com/mutual-funds/summary/315911750

https://investor.vanguard.com/mutual-funds/profile/VFIAX

Ah yes, index mutual funds. They do have fairly low MERs. In Canada, their ETFs are not as low as broad market ETFs, but fairly low.

In Canada, the MERs of "regular" (ie managed) mutual funds are much higher than broad market ETFs, 10 or 20 times as high or higher.

 

[Shannow]

This month, handing over my portfolio...to someone who cashed in and spent the other half of the portfolio back in 2019....

 

[PimTac]

I got this is a email today. My portfolio pretty much goes with this advice already.


https://corporate.americancentury.c...l&utm_term=0031I00000Sp1iXQAR&partnerref=sfmc

 

[wwillson]

This month, handing over my portfolio...to someone who cashed in and spent the other half of the portfolio back in 2019....

Ouch

 

[ArrestMeRedZ]

This month, handing over my portfolio...to someone who cashed in and spent the other half of the portfolio back in 2019....

The best investing ant in the world cannot make headway if married to a grasshopper. My Wife #1 was a grasshopper - she did her best to make sure there were no savings. Worst time in my life was when she left me, then almost bankrupted me in the divorce. Best time in my life was when I realized she wasn't coming back. Then I met Wife #2.
Starting out new in your 40s isn't the end of the world, even though it feels like it at the time. I've spent the best 24 years of my life with Wife #2. Even with the late start, we are retired and financially comfortable.

 

[PandaBear]

My biggest concern with index fund is everyone recommend S&P 500 and there's only so much you can buy in that. In the end it is not diversified and the whole 500 of them are all at way too high of a valuation vs realistic valuation.

 

[PimTac]

My biggest concern with index fund is everyone recommend S&P 500 and there's only so much you can buy in that. In the end it is not diversified and the whole 500 of them are all at way too high of a valuation vs realistic valuation.

I guess it all depends on what the meaning of diversified is.


https://advisor.visualcapitalist.com/sp-500-sectors-and-industries/

 

[PimTac]

Some recently announced inflation numbers. 17.15%. The highest on record since June 1947.


http://www.shadowstats.com/

 

[Schandyman]

All the markets YTD are in the red.

 

[Schandyman]

The markets need a total adjustment everything is out of whack. Inflation shot up like a rocket that the market can’t keep up.

 

[JeffKeryk]

All the markets YTD are in the red.

Yup. That's why market investments need to be long term. Take advantage of, or at least ride out, the lean periods.
I see people discouraging paying off homes, other investments (like solar in my case), etc.
Stabilizing and minimizing recurring costs is a hedge against downturns and inflation.

 

[alarmguy]

Yup. That's why market investments need to be long term. Take advantage of, or at least ride out, the lean periods.
I see people discouraging paying off homes, other investments (like solar in my case), etc.
Stabilizing and minimizing recurring costs is a hedge against downturns and inflation.

If I understand your post, you discourage debit and encourage paying off long term debt early.
I agree 100%.
Yup on long term investing, been there, done that on the short term stuff, sometimes it worked, sometimes it didnt and all told for me personally it wasnt worth the thought and stress.

 

[PandaBear]

Stabilizing and minimizing recurring costs is a hedge against downturns and inflation.

This. When your recuring cost is minimized you can take on higher risk in the future, it is not a "loss" if you consider keeping a lot of cheap debt around also hinder your risk tolerance.

 

[ArrestMeRedZ]

I think I might not be reading the last few posts correctly. If it's to keep consumer debt minimized or at zero, I agree.
Investment debt is another thing. I rode out the last bad inflation period of the late '70s and early '80s. Stagflation. Bond prices went through the floor. Savings and loans, who had lent long term money at low rates, then had to pay higher rates to attract deposits went bankrupt. Stocks flattened.
The people who got rich were the ones who had or could get loans at low rates and invest in equities. Buying existing houses and assuming low interest trust deeds was effective. Even though rising interest rates made housing less affordable, the inflation rate made the prices even higher. Then, when rates eventually dropped, house prices skyrocketed.

If you think interest rates and inflation are bad right now, just you wait. It is my opinion that the next decade will be 1976-1986 on steroids.
If you can get long term money at low rates right now, then pick the right investments you can get rich. Pick the wrong investments and you can get poor.
As for me, other than a few decent dividend pipeline stocks, I'm avoiding anything paying out fixed interest or dividends. Any real estate, metals or other equities I have, I'm HODL. Wife wouldn't let me refi the house at 2.5%, don't owe nobody nothin' so I'm not taking my own advice.

 

[Dave Hess]

Some recently announced inflation numbers. 17.15%. The highest on record since June 1947.


http://www.shadowstats.com/

Yep. The official numbers are too low.

 

[JeffKeryk]

@ArrestMeRedZ "recurring costs" are basically your monthly payments: mortgage or rent, utilities, loan payments.
A "hedge" is buying insurance against future unknowns.
Paying off a house allows for a place to live if income goes south. I installed solar which required a cash outlay but now my monthly electric bill is next to nothing.

Obviously one could choose to use that money to invest in the various markets; I believe in some of both.
Beyond that, I can tell you living in a place you love with no mortgage is a pretty great feeling.

 

[ArrestMeRedZ]

I can completely agree with you there on mortgages from the heart, even though my head says to borrow and invest.
I've also been considering roof mounted solar. The only things keeping me from it is the uncertainty of a 22 year old tile roof, and the possibility I may move before it's amortized.

 

[PimTac]

Investing in the markets using borrowed money is hardly ever a good idea. Sure, some have done it and succeeded. Those are the people that talk about it. The majority stay quiet because they lost most or all of their money.

One example I bring up from time to time is the secular bear market of 1966 to 1982. How would one invest in this kind of market? Would you take out a loan and put money into it?

When will the next secular bear market happen?


Edit: Note the date this article was written. Things were much different then. Apply today’s conditions and you might see some correlation with that 66-82 period.



https://awealthofcommonsense.com/2014/06/1966-1982-stock-market-really-bad/

 

[Schandyman]

I've also been considering roof mounted solar. The only things keeping me from it is the uncertainty of a 22 year old tile roof, and the possibility I may move before it's amortized

Are you buying the solar or financing with govt grants? 22 yr old roof, no way would I install solar on a roof that old. My friends client did solar and a roof financed the entire job with grants.. no good to his surprise. When he sold the house those grants had to be satisfied and the new homeowners didn't want to take on the expense of the solar. so he had to eat it pull the solar panels off and had to redo the roof. He took his panels with him.

 

[JeffKeryk]

Investing in the markets using borrowed money is hardly ever a good idea. Sure, some have done it and succeeded. Those are the people that talk about it. The majority stay quiet because they lost most or all of their money.

I would never do such a thing. The last 15 years have been an anomoly that I believe have lured people into very risky thinking.