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10-10-2019, 12:35 PM | #3226 | |
Why so serious?
Join Date: Dec 2016
Location: Chicago
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Posts: 12,942
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10-10-2019, 05:24 PM | #3227 | |
Mod Team
Join Date: Sep 2011
Location: Valley of the hot as ****
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Posts: 46,182
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10-11-2019, 08:38 AM | #3228 |
Andy Reid Supporter
Join Date: Apr 2012
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Someone talk to me about owning vs renting. I’ve always been told my whole life that owning a home is “great bc you keep your equity!”
I’ve owned my house for almost 4 years and the “equity” I’m getting on it is shit compared to the money I’ve had to spend to fix shit in a brand new house when I moved in. It’s to the point where I’m thinking **** it. I’m close to selling this damn house and renting so I won’t have to spend a lot of money every year paying to fix the goddamn thing. Oh and then when I sell the goddamn thing the realtor gets 6%. Owning feels like such a sham. Last edited by RunKC; 10-11-2019 at 08:59 AM.. |
Posts: 49,764
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10-11-2019, 08:45 AM | #3229 | |
In BB I trust
Join Date: May 2003
Location: Boston, Mass.
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Focusing on the second paragraph -- I'd stick to low very cost mutual funds, which generally means index funds, or ETFs which are a type of stock which tracks a group of stocks. It's basically an even lower cost way to invest in an index. The upside to ETFs is no fees. The downside is that dividends are not automatically reinvested. For now, I'd go 50/50 with your money -- a total market index (which you already have) and a 500 index, which tracks the largest companies. The two are not the same by any stretch. This is assuming you have a long investing horizon, of course (in other words, that you're pretty young, say under 40) and can stomach the bad year or three that will inevitably happen and just ride it out. |
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Posts: 43,125
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10-11-2019, 08:49 AM | #3230 | |
Fish are scared of me
Join Date: Nov 2001
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The main thing about owning is that one day your home is paid off and nobody can ever take it from you so you have that security. If you rent , you rent for life. And as far as repairs you can do what I do and don't fix shit. Unless its a broken water line. |
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Posts: 40,629
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10-11-2019, 10:00 AM | #3231 | |
Kind of a mod
Join Date: Aug 2005
Location: Donkey Land
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If you want to try and figure out the best financial decision, you can play around with an online calculator to help you see where the differences are. For me, what it really comes down to is that your mortgage is a fixed amount, while rent will increase over time. So if you plan to stay in your place for 50 years, there's almost no question that buying will be the best option. But you're right that big maintenance items suck, and if you get hit with a bunch of them right after you buy, you might be behind where you'd be if you'd rented in the short term. Side note: I'm kind of ignoring the "equity" argument even though it's a valid one. I personally bought my place in 2009 when the government was giving out free money to buy a house, and I live in Denver where the housing market has been booming ever since. Nearly half of my net worth is due to my house, so I've been really fortunate. The problem is that another housing market collapse could eliminate all of it, and the situation in Denver this past decade is far from typical. Again, if you plan to stay in your place for years, the equity will absolutely be a benefit, but it doesn't work for everyone, and the benefit is pretty small if you're not in it for the long haul. |
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10-11-2019, 10:25 AM | #3232 | |
Supporter
Join Date: Apr 2007
Location: Scott City KS
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FWIW if you have a loan on an amortization table (as opposed to straight line) you will not accumulate much equity early on. If you really are worried about the numbers make sure you read up on how amortization tables work. |
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10-11-2019, 10:34 AM | #3233 | |
Seize life. Be an ermine.
Join Date: Jul 2001
Location: My house
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Last edited by Rain Man; 10-11-2019 at 08:19 PM.. |
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10-11-2019, 07:55 PM | #3234 | |
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Join Date: Jan 2009
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10-12-2019, 07:07 AM | #3235 |
Supporter
Join Date: Feb 2005
Location: Olathe, Ks
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Amnorix is partially right.
You can reinvest your ETF dividends easily if you go through Fidelity and I assume even Schwab or others. I use Fidelity. I own a number of ETFs. I have dividends and capital gains automatically reinvested in them. So if you want to go the ETF route don't let that dissuade you as Amnorix is wrong about that. |
Posts: 130,506
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10-12-2019, 03:49 PM | #3236 | |
Andy Reid Supporter
Join Date: Apr 2012
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I’d also consider adding Target. They’ve ascended since 1996 and they pay a 2.36% dividend yield. Last edited by RunKC; 10-12-2019 at 03:57 PM.. |
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10-12-2019, 05:52 PM | #3237 |
Fish are scared of me
Join Date: Nov 2001
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Posts: 40,629
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10-12-2019, 06:54 PM | #3238 |
It was not a fair catch
Join Date: Aug 2012
Location: Correcting papers
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Put everything in a trust.
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Posts: 39,010
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10-17-2019, 01:46 PM | #3239 |
Andy Reid Supporter
Join Date: Apr 2012
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So I use Fidelity and they sold me their target managed fund for my Roth IRA.
My question is, why would I do that and not just get an S&P low cost Index Fund, specifically the Fidelity version FXAIX? Here’s the comparison: Fidelity managed target fund-average life of return to date is 7.70%. It’s got an expense ratio of 0.75% Fidelity S&P FXAIX-average life of return to date is 13.22%. It’s expense ratio is 0.02% It also seems like a large portion of the target fund is made up of the S&P anyway. That seems like one hell of a huge difference. Any downside to this in your minds? |
Posts: 49,764
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10-17-2019, 02:00 PM | #3240 | |
Supporter
Join Date: Feb 2005
Location: Olathe, Ks
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The SP500 fund is just that. It's 100% stocks. Most people fall in love with the return of the SP500 and lose site of proper asset allocation. The downside is if you go 100% SP500 you are in nothing but stocks. So if the SPX goes down 20% you go down 20% because you have nothing else to cushion or otherwise stabilize your portfolio. I will give you a hint: 90% of people with proper asset allocation will rarely outperform the SP500 unless you are very young and pretty much in all stocks. |
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