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asking the forum if its wise to downpay more than 30% in current housing market
invite response
2011 Mar 25, 7:30am 1,688 views 3 comments
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toothfairy
2011 Mar 25, 7:48am
The guy makes good point.
Its not about the % you`re putting down, the real question is how much cash you`ll have left over and that`s your liquidity.
Most people dont know how to invest. They been spending it on their home, but that didnt work out well for them.
My home isnt an investment, it cant make money while i am earning my income at work. Stocks/Bonds/Bank CDs are the only investments making money for me in the long run.
In addition, my investments help fuel our economy. As such I get some favorable tax treatment.
carrierpigeon
2011 Mar 25, 9:33am
thomas.wong1986,
I don't mean to come across as a smart*ss at all. Please don't take this that way. If you are "investing" in "stocks/bonds/bank cd's then you're not making money in the long run. The reason precious metals such as gold, silver, and platinum are flying high over the last decade is because of the money creation or 'quantitative easing' that the Fed has been engaged in. In the last 2 1/2 years the amount of dollars in existence has tripled. Is the Dow three times as high as it was 2 1/2 years ago, or on its way to it? Is the money in your CD up 200% in that time? If not it is because you are counting NOMINAL increases as 'making money'. The nominal increases you are experiencing do not equate to 'making money'. That is like a stock that has gone through a 3-for-1 split. You started out owning 100 shares at $10. But you noticed after they tripled the number of shares in existence you still only had 100 shares and they're now worth $10.20. That my friend is not 'making money'. That is losing money so fast that you can't hope to keep up with the value of the money that you've set back. You started your post out, "Most people don't know . . .". I'll end that phrase with "Most people don't know where their life savings is going. By putting your money in hard assets that can't be manufactured or over produced, assets that have represented value for centuries, and in the case of silver, a hard asset that is being consumed faster than we can source it in nature, the nominal increase in price that you will experience won't necessarily mean you are 'making money', but it WILL mean the value of your savings will not be inflated away.
This was in an article, a guy from formula capital saying that housing is not a good investment from a financial point of view. He said. and he has some merit.
1. Illiquidity. You can’t cash out whenever you want.
2. High leverage. You have to borrow a lot of money in most cases.
3. No diversification. For most people, a house is by far the largest part of their portfolio and greatly exceeds the 10% of net worth that any other investment should be.
example numbers: 700K single family home, $200K down payment.
200K deposited into any bank, or treasuries won't get much return either. But 200K is hard earned cash that always
make anyone feel at ease or give a sense of safety.
Can we also keep the answers related to the topic, and not deviate into people defending their points against each other, and also no need to bring in charts to make your point.
#housing