What're you doing with your money in 2023? Or what do you recommend others do?

[0ddl0t]

Stocks: Corporate governance is a concern with index funds. You're not the owner of the companies' shares, the fund is, but they have little/no direct financial interest in taking the time to vote responsibly for matters put before shareholders. In recent years some index funds have even started pushing managements to make various "woke" changes even if those changes ultimately cost shareholders.

I still tell folks to invest in index funds because for 99.99% of people it is the best way to invest in stocks (and it requires no real thought). But I am concerned what may happen down the road if too many people follow that advice...

Bonds: I generally think of bonds as an investment people make once they already have enough money and just want to keep what they have. There have been short periods of crisis in which bonds have outperformed stocks, but over any long term (10-20 year time period) stocks have had far superior returns.

So aside from special situations (like being able to buy a distressed company's bonds for $0.30 on the dollar), I have no plans to invest in bonds until I'm 5 years away from total retirement at which point I'd only invest what I anticipate needing ~5 years at a time.

Real Estate: I've invested less cash into real estate than any other investment, yet my real estate holdings are worth 3x everything else. The difference is I buy stocks with 100% of my money, yet bought real estate with only 3.5-20% of my money. Leverage makes for outsized returns, but it also adds risk - I don't have to keep paying anything to hold on to my stocks, but I have to keep paying mortgages (& tax/insurance) even when I'm out of work or my tenants aren't paying.

To lower that risk, I try very hard to ensure my real estate pays for itself - that it cash flows. So rather than buying a nice house for myself and hoping it'll be worth more in 20 years, I tend to buy low end rentals whose current rent should pay the purchase price of the property in 10 years or so (preferably less). I still have maintenance, taxes, & insurance so it probably won't really pay for itself for 15-30 years, but that number plummets when we have inflation (I can raise rent but my mortgage stays the same).

My word of caution for folks like @TGS who are betting on continued price appreciation is to be aware that many localities - even some bustling metropolises - lose value. If you bought property in Detroit or Pittsburgh in 1950, you had every reason to believe it would appreciate. This Seattle billboard said it all after the "Boeing Bust" in 1971



Seattle eventually rebounded thanks to Microsoft and then Amazon. Detroit & Pittsburgh still haven't. That doesn't mean you should throw away money on rent if purchasing a house will cost you less. I just would be very leary about assuming a specific house will be worth more in the future (especially inflation adjusted).

PS: I'm currently building an ADU to turn my current money-losing personal residence into a money neutral duplex. Why pay the mortgage when you can so readily find tenants to do that for you?

Gold/Crypto/ammo/non productive assets: I consider these speculation, not investments. Maybe they go up, maybe they go down, maybe they just cost you a little each month to hold/protect. But the underlying investment itself doesn't create anything unlike stock in a company, interest on a bond, or rent from real estate.

[TGS]

My word of caution for folks like @TGS who are betting on continued price appreciation is to be aware that many localities - even some bustling metropolises - lose value. If you bought property in Detroit or Pittsburgh in 1950, you had every reason to believe it would appreciate. This Seattle billboard said it all after the "Boeing Bust" in 1971



Seattle eventually rebounded thanks to Microsoft and then Amazon. Detroit & Pittsburgh still haven't. That doesn't mean you should throw away money on rent if purchasing a house will cost you less. I just would be very leary about assuming a specific house will be worth more in the future (especially inflation adjusted).

That's wasn't really what I was saying. I actually bought my current place knowing that it won't appreciate much. Thing is, once it's paid off, it's a huge money generator. Ergo, it's an investment. My girlfriend's condo going up for rent is also an investment...like you said, why sell it when someone will pay the mortgage for you? Then, when it's paid off we can either keep it as a cash cow for a steady stream of money, or we can sell it and use the proceeds for something else...proceeds that's we only paid a small amount of money to earn, since someone else paid the mortgage. It's not a domicile for us, it's just an investment.

The phrase, "A home should be a domicile, not an investment" caught my ear because it's one of those common tropes recited like a bible verse by people to justify long term renting or against the idea of landlording, and we are clearly on the winning end with someone paying the mortgage for us, as you pointed out in your own situation. I think we got clays point cleared so there's no need to rehash that.

As you detailed, real estate can be a fantastic investment because you're not actually paying for it to "mature", if you will.

[blues]

I don't consider the value of my home when I total up our net worth. (Of course I have an idea of what my home is worth but I don't use it in the calculation.) I only consider how much and how long...and frankly, if it weren't for the habit of saving and investing, I'd have quit worrying about it altogether.


There's more than one way to skin a cat, and many roads that lead to one's ultimate destination.

My two cents on a topic with no one right answer.

[Borderland]

Real estate prices are dropping like a rock around here. If you traded a year ago you might be OK, but some first time buyers are losers in this market and will be for awhile.

I know, low interest rates, but losing 3-4% a year on the value of that investment would worry me. Might be 2008 all over again with people just walking away from their mortgage.

[MickAK]

I think we're entering into unchartered territory. I'm not sure how much the accumulated wisdom of the last century is going to apply. Couple things that should:

Gold isn't for making money. It's for keeping money. It's unlikely to keep up with inflation exactly but it's also unlikely to turn into bubble gum.

If you have a business or can handle running one investing in your business is going to beat the crap out of any other return. Just don't get romantic.

Stress is currency. Exercise, good diet and honest work can build up your stress reserves. You can't do anything without depleting them. Use stress more wisely than money.

As far as the line goes up forever and the index fund never ends people, Japan would disagree. They're not a post apocalyptic hellscape, line just didn't go up.

[shootist26]

As far as the line goes up forever and the index fund never ends people, Japan would disagree. They're not a post apocalyptic hellscape, line just didn't go up.

https://www.youtube.com/watch?v=Jh9Gn58r9Fw

10:45. The Japan analogy is often repeated but there is some important context behind it. Buy and hold index funds diversified across both geographical and asset class types. My equities portfolio consists of US large cap, international developed markets, and US small cap value funds

[0ddl0t]

Gold isn't for making money. It's for keeping money. It's unlikely to keep up with inflation exactly but it's also unlikely to turn into bubble gum.

Gold has never had universal value. Western civilizations valued it because it could be easily formed into coins/jewelry and was uncommon, but not rare enough that it couldn't regularly be used as currency. Still, silver was more rare & valuable than gold in ancient Egypt (until Cleopatra). China primarily used copper until adopting paper money, though they did use gold for jewelry and within the last 100 years as a foreign exchange currency. But even as jewelry, gold was less valuable than Jade. Russia primarily used furs as currency until foreign trade expanded around 1000 AD.

Aside from the Aztecs, few native Americans valued gold. Wampum (shells) was preferred by most (the isle of Manhattan was purchased with ~$25 worth of beads & wampum).

Worldwide ~80% of gold is ornamental (although the US uses ~33% of its gold for electronics). That means it is primarily valuable because people think its valuable - fundamentally not that different from bitcoin & NFTs.

[MickAK]

Aside from the Aztecs, few native Americans valued gold. Wampum (shells) was preferred by most (the isle of Manhattan was purchased with ~$25 worth of beads & wampum).

Well I got plenty of shells if it comes to that.

[Andy T]

I formative, but doesn’t necessarily make me feel better.

He talks about ETFs continue to become a greater portion of the market and how TODAY it’s not a problem but also all combined is what gives me cause for pause.

Interesting point though that if ETFs start taking over, manager will move to individual stocks.

On a related note, for those primarily (or so,let.) in index funds, which ones?

ETFs:
VGT - for tech
VOO - SP500 Total market index

I also have legacy Mutual Funds:
VTSAX
VIMAX
VFIAX
VSIAX

[Borderland]

Six month T bills at 5 percent are very attractive, for yield and security.

I have some money in a balanced fund that is struggling but it's starting to come back. They're about 40% in bonds. They always maintain a 60% position in equities which is getting hammered.

I just purchased 50K of these T bills based on a money managers suggestion. I won't be able to do that well in my fund this year so took the leap.

My theory is the fed is looking for a short term loan to shore up some immediate cash flow problems which doesn't sound good but if they want my money that bad I'll loan it to them for 6 months. I'm not seeing any better deals out there with almost zero risk. As Blues says,

if the U.S. defaults, we're all going to be in the same deep hole no matter where your money is invested.