Let’s start this week’s roundup with Ron’s post at The Wisdom Journal, Retirement Advice That Goes Against The Grain. Ron offers four tips, each of which, taken as a soundbite, sounds a little crazy. However, when you read Ron’s discussion of each bit of advice it paints a pretty sane picture of how to approach retirement planning. A nice read to start the week.
20 Something Finance’s GE Miller suggested you Calculate the “Total Cost of Homeownership” BEFORE Renting or Buying. As I read it, I thought how what became obvious over time to us older folk may not be on the mind of the young home buyer. Don’t get into a new purchase or rental without understanding the total cost. GE continues to put out some quality writing.
How many of you invest outside of retirement? Ninja asks this at his site Punch Debt in the Face. Once you’ve saved up that emergency fund and are handling your budget just fine, are you saving only in the retirement account, or other accounts as well?
Rick Ferri (whom I met last year, nice guy and interesting to talk to in person) explained why Splitting Growth And Value Leads To A Worse Return. Rick discussed how some advisors use an equal share of each, which struck me as silly as well. On the other hand, if one is prescient enough to choose the one that will outperform each year, there might be some extra money to be made. If your advisor has you in the Russell 1000 Growth and the Russell 1000 Value, show them Rick’s article and ask them to explain why you’re paying a higher expense than the plain Russell 1000.
The Reformed Broker, Joshua Brown, made The Case for Brazil, the World’s Most Hated Stock Market. His article started “Gun to my head – I had to pick a single non-US stock market to be invested in for the next ten years and I cannot touch the money in between, which one would I pick? I don’t even need to think twice about it, the answer is Brazil.” Pause. The next day, Josh posted What Happens When You Buy Brazil Down 20%? In this follow on discussion he offered some history, how the Brazilian market fared 6 months after falling 20%, and the numbers are impressive. Up 90% of the time with an average 30%+ gain. EWZ is the ETF I chose to use to invest in the Brazilian market. Josh’s site warns Nothing on this site should ever be considered to be advice, research or an invitation to buy or sell any securities, and I’d like to echo that. Personally, I think that we in the US can easily load up on US stocks, S&P ETFs, and miss the diversification the rest of the world can offer.
The Mighty Bargain Hunter asked 10-year mortgages: How low can you go? A great discussion, and the only red herring in the article is the ratio of interest to principal in the payment. You know, early on with a 30 year mortgage, the principal is a tiny part of the payment and it increases each and every month. John offers that there’s a good feeling when you start out with most of you payment going to principal. That may be, but not for me. My mortgage duration is tied to my target retirement date, if I were in my 20s or 30s, I’d be sitting on a brand new 30 year mortgage, and when inflation returns, I’d watch it devalue itself faster than I’m paying it off.