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I'm breaking my own rules again by responding here, but the answer to this concern is easy. Simply put, and as I've mentioned a zillion times like a broken record, the overall stock market has delivered an average, long-term return of between 7-10% a year for well over 100+ years. People think I'm stupid for saying so, but look it up. That's a better return than real estate, and its a more consistent return than just about any other investment one could make. Are there risks? Yes. Can you lose money at times? Yes. That is why its wise to hire a financial planner and have them do the work for you.
Even if only 50% of 10 million were to be placed in boring stock investments, that would likely still provide a lifetime of comfortable living with the remainder of the cash simply sitting around somewhere.
$10 million can be invested risk free in TIPS and will always return and real income 4x the real median income. By math, that means once you amass ~$2.5M in wealth, you are guaranteed to make at least the median income for life if you invest conservatively.
That's not even remotely true.
Simply put, and as I've mentioned a zillion times like a broken record, the overall stock market has delivered an average, long-term return of between 7-10% a year for well over 100+ years
If you average it out you'll get closer to 4%. You have to be pretty lucky to get 7 to 10 over years.
Note that this ill always benefit the wealthiest (most leveraged) the most.
Not really--as we've discussed before. A rich person losing 50% of his wealth is much, much less harmful than a working stiff losing his job.
I've heard all the horror stories about HELOC's.. but plan to do this responsibly.. and put it all back into the house for practical repairs and updates. I see I can choose between a Home Equity Line of Credit or a Home equity loan...
Welcome to homeownership. Homes only increase in x "value" if you put x dollars of maintenance into them. (Unless you sell in a bubble.)
HELOC is probably better than a loan, less fees.
Get a floating rate. I think rates are around prime + 1%. (around 4.25%), tax deductable. The larger than line, the better the rates. I do not believe 3.25% is out there unless you are prime, in Palo Alto and taking out 500K.
I am planning on buying a house (rental property) with cash but then want to get some sort of loan where the house will still be cash flow positive, but I'll use the money for something else, maybe another purchase. Any thoughts on the best way of doing this? Thanks.
Note that this ill always benefit the wealthiest (most leveraged) the most.
Not really--as we've discussed before. A rich person losing 50% of his wealth is much, much less harmful than a working stiff losing his job.
We discussed this before indeed. The working stiff losing his old job would find a new job that can pay more because the new employer has a chance to buy the previous employer's assets at fire-sale prices. Both Google and Amazon in their early years were well known for picking up equipment and office furniture from failed dot-com's. Less money spent on hardware, rent and servicing debt, the more money to pay employees and devote to customers.
Your paymaster the banksters don't like that, but prefer the old debt stay, and have the cost transferred to other people, leading to market place clog-up and long term unemployment for the working stiff.
Both Google and Amazon in their early years were well known for picking up equipment and office furniture from failed dot-com's. Less money spent on hardware, rent and servicing debt, the more money to pay employees and devote to customers.
LOL that profit margins and economic value captured by workers is determined by anything more than the market. A new employer also gets to buy employees at fire sale prices.
Not really--as we've discussed before. A rich person losing 50% of his wealth is much, much less harmful than a working stiff losing his job.
Not really...
Assuming a)So called rich person, loses 50% of his wealth, which could be 100% of his growth, if he started with that 50% originally. Not only that, that other 50% may have been what he depends on to maintain his bills. His income has just been cut in half. Anyone with a Mortgage and Bills knows they don't want half. The guy who lost half his income probably hasn't been working and is considered Dopped out of the workforce, and will have a hell of time getting a job to build back up nest egg. And his bills will be draining the remainder of his nest egg, faster every month as he pays bills. The interest he earns will be less.
b)The guy who lost a good job, if he was at least smart enough to save a years worth of salary, has a year buffer. And he is fresh in the job market. He'll probably bounce back quickly and not have to use more than a month or two of his savings.
Just because people have a million if they are trying to live off it, they are on a set fixed income. There is no room for error. I realize up to a point you have enough money to live indefinitely regardless how you manage your resources. But I'm not talking about extremely wealthy people or people who have wealth because they were finance and investing savvy. Many people come into money, save up enough money(not likely anymore), win a lotto pool, or some other windfall means. They don't automatically become magnates and moguls. And for this argument, I'm talking about people with only 1mil to 2mil, that is just enough to manage a meager income through.
Those people who don't consider their money how ever they have it tied up earning them income, don't consider any of it "Mad Money" or in any way disposable.
It's why when you ask a relative or Friend who you think is rich, for a decent chunk of change, you ever notice they say...
"I don't have THAT kind of Money."
They have some Money, but it's not That kind of money.
I'm breaking my own rules again by responding here, but the answer to this concern is easy. Simply put, and as I've mentioned a zillion times like a broken record, the overall stock market has delivered an average, long-term return of between 7-10% a year for well over 100+ years. People think I'm stupid for saying so, but look it up.
You are looking at stock indices themselves with dividend reinvested without taking into consideration transaction costs. Index funds are not the same as indices with dividends reinvested. Funds have transaction cost and tax cost when trying to track indices, which have very different stocks over a long period of time. Managed funds have even higher transaction costs.
That's a better return than real estate, and its a more consistent return than just about any other investment one could make.
You are forgetting the dividend payment on real estate (rent income or owner equivalent rent), and the leverage allowed.
Both Google and Amazon in their early years were well known for picking up equipment and office furniture from failed dot-com's. Less money spent on hardware, rent and servicing debt, the more money to pay employees and devote to customers.
LOL that profit margins and economic value captured by workers is determined by anything more than the market. A new employer also gets to buy employees at fire sale prices.
Did average hourly wage drop by more than 50% during the market crash of 2008-09? Market crash is when the wage earners win big viz the capital owners.
Market crash is when the wage earners win big viz the capital owners.
Only if they keep their jobs...
Market crash is when the wage earners win big viz the capital owners.
Only if they keep their jobs...
No. They get a deal from the new employer who doesn't have to service the old debt, and they get a better deal from the liquidation sales themselves.
Did average hourly wage drop by more than 50% during the market crash of 2008-09? Market crash is when the wage earners win big viz the capital owners.
Wages didn't drop?
Why is 50% chosen?
You think this, showing non-supervisory wages as a percentage of GDP falling from 32.7% to 30.8% over the past 5 years is not related to Corporate profits after tax as a percentage of GDP increasing from 7.2% to 11.1% of GDP?
It is important to note we are talking about what happens after the crash, not during it. Capitalists get fire sale prices after the liquidation event. So lets examine 2009 onward.
With a $10 million windfall, you could easily and I mean really easily purchase a multisector bond fund and make over $330,000 per year at todays rates. Yes, you would need to pay your fed taxes no matter what at regular rates and depending on the state that you reside in you may need to pay taxes there as well, but you would automatically be in the top 3% of all households financially off of this passive income! I wouldn't even care about NAV fluctuations at that point since the worst that this fund has done over the last 10 years is a little over 11% loss and this was in 2008.
No. They get a deal from the new employer who doesn't have to service the old debt, and they get a better deal from the liquidation sales themselves.
lol-yes, that's certainly what we're seeing right now. The unemployed are getting great deals, aren't they?
Seriously--why in the hell would you think that employees would get BETTER deals when the supply of unemployed labor is higher.
Bull run stock markets produce the inequality that you guys decry so much.
You've got it backwards. Companies cut wages so that more cash went to the owners. That increased the value of the stock.
Inequality creates bull runs of stocks.
supply of unemployed labor is higher
Slight correction. Demand for labor is lower. Supply of labor is unaffected.
Did average hourly wage drop by more than 50% during the market crash of 2008-09? Market crash is when the wage earners win big viz the capital owners.
Wages didn't drop?
Why is 50% chosen?
Are you so ignorant as not to realize that the stock market dropped more than 50% during the crash? SPX was in the 1500's near its peak in 2007, dropping to 666 at the bottom in early 2009.
You think this, showing non-supervisory wages as a percentage of GDP falling from 32.7% to 30.8% over the past 5 years is not related to Corporate profits after tax as a percentage of GDP increasing from 7.2% to 11.1% of GDP?
It is important to note we are talking about what happens after the crash, not during it. Capitalists get fire sale prices after the liquidation event. So lets examine 2009 onward.
You are criticizing the result of the FED rescue. The crash took place before 2009.
Slight correction. Demand for labor is lower. Supply of labor is unaffected.
Supply of unemployed labor is higher. But, you're correct that I should have stated it as you say.
No. They get a deal from the new employer who doesn't have to service the old debt, and they get a better deal from the liquidation sales themselves.
lol-yes, that's certainly what we're seeing right now. The unemployed are getting great deals, aren't they?
Seriously--why in the hell would you think that employees would get BETTER deals when the supply of unemployed labor is higher.
What we are seeing now is the result of half a decade of FED QE. In case you don't remember, and it certainly doesn't feel like it, the crash took place more than half a decade ago. We are allegedly in recovery for half a decade now. LOL. How is that FED pumped recovery that you advocated so much half a decade ago feeling to you now?
I was thinking the same thing last Sunday when this was a big deal on the Sunday morning news/talk shows. Nobody even dared to make that comment (which is what I was thinking), that is...
It was a private conversation. So the guy is provably a douchebag. But you're using a conversation his girlfriend taped to prove it ? Wtf ?
I had the same feeling when there was all the talk about Clinton getting a sexual favors from an intern. So ? It's his private business. I'm not supposed to know that!
Same thing here. All I can think is that it's because of the irony that he owns an NBA team and made those remarks.
Is it a slow news time? Or is it that there's other news are they trying to move out of the headlines.
Is this meant to distract us from what's happening in the Ukraine ? Which happens to also be somewhat less our business than we want to make it.
Are you so ignorant as not to realize that the stock market dropped more than 50% during the crash? SPX was in the 1500's near its peak in 2007, dropping to 666 at the bottom in early 2009.
Are you so ignorant to try to compare the percentage drop of value (and an index of value at that, not absolute value. Does the weight of AAPL in the S&P 500 equal the weight of value of AAPL in the overall corporate marketplace?) with the percentage drop of wages?
Supply of unemployed labor is higher. But, you're correct that I should have stated it as you say.
I only say it my way because employers are not limited to hiring only unemployed workers.
Seriously--why in the hell would you think that employees would get BETTER deals when the supply of unemployed labor is higher.
It wasn't just I thought they would. They actually did! Because market prices for everything else dropped even faster than wage decline: gasoline went from $4/gallon in 2007 and early 2008 to nearly $2/gallon at bottom in 2009. Median house prices went from near $300k to below $200k.
New employers with reduced debt load would be able to bid up wages more, not necessarily in nominal terms but certainly in purchasing power parity terms.
Are you so ignorant as not to realize that the stock market dropped more than 50% during the crash? SPX was in the 1500's near its peak in 2007, dropping to 666 at the bottom in early 2009.
Are you so ignorant to try to compare the percentage drop of value (and an index of value at that, not absolute value. Does the weight of AAPL in the S&P 500 equal the weight of value of AAPL in the overall corporate marketplace?) with the percentage drop of wages?
What do you mean by "weight of value of AAPL in the overall corporate market place"? Do you just invent stuff on the fly? Market capitalization is what it is.
I don't believe it was taped illegally. According to:
http://thecolbertreport.cc.com/videos/jfz395/donald-sterling-s-racist-comments
(6 minutes, worth the watch) ... Sterling not only knew he was being recorded, but told her to record him because he couldn't always remember what he said. I assume that this is the source for that:
http://www.tmz.com/2014/04/27/donald-sterling-racist-audio-v-stiviano-recorded-clippers/
A fuller version of the audio is here, fwiw:
http://deadspin.com/exclusive-the-extended-donald-sterling-tape-1568291249
That's not even remotely true
You don't understand tips then.
I understand tips just fine. I think it's you who is missing the point.
It wasn't just I thought they would. They actually did! Because market prices for everything else dropped even faster than wage decline: gasoline went from $4/gallon in 2007 and early 2008 to nearly $2/gallon at bottom in 2009. Median house prices went from near $300k to below $200k.
New employers with reduced debt load would be able to bid up wages more, not necessarily in nominal terms but certainly in purchasing power parity terms.
No, they didn't! When you are umemployed, it really doesn't matter if gas prices went down by $0.50/gallon now, does it?
New employers pay the market rate for labor. That rate is set by supply and demand. And when demand is down, as control point rightly stated, price will go down as well.
Why does pro-sports have "owners"?
Why isn't it run like a corporation where everyone is an employee of the NFL, NBA, NHL, MLB or a subcontractor or vendor?
The law may guarantee FREEDOM from punishment based on beliefs, but society does not. Frankly, I'm willing to look the other way and let the mob have it's way. Let Karma Justice prevail.
By the way, would you vote for a President if something like this came out?
Most people on the left claim Lincoln as the "greatest President," yet he believed that blacks were intellectually inferior, the two races should not mix, and blacks should be shipped back to Africa. Compared to him, Sterling, born 80+ years ago, or half way back to the Civil War era, is practically a saint! Sterling not only was dating a black girl, but was recorded on tape saying he wouldn't mind even sharing his girl with black athletes!. He just preferred not to have that fact come out as a public spectacle via her Instagram pictures.
What do you mean by "weight of value of AAPL in the overall corporate market place"? Do you just invent stuff on the fly? Market capitalization is what it is.
Is the weight of AAPL in the S&P 500 equal to the weight of AAPL's market cap in the overall market cap of the country? Even just talking about the stock market - the S&P 500 is not the entire stock market, after all.
The current market cap of the S&P 500 is about 16.8 trillion. Current outstanding US treasuries held by the public is 12.4 Trillion. The S&P fell 50%+. The market value of treasuries didn't fall anywhere near 50%. Someone owns those debt instruments, and they add to that entities net worth.
All of this is to say that comparing the percentage drop in value of a partial segment of the country to income is useless. Especially in the middle of an enormous deleveraging event. Incomes are not leveraged, market caps are.
The law may guarantee FREEDOM from punishment based on beliefs, but society does not. Frankly, I'm willing to look the other way and let the mob have it's way. Let Karma Justice prevail.
By the way, would you vote for a President if something like this came out?
Most people on the left claim Lincoln as the "greatest President," yet he believed that blacks were intellectually inferior, the two races should not be mixed, and blacks should be shipped back to Africa. Compared to him, Sterling, born 80 years ago, or dating half way back to the Civil War, is practically a saint! Sterling not only was dating a black girl, but was recorded on tape saying he wouldn't mind even sharing his girl with black athlete!. He just preferred not to have that fact come out as a public spectacle.
If Lincoln, with those views was to run for President today, he would lose in a landslide.
Ironically, Sterling, if he was to run for President 200 years ago could win as it was OK to sleep with black women as long as you did not like Blacks.
If Lincoln, with those views was to run for President today, he would lose in a landslide.
Ironically, Sterling, if he was to run for President 200 years ago could win as it was OK to sleep with black women as long as you did not like Blacks.
He likes blacks, and said so clearly in her recording. He was dating a black women, not just using her like a slave. He was accommodating her free will to such a wide extent that he was recorded on tape by her as saying she could sleep around all she wanted (just don't cause a public spectacle and embarrass him). That's not how slave masters treated slaves, black or white. Heck, most husbands today would not even allow their wives to do that.
When you are umemployed, it really doesn't matter if gas prices went down by $0.50/gallon now, does it?
Gas prices went down a lot more than $0.50 gallon and yes it does make a difference.
make a difference. tatupu70 says
That rate is set by supply and demand. And when demand is down, as control point rightly stated, price will go down as well.
And collusion, lets not forget that:
Isn't what you are describing more natural than "eternal wealth" (without effort).
In nature, everything you take possession of must be fought for, on a daily basis.
A Homesteader, living life on the Plains had to defend his acreage.
A tribe must defend its grazing and planting rights.
Just as earning requires labor -- by brain or muscle -- so too, the holding of wealth requires additional labor.
Does it make sense that someone who developed a 1980s technology is still rewarded even though he has not participated in any innovation since then and may have tried to suppress new technologies?
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