I started a thread yesterday reagrding this but I don't think I worded it quite right. So sorry for that. Simple question? Does a avg Joe like myself who is 33 married with 1 daughter (maybe 1 more in the future). Take the equity when we sell our house and throw it into investments and have a higher house payments but don't need to invest quite as much each month. OR take the equity and dump it all into the next house with a lower house payment and keep making the monthly investment payments? This question has my wife an I wondering. Our investment guy of course wants us to invest saying he can get 10-12% in the S&P 500 instead of the money being in our new house only making 5-7%. Any opinions.
See the thread I posted yesterday regarding month by month investment vs bulk. There are some interesting caculations in the middle of the thread. Also, a link to another interesting website. http://ferrarichat.com/forum/showthread.php?t=8246 Your investment guy is raising some red flags for me, however. Sounds a little shady to me. My guess is you are paying him comissions? If you decide to invest the money rather than put it into the house, I would invest in a no-load index fund to start. No commissions, low operating expenses. Every dollar you spend in commissions is most likely wasted. Hope this helps. Dom
Well, first off, it sounds like you are being pressured by your investment advisor. I don't think he should be pressuring you to do anything. He should give you the options, and let you decide what is the best option (hopefully using data and calculations). Why is he pressuring you. Is it possible he is going to be making some sweet commissions if you invest your money with him, rather than putting it into the house? Why is he asking you to only put 5% down on the house, making you eligible for PMI. You could put as little as 10% and avoid PMI, but I doubt you could do it with 5%. I would think he would want you to avoid PMI as much as possible. Also is he saying he is guaranteeing you 10-12% ROI? If so, then that is definately BS. I could be wrong, and he could be legit and have his reasons, but from what you have written, I am just a little suspicious. Dom
Capital gains on the sale of the house are taxable if you don't reinvest in another house. I kinda smell a rat, too. What you spend on housing is pretty much a personal decision, and, historically, you generally get your money out and then some. Investments are usually riskier. The market now is OK, but not that long ago, a lot of people lost a lot of money.
PAT I AGREE WITH DOM 100% AS WE JUST SPOKE TO MAKE 10- 12 %, WHERE DO I SEND MY CHECK......... 10% DOWN........GOOD LUCK MY FRIEND BRUCE
??? OK, I'm confused. We just spoke? Maybe you've got me confused with someone else- I don't think we've ever spoken to one another- though I have ordered batteries from you Dom
NO, YOUR NOT CONFUSED...MEANING I JUST SPOKE TO PAT (ENZO) ABOUT IT.........YOU TOOK YOUR ZOLOFT TODAY DOM, DONT WORRY BRUCE
As a financial advisor, you should never take a real asset (equity) and swap for something that is as volatile as the stock market. if we have a repeat of 2000-2002, you will be left with no equity in your house, and no money. I have seen several clients borrow money only to lose it in the market, they failed to realize that the house payment went up as their investments went down. Some ended up selling their homes just to get out from under the note.
