TheCaptainPower said:
How much do you plan on needing when you retire? 30k to 50k is pretty good depending on where you live.
How the hell can you retire with a 401k??
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How much do you plan on needing when you retire? 30k to 50k is pretty good depending on where you live.
Its not a great lifestyle at 30K. Can't live by yourself and own a car in Brooklyn where I live now....
And that's if I ever hit a million. A couple more market crashes and nobody is going to get to that point.
I'm trying to wean myself away from banking on my 401K for retirement and look towards other venue's.
My old training partner moved to Arizona and bought a 3 bedroom house, his two roommates pay his complete mortgage. I might have to look for something like that....
And that's if I ever hit a million. A couple more market crashes and nobody is going to get to that point.
I'm trying to wean myself away from banking on my 401K for retirement and look towards other venue's.
My old training partner moved to Arizona and bought a 3 bedroom house, his two roommates pay his complete mortgage. I might have to look for something like that....
TheCaptainPower said:
I'll take your word for it. I just think he was waaaay off base in this particular post. Here's why I think so:
- Everyone knows what happened the last few times the Fed expanded credit in the face of economic difficulty; you're all familiar with how the tech bubble, the housing bubble , the mortgage bubble, etc. ended. It ended with a crash! Those were, essentially, the case of too many dollars chasing the same assets.
- What we have now is essentially the same situation. Except now we have it on a world wide basis: Prime Minister Abe is doing it in Japan (and unsurprisingly, the Yen is falling as a result), Carney at the BoE is doing the same. So you have it on a grander scale - and that suggests to me we may have a grander fall.
- For my money, I don't see how the Fed's extreme quantitative easing can produce anything other than a temporary (and ultimately disasterous) financial distortion, as has happened in the recent past.
- Think of the money supply this way: There are only two forms of monetary base - 1) currency and 2) banking reserves. Of the many trillions of dollars of monetary base created the past few years, only a small percent ($200B?) has been in the form of actual currency. All of rest is just an increase in banking reserves, which eventually takes the form of an expansion of credit. This credit can be exchanged for actual assets! They only "go away" at the point that the Federal Reserve reverses course and begins to sell Treasuries or mortgage backed securities, and retires that credit in circulation as payment.
Meanwhile, with the Fed keeping the short end of the curve near zero, all that extra money floating around creates discomfort for those holding it: There is a negative real interest rate (i.e., inflation exceeds what your bank will pay you in interest), which does what? It causes you to SEEK HIGHER YIELDS. To take more risk. To buy stocks, bonds, and real estate. The Fed is hoping you will do this!
Why? B/c the government hopes that the feeling of wealth created by the rise in prices of the assets you have bought will cause you to feel richer, and therefore SPEND more in the consumer economy. I.e., they hope that creating a "phantom" recovery (based on credit) will eventually lead to a REAL recovery! That would certainly be nice, if it happened. Maybe it will. It remains to be seen.
But the problems associated with this course of action, in my view, are the following:
1) This is all "fiat money": The currency isn't tied to gold or any actual asset, so all it does in the long run is cause more dollars chasing the same amount of goods (the very definition of inflation). AND ONE OF THE THINGS THAT GET INFLATED IN THIS SEARCH FOR YIELD IS ASSET PRICES! Houses, stocks, etc. Now, if this could be done indefinitely (I guess that's what Wall St is implying, though he won't actually tell us), then I suppose asset prices could rise indefinitely. But that doesn't happen! We've seen three times the past 13 years that eventually, the music stops, and this game of musical chairs is over. When does the music stop? When credit has been expanded too far, and people are getting credit and buying assets (such as homes!) that they can't afford. Then, since banks want to minimize losses, a GREAT UNWIND of credit begins. Fewer dollars chasing the same amount of assets has exactly the opposite effect that MORE dollars chasing the same amount of assets had: Prices DECLINE!
2) The second problem this scenario has is it causes MALINVESTMENT. I.e., instead of credit going where it naturally would in a normal credit environment, excess credit means projects get done that SHOULD NOT GET DONE. Well, that leaves a bit of a hangover when these projects crash! Just like you can use your time wisely or spend it poorly - but you pay a price years later if you've spent your time poorly -- you've nothing to show for it! Its the same with money that flows towards projects that should never have gotten funded: Our society is poorer for it.
That's what I base my opinions on. That's what I think the government is doing. Anyone who has a different view, and wants to tell us why, is more than welcome to do so and will be treated respectfully. I may even learn something! But if you reply with a childish "hahaha - anyone who thinks that knows nothing", well, you will be repeatedly invited to tell us WHY you think that.
^ I gave you my quick answer already. It's above you may have missed it. Feel free to debate this on another thread, I may even post.
Captain how much money do you spend a month. Break it down. Rent, partying, food, other etc. all you need is about 4 categories.
Captain how much money do you spend a month. Break it down. Rent, partying, food, other etc. all you need is about 4 categories.
Dexter Morgan said:
I am trying to follow your logic but it is backing up what Westcoast said about real estate and why I will be putting cash into real estate myself.
If you're expecting inflation then why wouldn't you be touting real estate?
Because it may crash? Well, I would have loved to have sold my real estate at that top of the bubble. It's the people that bought/refinanced at the top of the bubble that got screwed.
Are you saying we are at the top of another bubble? I am just trying to understand your fear here.
WestCoast said:
It will. In the very short run. If you're a flipper, I guess you could make it work. Most people aren't - they keep real estate throughout the full cycle. See my recent reply why I think that this will lead to pain in anything beyond the short run. Its like eating a snickers bar for the sugar rush - fine, but very short term.
worldwidetraveler said:
Yes, you are correct: Housing prices will inflate and you will have an opportunity to profit IF you get out before the cycle turns. But someone will be left holding the bag - i hope it ísn't you. This is "junk calories" in my view and the wrong approach for the Fed to take. Their is a way to grow the economy without encouraging boom/bust cycles. Its called minimal government intervention, a return to hard currency, and balanced budgets.
As for where we are now, economist Mike Shedlock, a better expert than I, estimates we are around mid-2003 equivalent in housing prices. The bubble crashed in 2006. Well, mid-2005, really, if you count condos AND all the "selling incentives" that decreased the real sales price below the nominal price.
WestCoast said:
When did you become mod?
Dexter Morgan said:
That still tells me real estate is a good investment right now. I would have no problem dumping when things heated up. I sold before the burst and got out of real estate knowing it was insane prior to the last bubble burst. I have been wanting to get back in lately.
@ worldwide not trying to start beef just saying it would be easier. Hopefully captain can answer. Carry in with the debate then, I'll wait for him.
Wtf? At the below, still trying to troll me I am saying post them here or PM me if he doesn't want to share with people. You know privacy?
Wtf? At the below, still trying to troll me I am saying post them here or PM me if he doesn't want to share with people. You know privacy?
WestCoast said:
You'd love to be able to spew your pretend-knowledge where no one can critique it, wouldn't you? You're a pretender, Cupcake.
WestCoast said:
No problem bud. At least I didn't take it as one.
worldwidetraveler said:
Right, but if you think through what I've said, its not only real estate that would get bid up. If you have a short term perspective and want to market time, why not do a more liquid asset like equities? You can be out in a day, and without the 6% realt-whore's fee. Besides, the same bubble rarely inflates twice in a row: First it was stocks, then housing, then bonds, then gold: I'd put money that equities will re-inflate before housing. It certainly has the last few months!
Dexter Morgan said:
No doubt. I don't know squat about stocks but I do know real estate. There are a lot of ways you can get creative if you are willing to finance it yourself.
Since I understand real estate better, I feel more in control. People will always need a place to live.
Even if he purchased RE today and there was a run up, I still think he would have purchased low enough to not worry about a bubble.
That is unless he did something stupid and refinanced at the top of the bubble.
He can even do this with a self directed ira.
My bills are as following:
Rent: $750 (2 bedroom for $1500)
School: $250 (20K left)
Electric: $120 Average
Cell: $40
Gym: $55 (fukin NYSC)
Car insurance ($900 semi annually)
Subway ($150ish)
Total estimated: $1450ish fixed a month....
Not including food, beer, clothes, etc etc etc....
Beer and food are variable, sometimes I go out a lot, sometimes I don't. My food is cheap, $30 a week....
Rent: $750 (2 bedroom for $1500)
School: $250 (20K left)
Electric: $120 Average
Cell: $40
Gym: $55 (fukin NYSC)
Car insurance ($900 semi annually)
Subway ($150ish)
Total estimated: $1450ish fixed a month....
Not including food, beer, clothes, etc etc etc....
Beer and food are variable, sometimes I go out a lot, sometimes I don't. My food is cheap, $30 a week....
worldwidetraveler said:
Makes sense. Always do what you're most comfortable with; it's your money!
This is my problem with real estate:
A) If interest rates go up the shit should drop pretty bad...
B) Massive bubble in NYC, and Florida is re-bubbling
C) I might not be cash flow positive if I buy in Florida while I live in NYC
My passive income is up to around $400 a month now, I would love to get it to cover my fixed bills by age 40. Looking for a new job possibly next year after I vest at my currently company...
A) If interest rates go up the shit should drop pretty bad...
B) Massive bubble in NYC, and Florida is re-bubbling
C) I might not be cash flow positive if I buy in Florida while I live in NYC
My passive income is up to around $400 a month now, I would love to get it to cover my fixed bills by age 40. Looking for a new job possibly next year after I vest at my currently company...
samsamsam said:
That seems to be being demonstrated right before our eyes:s
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