Ideal ski towns for the future factoring in all issues?

[NYDB]

unless you sold at the wrong time or were heavy into bonds your 401k should have more than doubled during the past 20 years. so yes, find a new financial advisor. not kidding.

spy went 90-450. if you reinvested dividends the returns would be even higher.

 

[Hawk]

OK so yes they did double but my house did better than that. That was my inital point.

 

[NYDB]

I am talking personal investment. So if i looked at your 401K over the last 20 years you can say that your % increase on investment was greater than 50%?

yes. much more than your house. or my house

 

[djd66]

OK, Fidelity blows then. I'm firing my fund manager. Will you take over for me? No in all seriousness. You must have done well.

There has been one major correction over the last 20 years and another smaller one in the last 2 years. Those have have knocked down the percenages a bit. My house tripled in value in MA and my condo in VT doubled in value. I can't say my 401 K did.

I actually just did that (fire my financial advisor) as he was charging way too much for that value I got (none) I am not that well versed on investing, but what I do know is when you look over time, S&P 500 Index fund it has done very well. Its pretty brainless for me to just plunk money in the index,... set it and forget it until I retire.

I'm with Fidelity too,... this is the fund: https://fundresearch.fidelity.com/mutual-funds/summary/315911750

As they say,... Past performance is no guarantee of future results

 

[x10003q]

I actually just did that (fire my financial advisor) as he was charging way too much for that value I got (none) I am not that well versed on investing, but what I do know is when you look over time, S&P 500 Index fund it has done very well. Its pretty brainless for me to just plunk money in the index,... set it and forget it until I retire.

I'm with Fidelity too,... this is the fund: https://fundresearch.fidelity.com/mutual-funds/summary/315911750

As they say,... Past performance is no guarantee of future results

Can I Make Money With a Couch-Potato Portfolio?

The couch-potato portfolio is an indexing strategy that requires only yearly monitoring but offers significant returns in the long run.

www.investopedia.com

 

[Domeskier]

Yeah if you completely discount that the majority of real estate in this country is bought with leverage, which adjusts the calculus pretty significantly.

A very common example. Person buys house in 2015 for the average price at the time of 176k with 5% down FHA. So they invest $8,800 bucks. They then sell in 2023 for the average housing price of 467k. Lets exclude the monthly mortgage payments (opportunity cost - since presumably they would have had to make rent payments also if they didn't buy, which are roughly equivalent to the cost to own since landlords don't lose money typically). Take off 37,360 for closing costs when they sell, and let's assume one major repair of 20k during that time frame as well.

That person made $242,440 tax free (assuming primary residence) on an initial investment of $8,800. Stock market isn't even close and you'd have much higher leverage costs if you tried (if you could even get it), and much higher risk. This is the average mind you, some areas did significantly better

A more accurate comparison would include the cost of borrowing. This person would be paying close to $45,000 in interest over 8 years on a 30-year fixed rate mortgage at the average rate in 2015 of 3.85%. Adjusted to take into account the value of the mortgage interest deduction for someone earning the median income, the total investment will still be close to $50,000. Still beats a $50K investment in the S&P over the same period, but it's also just an 8-year snap shot that covers a particularly hot, pandemic-charged housing market.

 

[x10003q]

A more accurate comparison would include the cost of borrowing. This person would be paying close to $45,000 in interest over 8 years on a 30-year fixed rate mortgage at the average rate in 2015 of 3.85%. Adjusted to take into account the value of the mortgage interest deduction for someone earning the median income, the total investment will still be close to $50,000. Still beats a $50K investment in the S&P over the same period, but it's also just an 8-year snap shot that covers a particularly hot, pandemic-charged housing market.

The investment in this scenario is more than $50k.
There was no accounting for the FHA Origination Fees of 2%-6% depending on the state, mortgage insurance premiums of 1.75% up front plus .5% yearly, property taxes, and homeowners insurance.
Also, maintaining a house for only $20k over 8 years is rather optimistic.

 

[AdironRider]

A more accurate comparison would include the cost of borrowing. This person would be paying close to $45,000 in interest over 8 years on a 30-year fixed rate mortgage at the average rate in 2015 of 3.85%. Adjusted to take into account the value of the mortgage interest deduction for someone earning the median income, the total investment will still be close to $50,000. Still beats a $50K investment in the S&P over the same period, but it's also just an 8-year snap shot that covers a particularly hot, pandemic-charged housing market.

Yes and no. I see your point but I excluded those costs (same for FHA costs and general maintenance) because they alternatively would be paying rent, which is not likely to be that significantly cheaper in most markets. Don’t be fooled, you are paying those costs when you rent, they just aren’t itemized out for you. Obviously some nuance but I think ultimately the point stands concerning leverage.

 

[Former Sunday Rivah Rat]

You can't live in your index fund. I you WFH your home(s) are income producing assets.

 

[Edd]

We never wanted kids and a house wasn't of great interest for us. Our financial advisors have always said "If you don't want a house, don't buy one, you'll make out better being able to invest more elsewhere." That's all worked out pretty well as we have an inexpensive living situation that we like and works for our lifestyle.

However, our advisors could not have forseen the doubling (at least) of the house prices in our area due to Covid and WFH. If we were determined to buy here, we could, but our investments haven't kept up so well that we can just buy a house without worrying about it. Feels like a wash over the last 10 years.

Additionally, I work nearby with a lot of 30-something folks who, naturally, hope to buy a home here. For those who don't have a big financial advantage (inheritance or whatever), they don't have a shot, it's a total joke, and I feel bad for them.

 

[Domeskier]

Yes and no. I see your point but I excluded those costs (same for FHA costs and general maintenance) because they alternatively would be paying rent, which is not likely to be that significantly cheaper in most markets. Don’t be fooled, you are paying those costs when you rent, they just aren’t itemized out for you. Obviously some nuance but I think ultimately the point stands concerning leverage.

I agree with you on the benefits of leverage. I also agree with you that the cost of home ownership can be ignored if it is assumed to be equal to the cost of renting (although I am not sure I agree with the assumption). The only thing I'm having trouble with in your example is the suggestion that the homeowner turned $8,800 into $242,000. To do that, he had to give the lender $45,000 over the course of 8 years. Perhaps that money otherwise would have gone to a landlord, so he's not any worse off economically that if he put the $8,800 in mutual fund and continued to rent. But it was still a direct cost of the $242,000 he eventually received from his investment in the home. This would presumably be the right way for him to look at it if, instead of renting, he owned a home free and clear and was deciding whether to invest $8,800 in a mutual fund or put it toward a down-payment on a new primary residence. And it's just not clear to me why this isn't the right way to look at it even where as in your example, there are added benefits to assuming these costs (i.e., no more rental payments).

Ultimately, this might just be hyper-technical hair splitting. Clearly, on the facts as you've presented them, the homeowner is better off than the renter. Whether his return was 2750% or just 500% is just academic.

 

[AdironRider]

Because over 60 percent of real estate in the entire country, and notably for the vast majority of people that really need to generate the most wealth possible (aka not the trust finders), has a mortgage. Furthermore, everyone pays taxes, insurance and general maintenance. Whether you rent or own you are paying those costs.

Obviously there is nuance to this, and of course there are outliers like the screaming rent deal from your uncle or whatever, but let’s just agree that isn’t the norm.

 

[BenedictGomez]

I am talking personal investment. So if i looked at your 401K over the last 20 years you can say that your % increase on investment was greater than 50%? I know my numbers. I was aggesive and I invested in a wide range and it is no where close to my return on my real estate.

So was he. And if you haven't made more than 50% in the market in the last 20 years, you should immediately fire whoever handles your investments. Like before you do anything else.

 

[BenedictGomez]

Hmmm..... seems lotsa people here would be surprised about two current facts:

1) Housing unaffordability today is worse than any time in American history, even worse than during the peak Housing Bubble of circa 2006-2007.
2) Of the roughly 400 MSAs in America, it is currently cheaper to rent a house (apples to apples) than buy in approximately 99% (not kidding) of them.

All that says Caveat Emptor to me.

 

[AdironRider]

And yet 90 percent of millionaires got that way via real estate.

A 1 bedroom craphole apartment in northern NH goes for over 2 grand a month on average in 2023. Renting is a losing deal long term.

 

[Harvey]

I am curious to know how my house has done vs my 401k, but it seems like a lot of work.

How do you compare an investment that gets 15% of your income every week for 40 years to one where you put down 20%, make principle and interests payments every month for 20 years, while do maintenance and improvements and pay taxes?

I haven't paid any taxes on my 401k yet. So those numbers are artificially high.

We don't have the same house anymore, but my current house is worth 4.5 times what I paid for my first house. It's paid off.

Back when I bought that first house my 401k was worth $0 and now it is worth infinity percent more. I was 90% in stock for most of the time.

One thing about stock, it seems like you pay a lot less in fees, on a percentage basis. But then again the real estate ELIMINATES another significant cost (rent) that you will incur if you don't buy it.

 

[AdironRider]

But then again the real estate ELIMINATES another significant cost (rent) that you will incur if you don't buy it.

Bingo.

 

[Harvey]

Another thing to add, and I'm not sure if it is a thing or not...

When the shit hits the fan your 401k drops, sometimes a lot. You are almost prohibited from using it at that time, if you are smart. But at the same time, while the price of your house may drop, if it is paid off it almost becomes more valuable. A big part of your expenses are "covered."

 

[thebigo]

Bought two acres in 2010 for $100K, well and septic cost around $25K, house materials cost maybe $100K? Did a bunch of the work myself. Comparable houses are selling for $600 - 700K+. Pay the town around $6K/yr for the privilege to live here, no income tax, no sales tax, kids go to a top ranked school. Been paying into 401K for 20 years, have not enjoyed it for one minute. Been enjoying my house from the minute I moved in.

 

[cdskier]

Hmmm..... seems lotsa people here would be surprised about two current facts:

1) Housing unaffordability today is worse than any time in American history, even worse than during the peak Housing Bubble of circa 2006-2007.
2) Of the roughly 400 MSAs in America, it is currently cheaper to rent a house (apples to apples) than buy in approximately 99% (not kidding) of them.

All that says Caveat Emptor to me.

I'm confused by #2. I looked at the prices of rentals in NJ recently and was shocked at how high they were. For similar monthly mortgage payments, I can buy a condo that in many cases would be superior to the rentals in that price range. And at the end...I own the condo whereas with rent I pay that money and own nothing.