Better to rent than own atm? Pending interest hikes...

[Bad Boy Dazza]

I'm selling my house, and am worried that interest rates will start going thru the roof in the next few years under Obama and his cronies.  So I think I may not re-buy but rather rent.     

What do the other financially stable people here think?

[snx]

Diversify.

Over the long-term, nearly 100% of investment analysts/gurus will fail to outperform the market index. I'm talking over a 20 year term.

There will be years where they outperform, and years where they underperform. But the math is simple - you can't outperform the market in general over the long-term. It's too hard, the information needed is too great, and reaction time to opportunities is always too late once information on the opportunity becomes available (i.e. the principle of "once you know it's hot, so does everyone else with money, and the price just went up, effectively eroding your margin potential).

The safe bet? Index investing. If you're in this for the long-term.

Diversify your index investing with respect to global market capitalization. The usual 80/20 rule applies for young investors in stock/bonds. To further diversify (for the enterprising investor) requires some capital in real estate, and some in precious minerals (gold, silver, etc...).

The issue is that most young investors are over-invested in real-estate (i.e. 300K mortgage) with little to no equity in the market. Thus, they are not truly diversified.

Think of it this way: you wouldn't put 100% of your money into bonds (unless you're an idiot). So why over-weight yourself in a house? Usually, because a home is an emotional decision, and market investments can be more detached, for whatever reason.

Anyone who tells you to dump/not dump your house, doesn't know what they're talking about. Because if there truly is a market signal to dump in your town, everyone already knows it, and you'll get crushed on your selling price (free and efficient markets work like that). Likewise, if everyone says don't dump your house, you have to call into question what prompts them to say that? Do they have inside information that the local economy in your town will boom? That there's going to be a housing shortage that only they know about?

No one can tell you what to do, because your situation is hidden (you're anonymous).

I would only recommend (as would any wise broker) to you to diversify. That protects your dollar cost average over the long term from erosion in any one particular investment stream.

[Roger Bacon]

I'm selling my house, and am worried that interest rates will start going thru the roof in the next few years under Obama and his cronies.  So I think I may not re-buy but rather rent.     

What do the other financially stable people here think?

Real estate seems to have bottomed out here.  You should atlleast take a look at some of the once in a lifetime deals available right now.

[Bad Boy Dazza]

Thanks, solid sounding advice.

Diversify.

Over the long-term, nearly 100% of investment analysts/gurus will fail to outperform the market index. I'm talking over a 20 year term.

There will be years where they outperform, and years where they underperform. But the math is simple - you can't outperform the market in general over the long-term. It's too hard, the information needed is too great, and reaction time to opportunities is always too late once information on the opportunity becomes available (i.e. the principle of "once you know it's hot, so does everyone else with money, and the price just went up, effectively eroding your margin potential).

The safe bet? Index investing. If you're in this for the long-term.

Diversify your index investing with respect to global market capitalization. The usual 80/20 rule applies for young investors in stock/bonds. To further diversify (for the enterprising investor) requires some capital in real estate, and some in precious minerals (gold, silver, etc...).

The issue is that most young investors are over-invested in real-estate (i.e. 300K mortgage) with little to no equity in the market. Thus, they are not truly diversified.

Think of it this way: you wouldn't put 100% of your money into bonds (unless you're an idiot). So why over-weight yourself in a house? Usually, because a home is an emotional decision, and market investments can be more detached, for whatever reason.

Anyone who tells you to dump/not dump your house, doesn't know what they're talking about. Because if there truly is a market signal to dump in your town, everyone already knows it, and you'll get crushed on your selling price (free and efficient markets work like that). Likewise, if everyone says don't dump your house, you have to call into question what prompts them to say that? Do they have inside information that the local economy in your town will boom? That there's going to be a housing shortage that only they know about?

No one can tell you what to do, because your situation is hidden (you're anonymous).

I would only recommend (as would any wise broker) to you to diversify. That protects your dollar cost average over the long term from erosion in any one particular investment stream.

[Bad Boy Dazza]

I am in Australia, but the US meltdown will affect us here also for sure.

Real estate seems to have bottomed out here.  You should atlleast take a look at some of the once in a lifetime deals available right now.

[snx]

Thanks, solid sounding advice.

Here's a very good piece of advice most casual investors forget (from my good friend, who manages one of the largest investment houses in Canada):

It doesn't matter what happens to your investment...if it goes up or down. All that matters is what you paid when you got in, and what you got paid when you got out.

Think about that for home ownership.

Also, most people forget to include the lost monies on having an agent list the property, the taxes involved in selling (where applicable), the money spent on staging and improving the property to make it attractive, the double-mortgages some carry until the first property closes, lawyer fees, etc...When you do the actual P&L on home ownership, it can sometimes be a staggering drop versus what you think it is.

However, holding isn't always that sweet either. Most who buy a house put a lot of money into the place. When you weigh the financial appreciation of the property against the expenses of owning the investment (the house), one typically finds that what felt like a 5% compound annual growth rate is actually more like 1 or 2%, after expenses.

Most indexed market fund investments, net of brokerage house costs and management fees, can net far better than 1-2% CAGR over the long-term.

But still, don't let that dissuade you from diversifying away (or into) real estate. It's all about manageable diversification. 

[Bad Boy Dazza]

lmfao, what you mena by "owning", if you own it full out, you dont care about interest rates, bc they dont affect you.

sorry for the heads up , but having a mortgage is a far cry from owning the place.

Oh wtf, you know what I meant, it is an investment and when I sell I am expecting an excellent profit.

[Hulkotron]

Most getbiggers are experts in owning.

[FitnessFrenzy]

I rent.

[MB]

Oh wtf, you know what I meant, it is an investment and when I sell I am expecting an excellent profit.

Houses should not be treated as investments.  Save your money, pay cash, and don't be concerned with interest rates or resale value.  

[MORTALCOIL]

Real estate seems to be much more unstable in the US then in France. Here, you can't lose on the long term. Profit taxes will kill you though. I invested everything I could in real estate.

[Raymondo]

Houses should not be treated as investments.  Save your money, pay cash, and don't be concerned with interest rates or resale value.  

Yes, because saving up £200,000 to make that cash payment only takes four or five years  

[hrspwr1]

If you are just wanting a place to live then now is a good time to get a mortgage.

[MB]

Yes, because saving up £200,000 to make that cash payment only takes four or five years  

It may take 20 yrs, not everyone can afford a home.    

[Raymondo]

It may take 20 yrs, not everyone can afford a home.    

And in the meantime you're paying rent to some landlord paying off his mortgage.

[MORTALCOIL]

And in the meantime you're paying rent to some landlord paying off his mortgage.

This.

[MAXX]

Oh wtf, you know what I meant, it is an investment and when I sell I am expecting an excellent profit.

most people buys a house to live in it

i suppose you havn't payed for it in full but you have a mortage

[MB]

And in the meantime you're paying rent to some landlord paying off his mortgage.

If you consider property taxes, interest, maintenance, and possible declining value, it isn't a slam dunk to buy on time.  

[Raymondo]

If you consider property taxes, interest, maintenance, and possible declining value, it isn't a slam dunk to buy on time.  

Hardly the point I was making.

[Irongrip400]

If you consider property taxes, interest, maintenance, and possible declining value, it isn't a slam dunk to buy on time.  

Spoken like a man with poor credit who can't get a mortgage.  Sour grapes.

[monopoly19]

Better owning. You can get a 30 year fixed rate at 3% right now, it will probably never be that cheap again. I wish I could buy more property right now, over the long haul real estate will always go up.

[240 is Back]

isn't it crazy when a girl requests A2M out of nowhere? 

[MAXX]

Better owning. You can get a 30 year fixed rate at 3% right now, it will probably never be that cheap again. I wish I could buy more property right now, over the long haul real estate will always go up.

not true. real estate market is all about location. if you can predict which locations are going to attract higher income people and invest there before that boom then you're set. choose the wrong location then you're screwed

[Natural Man]

I am in Australia, but the US meltdown will affect us here also for sure.

First japan will collapse, then europe, then the US. The only goal of the US is to collapse last, after Japan and europe, but that's about it. Australia economy mostly depends of asia 's economy first and foremost. It means it will be hit hard sooner than north america.

[monopoly19]

not true. real estate market is all about location. if you can predict which locations are going to attract higher income people and invest there before that boom then you're set. choose the wrong location then you're screwed

I would venture a guess that 90% of all property, land, homes, condo's, etc, are worth more today than they were 20 years ago. Obviously if your a total idiot and buy in a terrible location your chances are much lower, however at this point it's your fault, not the markets.