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Posted: 5/7/2024 11:58:04 PM EDT
[#1]
Quote HistoryOriginally Posted By Off-the-Grid: For everyone saying a million isn't shit or not worth much, do you have a million in liquid assets, or even in net worth? crickets.... You asking for a signup sheet? |
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AK, USA
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Posted: 5/7/2024 11:59:29 PM EDT
[#2]
Quote HistoryOriginally Posted By Off-the-Grid: For everyone saying a million isn't shit or not worth much, do you have a million in liquid assets, or even in net worth? crickets.... I haven't seen anyone say it isn't much. "Millionaire" still has a mystique from the wealth the term implied 30-40 years ago. What plenty of us are saying is that the term doesn't connote the same degree of wealth, or even wealth, period. Because using a 4% rule, if you are bankrolling your own retirement sans pension, like most Americans, then that million nets you roughly $40,000 in reliable income per year. Maybe in good markets that stretches a bit. And the vast majority of folks are never going to have a million dollars in retirement accounts anyway. But Dave says, and I agree, that almost anyone can hit that from a perspective of networth (assuming diligence, frugality, saving early and often, etc). And yet this thread is full of people saying that is nonsense. |
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Posted: 5/8/2024 12:01:33 AM EDT
[#3]
Quote HistoryOriginally Posted By FALARAK: You asking for a signup sheet? I would like to compare the DR haters balance sheet to the people here that said they followed his advice. 
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TX, USA
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Posted: 5/8/2024 12:02:09 AM EDT
[#4]
Quote HistoryOriginally Posted By boomfab: $1M ain't shit, Dave. "Millionaire" (singular million) isn't all that much. Lots of those around. Decamillionaire is the new millionaire...especially going forward into the next 10-15 years. The whole idea of "retirement" is going to go away for most in the coming decades. Most peoples returns won't be able to even beat REAL inflation with the way the gov spends anymore. So, most people should just get their head around the idea of working until you are pretty old, into your 70's if your health allows. While I hate the gov induced inflation and irresponsible spending, it's better for you to be productive anyway. God didn't create you to watch daytime TV, hit a little white ball around a lawn EVERY day, or drive your wife nuts all day long being home and bored. Define lots? In 2023 it was reported as 8.8% of the population having a net worth of 1m or more. Less than 2% of the households in the us have a net worth of 10m or more. To you it may not be shit but it looks like there are millions and millions of folks out there with way way less. |
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TX, USA
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Posted: 5/8/2024 12:04:25 AM EDT
[#5]
Quote HistoryOriginally Posted By Off-the-Grid: For everyone saying a million isn't shit or not worth much, do you have a million in liquid assets, or even in net worth? crickets....  Attached File |
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Posted: 5/8/2024 12:04:45 AM EDT
[#6]
Quote HistoryOriginally Posted By Middlelength: I haven't seen anyone say it isn't much. "Millionaire" still has a mystique from the wealth the term implied 30-40 years ago. What plenty of us are saying is that the term doesn't connote the same degree of wealth, or even wealth, period. Because using a 4% rule, if you are bankrolling your own retirement sans pension, like most Americans, then that million nets you roughly $40,000 in reliable income per year. Maybe in good markets that stretches a bit. And the vast majority of folks are never going to have a million dollars in retirement accounts anyway. But Dave says, and I agree, that almost anyone can hit that from a perspective of networth (assuming diligence, frugality, saving early and often, etc). And yet this thread is full of people saying that is nonsense. Did you read past the third post on page one? |
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Posted: 5/8/2024 12:13:46 AM EDT
[#7]
Quote HistoryOriginally Posted By Shooter66: Define lots? In 2023 it was reported as 8.8% of the population having a net worth of 1m or more. Less than 2% of the households in the us have a net worth of 10m or more. To you it may not be shit but it looks like there are millions and millions of folks out there with way way less. 26% of Americans own a house outright. So many of them should be half way there. |
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TX, USA
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Posted: 5/8/2024 12:16:50 AM EDT
[#8]
Quote HistoryOriginally Posted By OregonShooter: 26% of Americans own a house outright. So many of them should be half way there. And many will still never get there. |
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Posted: 5/8/2024 12:42:15 AM EDT
[Last Edit: BillofRights]
[#9]
Quote HistoryOriginally Posted By Off-the-Grid: For everyone saying a million isn't shit or not worth much, do you have a million in liquid assets, or even in net worth? crickets.... I’ve probably been guilty of saying it, because I get frustrated that Land and Real Estate inflation in the last several years negated my raises. And yes, and yes. But I understand what you’re saying. It’s not “nothing”. No part of it was easy, and a hell of a lot of things had to go exactly right. All I had to do, was maintain a top 5% income for about 20 years, while raising 2 kids with a single wonderful wife, who was willing to support my dream of paying off debt by living below our means. We didn’t scrimp too much, but starting from nothing, it took two decades of self discipline and single minded devotion to the cause of financial freedom. I had self-adopted what became known as Dave Ramsey religion, before I (or anyone) even knew his name. Ironically enough, net worth would be millions more, if I had slammed more money into the stock market, or Land and Real Estate, instead of paying off my house early. (Spidey was Right, so far). I’m as dedicated to the Market as he is, but more out of grim pragmatism rather than irrational exuberance. If I’da thrown a couple paychecks into BC when Arf hipped me to it, I’d be up 10 mil. -that’s the only one I really regret. Vast inflation requires a different mindset. It makes the game Far more complicated and risky by necessity. |
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Posted: 5/8/2024 1:03:27 AM EDT
[#10]
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IA, USA
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Posted: 5/8/2024 1:20:51 AM EDT
[#11]
Quote HistoryOriginally Posted By Lou_Daks: Allow me to enlighten you. There used to be a radio program called "Money Talk" hosted by Bob Brinker. He retired in 2018-ish, but up to that time it was the longest running radio show of any kind in history - more than 30 years. BB used a term called "critical mass" to describe a financial portfolio that would allow the owner to live in the lifestyle he wanted. Obviously, that varies. There's a name I haven't heard in a long time. I used to listen to his radio show on Sunday afternoons many years ago. I recall he was a big proponent of the Total Market Index. Good radio show. I also enjoyed listening to Bruce Williams. I was a 'nobody' that even called his show once...I can't remember what I asked him....Ugh!! |
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Posted: 5/8/2024 1:24:40 AM EDT
[#12]
It doesn't matter your salary, everyone can retire a millionaire if they are disciplined.
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Posted: 5/8/2024 1:29:31 AM EDT
[#13]
Quote HistoryOriginally Posted By Middlelength: I haven't seen anyone say it isn't much. "Millionaire" still has a mystique from the wealth the term implied 30-40 years ago. What plenty of us are saying is that the term doesn't connote the same degree of wealth, or even wealth, period. Because using a 4% rule, if you are bankrolling your own retirement sans pension, like most Americans, then that million nets you roughly $40,000 in reliable income per year. Maybe in good markets that stretches a bit. And the vast majority of folks are never going to have a million dollars in retirement accounts anyway. But Dave says, and I agree, that almost anyone can hit that from a perspective of networth (assuming diligence, frugality, saving early and often, etc). And yet this thread is full of people saying that is nonsense. It couldn't be more simple. The hardest part is paying yourself first and living below your means. |
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Posted: 5/8/2024 6:50:26 AM EDT
[#14]
Quote HistoryOriginally Posted By Shooter66: And many will still never get there. If inflation trends keep up, "millionaire" will be lower middle class blue collar fuckup money before I reach retirement age. The fact that I don't currently have a net worth of $1M or more doesn't make that any less true. |
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FL, USA
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Posted: 5/8/2024 7:41:56 AM EDT
[#15]
Quote HistoryOriginally Posted By Bizzarolibe: This. I'm not a Ramsay fan (I think he's arrogant and simply wrong about some things I could've paid off my 2.99% mortgage by now but that would've been fucking stupid), but if all Americans followed his program they'd probably be better off overall, and by a pretty significant margin. Remember: the average IQ is 100. His program is great for those in the middle/ass-end of the bell curve. It's not even a bad idea to pick and choose from certain portions of his doctrine. Quote HistoryOriginally Posted By Bizzarolibe: Originally Posted By bagofcrabs65: The best way to become a millionaire is to sell books telling people they can be a millionaire too. Or maybe it's a radio show that has millions of listeners.. Or maybe it's all the real estate.. Regardless his baby steps work for people who have zero money discipline. It's a base. Not the end all be all. This. I'm not a Ramsay fan (I think he's arrogant and simply wrong about some things I could've paid off my 2.99% mortgage by now but that would've been fucking stupid), but if all Americans followed his program they'd probably be better off overall, and by a pretty significant margin. Remember: the average IQ is 100. His program is great for those in the middle/ass-end of the bell curve. It's not even a bad idea to pick and choose from certain portions of his doctrine. I'm not even sure IQ is big part of it, I've known some really smart people that had zero financial acumen and/or spending restraint. In fact, some just made assumptions about financial moves that ended badly because they thought they were smarter than everyone else. |
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MS, USA
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Posted: 5/8/2024 7:53:33 AM EDT
[Last Edit: ExFed1811]
[#16]
Quote HistoryOriginally Posted By Off-the-Grid: For everyone saying a million isn't shit or not worth much, do you have a million in liquid assets, or even in net worth? crickets.... We don't have a million in liquid assets, but we have a few million between a guaranteed pension, a pretty large 401K, a decent house, two social security checks, and a few hundred acres of land very near the sea coast, with less than a hundred grand of debt for all of that What we have been offered for the land alone would make us liquid millionaires if we wanted or needed that right now. Our plan is to leave the land to our kids. But my wife and I are 65 and 66. As cruel as it is to say, if you don't have over a million dollars in net worth at our ages, you have made some really bad choices at a time in your life when it was really important to make good choices. |
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TX, USA
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Posted: 5/8/2024 9:11:05 AM EDT
[#17]
Quote HistoryOriginally Posted By BillofRights: I spend 2% annually just on Taxes alone. Luckily, the rate they can raise it, is limited by statute. Maintenance is another issue. It could Easily be another 2% annually, but I need to spend probably 8% just this year. They don't worry about the rate. They'll just increase the appraised value to get what they want. It makes everyone feel like they're getting wealthier while the state/county steals more of their money. |
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Posted: 5/8/2024 9:25:31 AM EDT
[#18]
Quote HistoryOriginally Posted By Middlelength: I haven't seen anyone say it isn't much. "Millionaire" still has a mystique from the wealth the term implied 30-40 years ago. What plenty of us are saying is that the term doesn't connote the same degree of wealth, or even wealth, period. Because using a 4% rule, if you are bankrolling your own retirement sans pension, like most Americans, then that million nets you roughly $40,000 in reliable income per year. Maybe in good markets that stretches a bit. And the vast majority of folks are never going to have a million dollars in retirement accounts anyway. But Dave says, and I agree, that almost anyone can hit that from a perspective of networth (assuming diligence, frugality, saving early and often, etc). And yet this thread is full of people saying that is nonsense. Well said. What DR said is true, and it’s Because “Millionaire” status has been rendered Middle Class by Inflation. When normal average Teachers and Cops are Millionairs, the term has lost it’s original meaning. It’s not that it’s “not anything”. A comfortable retirement is a rare thing these days. It’s just that it’s only 1/4 as significant as it was 30 years ago. The whole concept is dead simple, but the Arguing Autists of Arfcom make it complicated. |
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Posted: 5/8/2024 9:28:27 AM EDT
[#19]
Quote HistoryOriginally Posted By RedAngus: They don't worry about the rate. They'll just increase the appraised value to get what they want. It makes everyone feel like they're getting wealthier while the state/county steals more of their money. Quote HistoryOriginally Posted By RedAngus: Originally Posted By BillofRights: I spend 2% annually just on Taxes alone. Luckily, the rate they can raise it, is limited by statute. Maintenance is another issue. It could Easily be another 2% annually, but I need to spend probably 8% just this year. They don't worry about the rate. They'll just increase the appraised value to get what they want. It makes everyone feel like they're getting wealthier while the state/county steals more of their money. Sorry, I miss-spoke. They can’t raise the value too quickly, thank God. After another 10 years, my taxes might be “reasonable”, relative to inflation.
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Posted: 5/8/2024 9:32:19 AM EDT
[#20]
One thing to keep in mind is a million might be a target but there's about one second in time when people hit that exact number in their net worth, before the number changes again. And it's impossible to even know when you hit that number, really.
The term is part of clickbait marketing that all these content creators use. The actual message is about developing habits so that yes you become a net worth millionaire, and then keep going past that. |
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Posted: 5/8/2024 9:42:26 AM EDT
[#21]
He ain't lying. But a mil isn't what it used to be.
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MN, USA
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Posted: 5/8/2024 9:51:33 AM EDT
[#22]
Quote HistoryOriginally Posted By Off-the-Grid: For everyone saying a million isn't shit or not worth much, do you have a million in liquid assets, or even in net worth? crickets.... In this thread we have learned two things. 1) A million is so much money its impossible for teachers (and other in that pay range) to achieve it. 2) A million dollars isnt shit anymore. So it is an impossibility to save that much money while at the same time really isn’t much money. |
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TX, USA
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Posted: 5/8/2024 10:00:49 AM EDT
[#23]
Quote HistoryOriginally Posted By NDT3: In this thread we have learned two things. 1) A million is so much money its impossible for teachers (and other in that pay range) to achieve it. 2) A million dollars isnt shit anymore. So it is an impossibility to save that much money while at the same time really isn’t much money.  Attached File |
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TX, USA
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Posted: 5/8/2024 10:52:31 AM EDT
[#24]
Quote HistoryOriginally Posted By BillofRights: Sorry, I miss-spoke. They can’t raise the value too quickly, thank God. After another 10 years, my taxes might be “reasonable”, relative to inflation. Got'cha, that's a much better place to be in. And obviously not in Texas  . They need more money? Up goes your appraised value. They've raised my appraised value of my home over 200% in the last few years. Done the same for my land, but fortunately ag exemption is such that that's a very small difference for land/buildings etc. The biggest joke on this board are all the brag threads about how much their houses and their "equity" has increased. Nobody realizes that's just the easiest way to fleece them through property taxes, while making everyone feel "richer". |
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Posted: 5/8/2024 10:58:13 AM EDT
[#25]
Quote HistoryOriginally Posted By NDT3: In this thread we have learned two things. 1) A million is so much money its impossible for teachers (and other in that pay range) to achieve it. 2) A million dollars isnt shit anymore. So it is an impossibility to save that much money while at the same time really isn’t much money. It's confirmation bias. To anyone who hasn't achieved it its "impossible ". For anyone that can do the math it's not that difficult for a regular person to achieve. Fuck I'm 40 and physically disabled if I can do it it's not that damn difficult. |
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Posted: 5/8/2024 11:10:01 AM EDT
[#26]
Quote HistoryOriginally Posted By Jack-of-Hearts: He ain't lying. But a mil isn't what it used to be. The best part about making your first million, is noticing how much faster the second million comes along. |
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Posted: 5/8/2024 11:44:42 AM EDT
[Last Edit: wildearp]
[#27]
Quote HistoryOriginally Posted By FistPeso: It doesn't matter your salary, everyone can retire a millionaire if they are disciplined. You are unlikely to do this playing video games, living on government checks, drinking starbucks, and eating fast food. It may happen if you have a pretty butthole, but you may also get struck by lightning.   |
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Posted: 5/8/2024 12:04:46 PM EDT
[#28]
Quote HistoryOriginally Posted By FMJ3: I'm not even sure IQ is big part of it, I've known some really smart people that had zero financial acumen and/or spending restraint. In fact, some just made assumptions about financial moves that ended badly because they thought they were smarter than everyone else. Quote HistoryOriginally Posted By FMJ3: Originally Posted By Bizzarolibe: Originally Posted By bagofcrabs65: The best way to become a millionaire is to sell books telling people they can be a millionaire too. Or maybe it's a radio show that has millions of listeners.. Or maybe it's all the real estate.. Regardless his baby steps work for people who have zero money discipline. It's a base. Not the end all be all. This. I'm not a Ramsay fan (I think he's arrogant and simply wrong about some things I could've paid off my 2.99% mortgage by now but that would've been fucking stupid), but if all Americans followed his program they'd probably be better off overall, and by a pretty significant margin. Remember: the average IQ is 100. His program is great for those in the middle/ass-end of the bell curve. It's not even a bad idea to pick and choose from certain portions of his doctrine. I'm not even sure IQ is big part of it, I've known some really smart people that had zero financial acumen and/or spending restraint. In fact, some just made assumptions about financial moves that ended badly because they thought they were smarter than everyone else. IQ helps to get jobs and create businesses that come with a higher income. Income can be used to build wealth, but in most cases it is not. Smart people do dumb things, all the time. Planning and Discipline are what build wealth using income and investments. Dave Ramsey says variations of the above. These are the core concepts that he has correct. |
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Posted: 5/8/2024 12:13:10 PM EDT
[#29]
Quote HistoryOriginally Posted By NDT3: In this thread we have learned two things. 1) A million is so much money its impossible for teachers (and other in that pay range) to achieve it. 2) A million dollars isnt shit anymore. So it is an impossibility to save that much money while at the same time really isn’t much money. A million isn't impossible for teachers, but that's mostly because it's not what it used to be. Of course in blue and some purple states teachers make decent money, so if they aren't already at a million they are probably fucking up. In most red states, no, most teachers are not going to be millionaires, in spite of the fact that it's not even really all that much, because conservatives are fucking stupid. |
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LA, USA
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Posted: 5/8/2024 12:21:45 PM EDT
[#30]
Quote HistoryOriginally Posted By Notcalifornialegal: Yeah who df does this guy think he is? Looks like he's from Louisiana. Someone get @midcap to go hassle that guy. Quote HistoryOriginally Posted By Notcalifornialegal: Originally Posted By FALARAK: Originally Posted By midcap: I understand that Dave is trying to help people despite being a hippocrite, but here's the issue which should suprise no one. Your net worth is what you own minus what you owe. It's the total value of all your assets—including your house, cars, investments and cash—minus your liabilities (things like credit card debt, student loans, and what you still owe on your mortgage). These people may be millionaires...but they aren't liquid. I'd like to see the list again when you take out your primary residence. It will look much different. I don't take financial advice from people who can't afford $24.  Yeah who df does this guy think he is? Looks like he's from Louisiana. Someone get @midcap to go hassle that guy. I just noticed my membership ran out...I am gonna reup lol |
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Posted: 5/8/2024 12:24:39 PM EDT
[Last Edit: Logcutter]
[#31]
Quote HistoryOriginally Posted By Off-the-Grid: For everyone saying a million isn't shit or not worth much, do you have a million in liquid assets, or even in net worth? crickets.... Yes, without the house (paid off) or two vehicles (paid off) we have over a million. It's not pocket change, but it isn't enough to retire on either. Edit: I don't hate on Dave Ramsey, but I was never someone without self control who needed to follow his plan either. I'm between him and Spidey, in that I value my paid off house more than the lost "extra" money from paying it off early. You can save "enough" and pay debt/be debt free at the same time. They're not mutually exclusive |
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Posted: 5/8/2024 12:27:01 PM EDT
[Last Edit: Lou_Daks]
[#32]
Quote HistoryOriginally Posted By Antisocial1: How can you argue that it's impossible for your portfolio balance to dip below the starting value? That's just silly. As far as the above...the data are readily available as are online calculators that will run similar simulations using selected portfolios and historical stock market returns. If you stay below 4%, you will see around 95% chance that your balanced portfolio lasts 30 yrs Allow me to tell you what's silly - you're failure to understand basic mathematics. Once again, here's the scenario: We start with a retirement account $2.5M, at Year 0. The time frame is 30 years. We invest ONLY in CDs yielding 5.0% We withdraw 4.0% per year, according to the 4% Rule. Are you still with me? But you know what? I'm a prince among men, so here's my offer to you. We do not invest in CDs yielding 5.0%. We invest in CDs yielding only 4.1%. See how nice I am to you? So, in Year 1, we have withdrawn $100k according to the 4% Rule. But, the account has grown by $102,500 ($2.5M x 0.041 = $102,500). So, at the end of Year 1 the account balance is $2,502,500. Are you still following? In Year 2, we withdraw $100,100 according to the 4% Rule ($2,502,500 x .04). But, the account has grown by 4.1%, so the balance is now $2,502,500 - $100,100 + ($2,502,500 x 0.041) = $2,505,002.50 at the end of Year 2. Are you seeing a trend here? Under the 4% Rule, the account balance cannot dip below the original $2.5M and, in fact, it will grow modestly for the next 30 years, if we invest in nothing but CDs at 4.1% and withdraw at a steady rate of 4.0%. The 4% Rule is a guideline, and a conservative one. See this: https://www.investopedia.com/terms/f/four-percent-rule.asp Some experts argue that 4% is too conservative, while otherts argue that 3% is better. Note that I did not adjust for inflation in the example above. Once again, some experts argue about that point. I took a conservative constant 4% withdrawal approach, and my 4.1% growth rate is EXTREMELY conservative. Nobody smart enough to amass $2.5M is going to have 100% in CDs yielding only 4.1% for 30 years. |
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MS, USA
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Posted: 5/8/2024 12:32:36 PM EDT
[#33]
Quote HistoryOriginally Posted By Missilegeek: IQ helps to get jobs and create businesses that come with a higher income. Income can be used to build wealth, but in most cases it is not. Smart people do dumb things, all the time. Planning and Discipline are what build wealth using income and investments. Dave Ramsey says variations of the above. These are the core concepts that he has correct. Quote HistoryOriginally Posted By Missilegeek: Originally Posted By FMJ3: Originally Posted By Bizzarolibe: Originally Posted By bagofcrabs65: The best way to become a millionaire is to sell books telling people they can be a millionaire too. Or maybe it's a radio show that has millions of listeners.. Or maybe it's all the real estate.. Regardless his baby steps work for people who have zero money discipline. It's a base. Not the end all be all. This. I'm not a Ramsay fan (I think he's arrogant and simply wrong about some things I could've paid off my 2.99% mortgage by now but that would've been fucking stupid), but if all Americans followed his program they'd probably be better off overall, and by a pretty significant margin. Remember: the average IQ is 100. His program is great for those in the middle/ass-end of the bell curve. It's not even a bad idea to pick and choose from certain portions of his doctrine. I'm not even sure IQ is big part of it, I've known some really smart people that had zero financial acumen and/or spending restraint. In fact, some just made assumptions about financial moves that ended badly because they thought they were smarter than everyone else. IQ helps to get jobs and create businesses that come with a higher income. Income can be used to build wealth, but in most cases it is not. Smart people do dumb things, all the time. Planning and Discipline are what build wealth using income and investments. Dave Ramsey says variations of the above. These are the core concepts that he has correct. I have a brother who is very wealthy and he constantly chides me to make all my financial decisions with a calculator. His way of saying don't do stupid stuff with your money just because it feels good. |
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UT, USA
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Posted: 5/8/2024 12:32:58 PM EDT
[#34]
Quote HistoryOriginally Posted By OregonShooter: 26% of Americans own a house outright. So many of them should be half way there. What happens when those Boomers die and the homes get sold? No one's going to be able to buy that 1940s home for $1.8m except the wealthy, and they're probably just going to tear it down and build a multi-million modern farmhouse there instead. |
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Posted: 5/8/2024 12:37:22 PM EDT
[#35]
Quote HistoryOriginally Posted By mikeyb76: How many of those are baby boomers? The rest are mostly GenXers, mixed with a few younger generations that got lucky with the Internet. What happens when those Boomers die and the homes get sold? No one's going to be able to buy that 1940s home for $1.8m except the wealthy, and they're probably just going to tear it down and build a multi-million modern farmhouse there instead. Most people who own a home outright are boomers, but the reason is they've had 30+ years to pay it off and every younger generation has not had that much time. So it's not a fair comparison. It's the same reason that more boomers are millionaires - they've had more time to accumulate wealth. As to the sale of those homes when they die, the market will sort that out. There will be winners and there will be losers. Same as it ever was, same as it ever was. |
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Posted: 5/8/2024 12:40:58 PM EDT
[#36]
If there's enough of those boomer estate homes (surplus), the prices could go down. Heirs don't always want to fix up homes and be patient to wait for the highest offer, either.
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Posted: 5/8/2024 12:44:14 PM EDT
[#37]
Quote HistoryOriginally Posted By DDalton: If there's enough of those boomer estate homes (surplus), the prices could go down. Heirs don't always want to fix up homes and be patient to wait for the highest offer, either. This is correct. The market is never wrong. I'm old enough to have seen several cycles in RE, which are very long. A home I bought in 1989 for $270k went to $225k a couple years later. That's a 17% drop if my maths is correct. |
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USA
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Posted: 5/8/2024 12:57:33 PM EDT
[Last Edit: miseses]
[#38]
Quote HistoryOriginally Posted By Lou_Daks: This is correct. The market is never wrong. I'm old enough to have seen several cycles in RE, which are very long. A home I bought in 1989 for $270k went to $225k a couple years later. That's a 17% drop if my maths is correct. Quote HistoryOriginally Posted By Lou_Daks: Originally Posted By DDalton: If there's enough of those boomer estate homes (surplus), the prices could go down. Heirs don't always want to fix up homes and be patient to wait for the highest offer, either. This is correct. The market is never wrong. I'm old enough to have seen several cycles in RE, which are very long. A home I bought in 1989 for $270k went to $225k a couple years later. That's a 17% drop if my maths is correct. The problem though is the houses just got locked up in 30 year, negative real interest rate mortgages that can't be rolled over by the property owner into an identical loan on the same purchase. The "market" in this case is fed policies that pinned interest rates to zero, policies that locked this in for 30 years, then fed wildly swinging interest rates the other direction creating an irreversible lock-up effect. Thus you have to buy them out of that opportunity cost to buy their house. The result? What we see now, unbudgeable prices even as sales drop way down. If you don't offer enough money to buy out the money printer of negative real interest rates, homeowners can and will just wait it out for 30 years. You can pretty much put a fork in it for the current generation of first time home buyers, they're gonna either have to reverse the zoning/code regulations to let them get affordable prefabs or something or find some other way around buying the current housing stock. |
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Posted: 5/8/2024 1:00:26 PM EDT
[Last Edit: Lou_Daks]
[#39]
Quote HistoryOriginally Posted By miseses: The problem though is the houses just got locked up in 30 year, negative real interest rate mortgages that can't be rolled over by the property owner into an identical loan on the same purchase. Thus you have to buy them out of that opportunity cost to buy their house. The result? What we see now, unbudgeable prices even as sales drop way down. If you don't offer enough money to buy out the money printer of negative real interest rates, homeowners can and will just wait it out for 30 years. You can pretty much put a fork in it for the current generation of first time home buyers, they're gonna either have to reverse the zoning/code regulations to let them get affordable prefabs or something or find some other way around buying the current housing stock. A close relative and spouse are in escrow now on a 1st home, so I dispute your thesis. I believe their rate is 7%. They will refi if/when it goes down. The market is never wrong. ETA: They are in their early 30s. |
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Posted: 5/8/2024 1:03:54 PM EDT
[#40]
Quote HistoryOriginally Posted By miseses: The problem though is the houses just got locked up in 30 year, negative real interest rate mortgages that can't be rolled over by the property owner into an identical loan on the same purchase. The "market" in this case is fed policies that pinned interest rates to zero, policies that locked this in for 30 years, then fed wildly swinging interest rates the other direction creating an irreversible lock-up effect. Thus you have to buy them out of that opportunity cost to buy their house. The result? What we see now, unbudgeable prices even as sales drop way down. If you don't offer enough money to buy out the money printer of negative real interest rates, homeowners can and will just wait it out for 30 years. You can pretty much put a fork in it for the current generation of first time home buyers, they're gonna either have to reverse the zoning/code regulations to let them get affordable prefabs or something or find some other way around buying the current housing stock. I wouldn’t say put a fork in it per se, but I know my wife and I have about zero interest in buying a home local to us with currents rates and prices. Best thing we can hope for is finding new work and moving to a lower COL area. |
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USA
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Posted: 5/8/2024 1:05:38 PM EDT
[Last Edit: miseses]
[#41]
Quote HistoryOriginally Posted By Lou_Daks: A close relative and spouse are in escrow now on a 1st home, so I dispute your thesis. I believe their rate is 7%. They will refi if/when it goes down. The market is never wrong. ETA: They are in their early 30s. Quote HistoryOriginally Posted By Lou_Daks: Originally Posted By miseses: The problem though is the houses just got locked up in 30 year, negative real interest rate mortgages that can't be rolled over by the property owner into an identical loan on the same purchase. Thus you have to buy them out of that opportunity cost to buy their house. The result? What we see now, unbudgeable prices even as sales drop way down. If you don't offer enough money to buy out the money printer of negative real interest rates, homeowners can and will just wait it out for 30 years. You can pretty much put a fork in it for the current generation of first time home buyers, they're gonna either have to reverse the zoning/code regulations to let them get affordable prefabs or something or find some other way around buying the current housing stock. A close relative and spouse are in escrow now on a 1st home, so I dispute your thesis. I believe their rate is 7%. They will refi if/when it goes down. The market is never wrong. ETA: They are in their early 30s. We do not have a market for houses, we have a command economy run by the fed and county development boards. Market implies voluntary trade. Instead prices are set violently through, amongst other things, government monetary policy. In fact my building permit makes it a criminal offense to even sell my house, since a single anecdote is your threshold for proof, I have now disputed your thesis. If we actually did have a 'market', I would agree it wouldn't be 'wrong.' The reason why it is looking so wrong is because it is not a market but rather a facade of a market. |
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MT, USA
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Posted: 5/8/2024 1:09:20 PM EDT
[#42]
Helpful hint for Gen Alpha:
If you start investing $50/month at the age of 21, and increase that number by $50/month for every year you work, you will have at least couple million when you retire. Time is your ally. |
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AK, USA
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Posted: 5/8/2024 1:13:22 PM EDT
[#43]
Quote HistoryOriginally Posted By Lou_Daks: Note that I did not adjust for inflation in the example above. Once again, some experts argue about that point. I took a conservative constant 4% withdrawal approach, and my 4.1% growth rate is EXTREMELY conservative. Nobody smart enough to amass $2.5M is going to have 100% in CDs yielding only 4.1% for 30 years. I understand why you are using CDs, but a 5% rate of return is pretty optimistic long term for fixed, short term, securities. In normal market years the rate of return for such securities is often between 2-4%, so you generally are going to have to have a mix of higher risk securities as well. I think most people that need a portfolio to last 30 + years have looked at the montecarlo simulators and realize how market dependent the withdrawal rates (3 vs 4) become. If you are sitting on a big enough pile of money, it may not matter, but a few bad market years, ESPECIALLY if those years coincide with the beginning of someone's retirement, can make the 4% rule pretty risky. I wish more people understood that all of this gets easier if you save money now. |
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CA, USA
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Posted: 5/8/2024 1:14:51 PM EDT
[#44]
Quote HistoryOriginally Posted By Lou_Daks: Allow me to tell you what's silly - you're failure to understand basic mathematics. Once again, here's the scenario: We start with a retirement account $2.5M, at Year 0. The time frame is 30 years. We invest ONLY in CDs yielding 5.0% We withdraw 4.0% per year, according to the 4% Rule. Are you still with me? But you know what? I'm a prince among men, so here's my offer to you. We do not invest in CDs yielding 5.0%. We invest in CDs yielding only 4.1%. See how nice I am to you? So, in Year 1, we have withdrawn $100k according to the 4% Rule. But, the account has grown by $102,500 ($2.5M x 0.041 = $102,500). So, at the end of Year 1 the account balance is $2,502,500. Are you still following? In Year 2, we withdraw $100,100 according to the 4% Rule ($2,502,500 x .04). But, the account has grown by 4.1%, so the balance is now $2,502,500 - $100,100 + ($2,502,500 x 0.041) = $2,505,002.50 at the end of Year 2. Are you seeing a trend here? Under the 4% Rule, the account balance cannot dip below the original $2.5M and, in fact, it will grow modestly for the next 30 years, if we invest in nothing but CDs at 4.1% and withdraw at a steady rate of 4.0%. The 4% Rule is a guideline, and a conservative one. See this: https://www.investopedia.com/terms/f/four-percent-rule.asp Some experts argue that 4% is too conservative, while otherts argue that 3% is better. Note that I did not adjust for inflation in the example above. Once again, some experts argue about that point. I took a conservative constant 4% withdrawal approach, and my 4.1% growth rate is EXTREMELY conservative. Nobody smart enough to amass $2.5M is going to have 100% in CDs yielding only 4.1% for 30 years. Quote HistoryOriginally Posted By Lou_Daks: Originally Posted By Antisocial1: How can you argue that it's impossible for your portfolio balance to dip below the starting value? That's just silly. As far as the above...the data are readily available as are online calculators that will run similar simulations using selected portfolios and historical stock market returns. If you stay below 4%, you will see around 95% chance that your balanced portfolio lasts 30 yrs Allow me to tell you what's silly - you're failure to understand basic mathematics. Once again, here's the scenario: We start with a retirement account $2.5M, at Year 0. The time frame is 30 years. We invest ONLY in CDs yielding 5.0% We withdraw 4.0% per year, according to the 4% Rule. Are you still with me? But you know what? I'm a prince among men, so here's my offer to you. We do not invest in CDs yielding 5.0%. We invest in CDs yielding only 4.1%. See how nice I am to you? So, in Year 1, we have withdrawn $100k according to the 4% Rule. But, the account has grown by $102,500 ($2.5M x 0.041 = $102,500). So, at the end of Year 1 the account balance is $2,502,500. Are you still following? In Year 2, we withdraw $100,100 according to the 4% Rule ($2,502,500 x .04). But, the account has grown by 4.1%, so the balance is now $2,502,500 - $100,100 + ($2,502,500 x 0.041) = $2,505,002.50 at the end of Year 2. Are you seeing a trend here? Under the 4% Rule, the account balance cannot dip below the original $2.5M and, in fact, it will grow modestly for the next 30 years, if we invest in nothing but CDs at 4.1% and withdraw at a steady rate of 4.0%. The 4% Rule is a guideline, and a conservative one. See this: https://www.investopedia.com/terms/f/four-percent-rule.asp Some experts argue that 4% is too conservative, while otherts argue that 3% is better. Note that I did not adjust for inflation in the example above. Once again, some experts argue about that point. I took a conservative constant 4% withdrawal approach, and my 4.1% growth rate is EXTREMELY conservative. Nobody smart enough to amass $2.5M is going to have 100% in CDs yielding only 4.1% for 30 years. You've moved the goal post in this thread. Spidey mentioned a portfolio fluctuating below starting value and you said "show me the maths" and then went into an unrelated direction with 5% CDs and tried to conflate that with the "safe 4%" withdrawal rate...which comes from the Trinity study...which only dealt with stock/bond portfolios. Your CD example has nothing to do with a balanced portfolio not lasting 30 yrs and nothing to do with a "safe" 4% withdrawal rate. Absolutely nothing. Any braindead idiot knows you get all of the priciple back from CDs...this isn't the "gotcha" you seem to think it is. Also, it's common usage to say that you lose money to inflation, when you have only lost purchasing power and not actual principle. It's pretty funny that you think I don't understand what you're doing or that I don't understand basic math. I'm not reading your above diatribe and am done disussing something with someone who either can't understand the above paragraph, or is discussing in bad faith. |
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Posted: 5/8/2024 2:04:05 PM EDT
[Last Edit: KILLERB6]
[#45]
Quote HistoryOriginally Posted By brasscrossedrifles: What time zone are you in? I'm on EST. Its a little early here to be halfway into a 30 rack. Well, I guess its 5 O'Clock somewhere.   |
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Posted: 5/8/2024 2:22:11 PM EDT
[#46]
Quote HistoryOriginally Posted By KILLERB6: The time zone from 1984 to present where interest rates and inflation run 5% or less...as opposed to those "easy times" when they were as high as 20%. Ah, yes, the mid-late 70s. Maybe millennials will get off easy and this is just going to be our version of the 70s. (Extreme optimism) |
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Posted: 5/8/2024 2:26:49 PM EDT
[#47]
Quote HistoryOriginally Posted By Antisocial1: You've moved the goal post in this thread. Spidey mentioned a portfolio fluctuating below starting value and you said "show me the maths" and then went into an unrelated direction with 5% CDs and tried to conflate that with the "safe 4%" withdrawal rate...which comes from the Trinity study...which only dealt with stock/bond portfolios. Your CD example has nothing to do with a balanced portfolio not lasting 30 yrs and nothing to do with a "safe" 4% withdrawal rate. Absolutely nothing. Any braindead idiot knows you get all of the priciple back from CDs...this isn't the "gotcha" you seem to think it is. Also, it's common usage to say that you lose money to inflation, when you have only lost purchasing power and not actual principle. It's pretty funny that you think I don't understand what you're doing or that I don't understand basic math. I'm not reading your above diatribe and am done disussing something with someone who either can't understand the above paragraph, or is discussing in bad faith. It's pretty funny that you think a portfolio can't be structured to not run out of money in 30 years. Perhaps you should stick to beanie babies. Those are guaranteed to grow in value. We know you've read the example I provided and are just too afraid to address it.
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Posted: 5/8/2024 2:33:28 PM EDT
[Last Edit: Lou_Daks]
[#48]
Quote HistoryOriginally Posted By Middlelength: I understand why you are using CDs, but a 5% rate of return is pretty optimistic long term for fixed, short term, securities. In normal market years the rate of return for such securities is often between 2-4%, so you generally are going to have to have a mix of higher risk securities as well. I think most people that need a portfolio to last 30 + years have looked at the montecarlo simulators and realize how market dependent the withdrawal rates (3 vs 4) become. If you are sitting on a big enough pile of money, it may not matter, but a few bad market years, ESPECIALLY if those years coincide with the beginning of someone's retirement, can make the 4% rule pretty risky. I wish more people understood that all of this gets easier if you save money now. I didn't use 5% in my example, I used 4.1%. If you can't get 4.1%, I don't know what to say. Sequence of returns matters, esp. if you are heavily in stocks. For fixed income, SoR matters a whole lot less. That's what I intended to show, and I proved it using standard math - no tricks. It is possible to structure a conservative porfolio that eliminates the SoR risk. OF COURSE inflation matters. It always matters in a 30-year period, regardless of the type of portfolio. That's not the point. At. All. I was responding to a claim by Spidey07 that a portfolio balance will inevitably decline. It's just not true. Go back and read his post. |
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Posted: 5/8/2024 2:35:07 PM EDT
[#49]
Quote HistoryOriginally Posted By miseses: We do not have a market for houses, we have a command economy run by the fed and county development boards. Market implies voluntary trade. Instead prices are set violently through, amongst other things, government monetary policy. In fact my building permit makes it a criminal offense to even sell my house, since a single anecdote is your threshold for proof, I have now disputed your thesis. If we actually did have a 'market', I would agree it wouldn't be 'wrong.' The reason why it is looking so wrong is because it is not a market but rather a facade of a market. Financial claims & advice by someone too cheap to buy a $24 membership are always suspect. |
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Posted: 5/8/2024 2:43:15 PM EDT
[#50]
Quote HistoryOriginally Posted By Lou_Daks: Financial claims & advice by someone too cheap to buy a $24 membership are always suspect. A membership on this website is an example of something Dave Ramsey would tell you not to waste money on. |
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