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> 10 years go by, alice paid off 100k of the 200k loan, house is still worth 200k, bob has 100k of stocks and Charlie has 100k If we're talking dollars, then i

> 10 years go by, alice paid off 100k of the 200k loan, house is still worth 200k, bob has 100k of stocks and Charlie has 100k If we're talking dollars, then it would be incredibly unwise to save them. The very fact that the fed targets some level of inflation at all makes this incredibly unwise. Housing would never be worth just 200k 10 years later as long as population is increasing and the dollar inflating. Stonks are stonks. They're fine, but they don't provide the (at least) two fold benefit of buying a house in American society. 1). You pay a high cost for housing either way--might as well have _some_ of it go toward principal. 2). A mortgage allows you to highly leverage an appreciating asset against a depreciating dollar. The reliance on the state's pension scheme is also terrifying as the schemes tend to increase (if at all) under the inflation of true cost of living. All that said, I have a mortgage and stonks and crypto (metals soon), but I'll never hold more dollars than I need for a month (I have credit cards if it really came to it.) Edit: Why downvote? If you disagree, please say why.

Clubber 5y ago
This is correct. Ever since the US allowed consumer banks and commercial banks to merge, savings rate is usually less than a point, if that. Putting money in a savings account is actually losing value at the rate of inflation - interest. Inflation is usually around 2-3%, interest is a point or less. (last time I checked). I think the downvote was the comment wasn't entirely relevant to what the OP was trying to demonstrate and might have gotten into the weeds a bit, but I don't know why people downvote. Who knows, it could have been a mis-click. Just say what you want to say, downvotes be damned.
- reedjosh 5y ago
  And a typical 30yr mortgage rate is ~3% right now. https://www.zillow.com/refinance/ https://www.zillow.com/refinance/ > gotten into the weeds a bit Fair > downvotes be damned. Good advice.
ska 5y ago
The US has unusually high incentives & subsidies for home ownership, so it is a pretty strong contender. More generally though, home ownership vs. renting is not always a clear win. Agree savings accounts are useless these days.
dmoy 5y ago
The general point about cash losing money to inflation is spot on, but: > Why downvote? If you disagree, please say why. Sure, so > Stonks are stonks. They're fine, but they don't provide the (at least) two fold benefit of buying a house in American society. If you look at averages (across multiple areas, over many decades), you get: * stonks yield somewhere around 6% above inflation (so 9-10% before inflation). * houses yield somewhere around 1% above inflation, after including all the other random incentives plus taxes and upkeep costs, (not including multi family rental properties, which is a different matter) There are localities in which houses do much better (say the bay area), and there are localities in which houses do much worse (Detroit). But on average, it's a massive opportunity cost vs investing in equities. Which is fine, because there's other benefits to owning a house, like not having to move if someone jacks up your rent. While we're at it, other reasons for downvotes may include: > metals soon These yield also ~1% above inflation > I'll never hold more dollars than I need for a month (I have credit cards if it really came to it.) In 2008, the banks slashed my credit to <10% of what it was in 2007. Don't rely on credit cards for emergencies. Please hold more than 1 month in savings.
- reedjosh 5y ago
  > * houses yield somewhere around 1% above inflation But buying a house is the only way I can leverage such a massive amount and I have to have housing anyway. It also fixes my housing costs in contrast to renting. Further, I can sell my house and take gains without paying taxes on the gains. I can't do that with stocks. > Don't rely on credit cards for emergencies. I'll also be able to sell metals/stonks/cryptos if need be, but overall I'm just not risk adverse. If I end up selling to get by and lose some, I see that as just making up for what I would have already lost by holding too much cash.
  - dmoy 5y ago
    I should note that the 90% credit drop also coincided at a time when my investments crashed by 50%+, which would have been an extremely suboptimal time to pull out money. That would have wiped out like 10 years of growth. I strongly, strongly encourage you to put aside at least 3 to 6 months' worth of expenses outside of risky investments.
AdrianB1 5y ago
Because an example was given to illustrate a point and you are picking on it in a direction that has nothing to do with the discussion and the example. You took the spirit out of the example and made an analysis of the letters, colors and font - borderline trolling.
- reedjosh 5y ago
  Sure, I was just saying to work the system as best you can and describing what I do in the US.

Clubber 5y ago

This is correct. Ever since the US allowed consumer banks and commercial banks to merge, savings rate is usually less than a point, if that. Putting money in a savings account is actually losing value at the rate of inflation - interest. Inflation is usually around 2-3%, interest is a point or less. (last time I checked). I think the downvote was the comment wasn't entirely relevant to what the OP was trying to demonstrate and might have gotten into the weeds a bit, but I don't know why people downvote. Who knows, it could have been a mis-click. Just say what you want to say, downvotes be damned.

reedjosh 5y ago
And a typical 30yr mortgage rate is ~3% right now. https://www.zillow.com/refinance/ https://www.zillow.com/refinance/ > gotten into the weeds a bit Fair > downvotes be damned. Good advice.

ska 5y ago

The US has unusually high incentives & subsidies for home ownership, so it is a pretty strong contender. More generally though, home ownership vs. renting is not always a clear win. Agree savings accounts are useless these days.

dmoy 5y ago

The general point about cash losing money to inflation is spot on, but: > Why downvote? If you disagree, please say why. Sure, so > Stonks are stonks. They're fine, but they don't provide the (at least) two fold benefit of buying a house in American society. If you look at averages (across multiple areas, over many decades), you get: * stonks yield somewhere around 6% above inflation (so 9-10% before inflation). * houses yield somewhere around 1% above inflation, after including all the other random incentives plus taxes and upkeep costs, (not including multi family rental properties, which is a different matter) There are localities in which houses do much better (say the bay area), and there are localities in which houses do much worse (Detroit). But on average, it's a massive opportunity cost vs investing in equities. Which is fine, because there's other benefits to owning a house, like not having to move if someone jacks up your rent. While we're at it, other reasons for downvotes may include: > metals soon These yield also ~1% above inflation > I'll never hold more dollars than I need for a month (I have credit cards if it really came to it.) In 2008, the banks slashed my credit to <10% of what it was in 2007. Don't rely on credit cards for emergencies. Please hold more than 1 month in savings.

reedjosh 5y ago
> * houses yield somewhere around 1% above inflation But buying a house is the only way I can leverage such a massive amount and I have to have housing anyway. It also fixes my housing costs in contrast to renting. Further, I can sell my house and take gains without paying taxes on the gains. I can't do that with stocks. > Don't rely on credit cards for emergencies. I'll also be able to sell metals/stonks/cryptos if need be, but overall I'm just not risk adverse. If I end up selling to get by and lose some, I see that as just making up for what I would have already lost by holding too much cash.
- dmoy 5y ago
  I should note that the 90% credit drop also coincided at a time when my investments crashed by 50%+, which would have been an extremely suboptimal time to pull out money. That would have wiped out like 10 years of growth. I strongly, strongly encourage you to put aside at least 3 to 6 months' worth of expenses outside of risky investments.

AdrianB1 5y ago

Because an example was given to illustrate a point and you are picking on it in a direction that has nothing to do with the discussion and the example. You took the spirit out of the example and made an analysis of the letters, colors and font - borderline trolling.

reedjosh 5y ago
Sure, I was just saying to work the system as best you can and describing what I do in the US.