Author: mungofitch

Subject: Re: payoff mortgage vs investing in stocks

Date: 7/2/2021

Recommendations: 9

I think it`s a good strategy, on one condition: You`re very conservative about what you`re buying. * Ensure everything you`re investing in is something that absolutely for sure won`t be worth any less over time. (the value of something is not at all the same as its price, though the two meet occasionally) * Ensure it is something that is not plainly overpriced at the time you buy it. For the first reason I would not include bonds, metals, crypto in the nominee list. For the second reason, a big problem is that both US large caps and small caps are currently painfully expensive. The future is very uncertain, but if the S&P ends up being valued at the level that has been typical in the post-1995 "expensive era", then there will be a negative real total return in the next seven years. The good news is that you will be dollar cost averaging, not buying it all today. But still...ouch. The answer you get to a question usually depends more on who`s answering it than on what you ask. Since I`m the one writing this post, you`ll probably get this answer : ) https://boards.fool.com/7-year-prediction-34863782.aspx Berkshire is really boring, and doesn`t grow quickly. But it rises in value a pleasant amount every year. It`s a conglomerate made up of a bulletproof balance sheet and a wide variety of companies chosen for their longevity rather than their rapid growth. At the moment it has the additional charm of not being scarily expensive for what you get. If/when the broad market becomes reasonably priced, than a simple broad (but not cap weight) index fund is a good fit for your goal. I usually suggest looking at RSP. It won`t go broke. There is also much to be said for some very simple conservative "KISS" quant investing. This is the MI board. Buy 25 stocks that all meet reasonable criteria for being unusually predictable in their trend of rising value (not price). A couple of my suggestions would be a collection with unusually high ROE, which is simplest. Or a collection of stocks in industries with unusually good long run economics, like medical devices. Jim