Sanrith Descartes
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Investing General Discussion
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Blazin
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Gold is a non productive asset, valued in dollars it will continue to climb. Would your purchasing power increase over time if you stored your wealth in it? I would say maybe at the margins.
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Furry
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Videos like this just seem so stupid to me. I don't believe demographic collapse theories even a little. Sure there will likely be pain, but adaptability is one thing humans are really good at. Never mind that AI automation will almost certainly fill the gap over time.
I'm very much of the mindset to embrace the pain as it comes and then look for the shining stars that are forged by it, which will absolutely appear.
Jysin
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It is really a difficult bounce to get any traction in. The China deadline is TODAY. And the consequence of them not backing down is 104% tariff effective tomorrow.
This is fairly monumental.
I am a skeptic this is getting any positive news. I lightened positions on the intraday highs.
This is fairly monumental.
I am a skeptic this is getting any positive news. I lightened positions on the intraday highs.
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Asshat Foler
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Let’s say we don’t get positive news today. How red do you think open will be tomorrow?
Jysin
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Haus
I am Big Balls!
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The real goal of seeking REAL value is that you want to find assets which become worth more over time WITH INFLATION SUBTRACTED.
The house I live in, Purchased for around $150k in 2001. Looking at a simple inflation calculator...
Now, I have standing offers for my house for $500k. Because in my neighborhood the land is more valuable than the houses. They buy houses for $500k, tear them down, build "modern" McMansions on the same sized lot, and sell those for $1.2-$1.5m.
You'd initially think my house increased in value by $350k. ($500k-$150k). But that's...
It's actually increase in value by around $230k. ($500k - Inflation adjusted value of asset ($270k) )
So my house has been a nominal value increasing asset for me. Yay team Haus! It increased in value, while ALSO providing me shelter, and a place to keep all my crap!
But if I look at it... What if I had invested that $150k in the S&P 500 in 2001 instead?
Inflation adjusted, the investment grew to around $545. Meaning I would have made $395k on it, considerably better than the $230k from the house. By the order of around $165k. But also I got shelter and a place to keep my shit for almost a quarter of a century from the house. Divide the difference by number of months (288), and I effectively paid $572 dollars a month in rent looking at the difference between buying the house and investing. Could I have rented a place for that? Hell no. So.....
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Gravel
Mr. Poopybutthole
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It's a good example, but I personally hate looking at your primary dwelling as an asset. The reason being that you always need somewhere to live. So sure, you sell your house because it's appreciated fairly well and beat inflation, but the problem is you need to find a new place to live and it also appreciated by (very likely) the exact same amount.The real goal of seeking REAL value is that you want to find assets which become worth more over time WITH INFLATION SUBTRACTED.
The house I live in, Purchased for around $150k in 2001. Looking at a simple inflation calculator...
View attachment 581441
Now, I have standing offers for my house for $500k. Because in my neighborhood the land is more valuable than the houses. They buy houses for $500k, tear them down, build "modern" McMansions on the same sized lot, and sell those for $1.2-$1.5m.
You'd initially think my house increased in value by $350k. ($500k-$150k). But that's...
It's actually increase in value by around $230k. ($500k - Inflation adjusted value of asset ($270k) )
So my house has been a nominal value increasing asset for me. Yay team Haus! It increased in value, while ALSO providing me shelter, and a place to keep all my crap!
But if I look at it... What if I had invested that $150k in the S&P 500 in 2001 instead?
View attachment 581442
Inflation adjusted, the investment grew to around $545. Meaning I would have made $395k on it, considerably better than the $230k from the house. By the order of around $165k. But also I got shelter and a place to keep my shit for almost a quarter of a century from the house. Divide the difference by number of months (288), and I effectively paid $572 dollars a month in rent looking at the difference between buying the house and investing. Could I have rented a place for that? Hell no. So.....
View attachment 581443
The only way it works is through geographic arbitrage, which also only works because real estate is very local. This is the person who had a house in California which appreciated way, way more than the Midwest so they decided to ditch the higher cost of living area forever. And this is basically a one shot deal.
You always need a house, but I don't always need to hold Tesla stock, or gold, or treasuries, or Bitcoin. It's basically the unrealized gains point I brought up in Politics yesterday, but with the bonus of it being a place you live.
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Haus
I am Big Balls!
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Yes, but as you mention there is geographic arbitrage.
Mrs. Haus
and I are about to be a case study in that. Our house is in "legit Dallas" (i.e. in Dallas, not out in the burbs), with a high value. This also means a high property tax bill each year, even with homesteading exemption. It's handy though since I'm in Sales and it lets me get to any customer in DFW pretty quick because I'm very centrally located.As the world shifts, I'm doing fewer and fewer in person meetings, meaning I can do a lot more remotely and "WFH". With Starlink I can functionally do my job from almost anywhere that I can see the sky in Texas. We're looking at buying land away from town (to the tune of at least an hour from Dallas) and building a house. This will drop that property Tax amount through the floor. It's very possible we'll be able to do that, then sell the house in Dallas for enough to cover any loan we take out to build the country home. Meaning, we would end up in a home with no mortgage, for the rest of our lives, which will also accrue value (though probably not at anywhere near the pace the house in Dallas does.)
And even with this, there exists financial instruments for those who need to live in a house while also drawing down the asset value (reverse mortgages), or you hold the home, and you have a keystone level asset to leave to your kids when you're gone.
Cad
scientia potentia est
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It is an absolute win, but you need to account for a couple of additional things to make your calculation correct.The real goal of seeking REAL value is that you want to find assets which become worth more over time WITH INFLATION SUBTRACTED.
The house I live in, Purchased for around $150k in 2001. Looking at a simple inflation calculator...
View attachment 581441
Now, I have standing offers for my house for $500k. Because in my neighborhood the land is more valuable than the houses. They buy houses for $500k, tear them down, build "modern" McMansions on the same sized lot, and sell those for $1.2-$1.5m.
You'd initially think my house increased in value by $350k. ($500k-$150k). But that's...
It's actually increase in value by around $230k. ($500k - Inflation adjusted value of asset ($270k) )
So my house has been a nominal value increasing asset for me. Yay team Haus! It increased in value, while ALSO providing me shelter, and a place to keep all my crap!
But if I look at it... What if I had invested that $150k in the S&P 500 in 2001 instead?
View attachment 581442
Inflation adjusted, the investment grew to around $545. Meaning I would have made $395k on it, considerably better than the $230k from the house. By the order of around $165k. But also I got shelter and a place to keep my shit for almost a quarter of a century from the house. Divide the difference by number of months (288), and I effectively paid $572 dollars a month in rent looking at the difference between buying the house and investing. Could I have rented a place for that? Hell no. So.....
View attachment 581443
First, you didn't invest $150k in the house unless you paid cash for it at first, you invested whatever your down payment was and you've paid mortgage interest since then which affects the number. Put in the S&P 500 calculator whatever your down payment was and continuous reinvestment of your mortgage payment each month and see how that comes out.
At the end of the day though you need a place to stay, and those of us that bought a long time ago are way ahead of the game. My actual house payment is less than a lot of people's nice apartment rent which is hilarious...
Gravel
Mr. Poopybutthole
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That's also an excellent point, and why being a homeowner crushes being a renter (most of the time). You're taking advantage of leverage to increase your net worth, which is hard to do as individuals most of the time. Not sure how that works with 7%+ mortgage rates, but for a lot of us who locked in 2-4%, it's amazing.
Jysin
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Ive got big regrets not buying ANYTHING when 30yr tanked <3% for the brief period before houses exploded during Covid times. Why on earth would anyone sell those now?
Jysin
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Big Phoenix
Pronouns: zie/zhem/zer
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But bill Ackerman put a lot of work into that fud yesterday.
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Haus
I am Big Balls!
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I literally have a very small amount left on the mortgage on this house (refinanced without reducing term a couple times, now right at 3%). I could pay it off with one good commission check. I don't because that extra money makes me more investing it right now. That's the "cost of money" as Cad alluded to.
Yes, figuring in the amount I've paid in interest on my loan over time, estimating it to be around $70k in interest over the loan drops my "profit" from around $230k to around $160k. But as mentioned, it still provided a better place to live and keep my stuff than anything I could have rented while building equity along the way... So I'm still pleased. heh
My real dilemma with "project peaches" (which is the build a house to retire into plan) is do I want to :
- Sell this house to cover the cost once country house is built (cash out)
- Rent this house once country house is built (but how many years am I going to be renting it and will that result in a better return than selling?)
- Tear this house down, invest the money to build a McMansion here like others and then sell that for considerably more.
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Falstaff
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Fucker
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No dilemma.
Sell the house.
Don't bother renting a single unit. It will take you forever to meet the profit vs selling it outright. Like, what, 15 years? In that time you will blow a lot of cash and time and money keeping it fixed and in the meantime it will be getting closer to the dirt by the year.
Don't build on your own. You will get absolutely creamed on costs, creamed on time, creamed on wits. There's a reason why no one else builds and sells as a single entity. Even IF everything runs smoothly and you can keep ahead of bank rates, realtor fees, taxes, you will be lucky and I do mean lucky to bag $10k. Everything goes the other way? Now you are short $100k. Tiny fixes that the bank wants will chew through that $10k in a few weeks. Foundation is wrong in some small way? Survey is wrong? Missed an important step along the way? Get sued? Welcome to bankruptcy court.
Might was well take out a bank loan for a hundred k in cash. Take it out back and burn it. It will save you a lot of time and a few trips to the emergency room.
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