401K or cards?
amp0909
Posts: 81 ✭✭✭
With stocks taking a nose dive so far this year it is also affecting everyone's 401K. My question to everyone is if you could would you take all your money out of your 401K and buy high grade or raw vintage in any sport or keep your money in your 401K? Which do you think would have greater returns in 5-10 years?
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The hurdle rate is insane to start and you are also buying vintage after a multi hundred percent move. Buy bank preferred stock at 6% and I think you would win because chopping 30 to over 50 percent off the balance from taxes just leaves you with such a smaller balance to start that the returns would have to be exceptional. Remember when you go down 50% you have to go back 100% to break even.
401k all the way.
Retirement fund - check.
Hoard of delicious vintage - check.
Cash - yup.
I'd rather watch numbered ping pong balls in a blender.
I don't know enough about sports cards to invest in them. I wouldn't know which cards to buy to hold onto. Sure, we all know the big cards, but if you're investing in cards instead of a 401k you will need a good diversity that spans issues, years, players, condition, etc. Why not keep the 401k and invest in a small handful of those big cards?
Invest in tin foil. Looks like there will be a lot of demand.
HAH!
Then buy cards.
Always looking for Topps Salesman Samples, pre '51 unopened packs, E90-2, E91a, N690 Kalamazoo Bats, and T204 Square Frame Ramly's
Also, people forget that when you buy a high grade vintage card you start in the hole at least 10% due to the limitations of selling in the market. Lets say you buy a card today at auction for $2,000. Then you want to sell it tomorrow and the market for the card is unchanged...you'll be lucky to get $1,800 after selling costs. The card has to appreciate to about $2,250 before your "investment" has made you any money.
Work in progress - Unopened Racks/Cello/Wax with star power for Baseball, Football and Basketball
Collecting unopened 80's boxes and graded packs
I may be hoarding too much 80's junk wax but I like it!
Make an extra mortgage payment every year, pay extra principal on your mortgage every month, and always max out your retirement contribution. Never carry consumer debt.
Then buy cards.
+1, sage advice.
1988 Donruss Baseball
DO you know where I can find them?
Make an extra mortgage payment every year, pay extra principal on your mortgage every month, and always max out your retirement contribution. Never carry consumer debt.
Then buy cards.
This is the best advice I've ever seen on this forum.
1988 Donruss Baseball
This might be 2nd best.
MY SAYING is "NO one makes more money with my money than me." I like the odds better when I control the investment...not some broker feeding his best clients first.. Happens ALL the time.
True story from the stock market crash in the 80s era...................
I purchased a 52 Mantle Nm- MT for $3200. Held it for less than an hour and shipped to the other coast for $3500 plus shipping costs. I was young and happy with the profit. Buyer (another dealer) received card and said it was the best 52 mantle he had ever seen. Further, he said he'd have to get $10K to sell that card. A year or so later he called and left a message. I wasn't sure why he was calling. When he asked me to guess what he just sold....I realized he probably sold the Mantle. I asked ' Did you get $10 K for it?" He said na....he didn't have the heart to charge someone that much. He sold it for $9K. The buyer was a guy who was getting killed in the stock market and saw how much money is son was making with cards.
Granted this was the prime time to be in the card business. But what is that card worth today????
My saying applies AND another from my dad. IF you buy junk.....you own junk. HIGH GRADED RARE STUFF WILL HOLD VALUE BETTER THAN THE LATEST .300 hitter rookie card. Those clowns sign a big contract and become short lived .250 hitters. lol
Invest everything??? Absolutely not....play the market wisely and watch your investment closely...you bet. I've done it recently with high grade sets. Always CAME OUT ON THE PLUS SIDE.
Always CAME OUT ON THE PLUS SIDE.
This is a pretty amusing coming immediately after reading your 'BAD day for submissions' thread where you state "GOT KILLED $$$ wise on a couple better cards!!"
Break out cards were a gamble and experiment. What I have already adds up to more than I paid for the lot. Only a double I guess not a grand slam.
The advice about paying extra on your mortgage is not bad, but a little dated. At sub-4% interest rates, you should be beating that with money elsewhere. Was far more true when interest rates were higher. It's at least something that financial experts disagree on. The other things Griffins said (avoid CC debt, max retirement) are slam dunks. Cashing out your 401k for sports cards ... the opposite of a slam dunk. A slam donk?
There is nothing dated about this advice. Paying down a mortgage is debt elimination and you save permanent interest on each dollar you apply to the principle. Everyone is prone to doing dumb things with money and this is never dumb because you can't lose and overtime it acts as a savings account.
I make extra mortgage payments and love seeing the balance go down each month that you owe.
Make an extra mortgage payment every year, pay extra principal on your mortgage every month, and always max out your retirement contribution. Never carry consumer debt.
Then buy cards.
This is the best advice I've ever seen on this forum.
Good old Dave Ramsey advice and very solid - more folks should follow it. After that buy some cards!!
It is dated because it is far more true when mortgage interest rates are high than when they are at historic lows. If your money performs better in the market, you get the difference (say 5% vs 4% to be conservative) plus the tax break.
I didn't say it was a BAD idea to pay off your mortgage. I would image few have ever done it and thought to themselves, "what a tremendous mistake!" However, reasonable people disagree.
For example: this!
http://www.huffingtonpost.com/2012/08/30/mortgage-payments-why-doing-faster-doesnt-pay-off_n_1842499.html
You can read a lot more about it with a quick google search.
The other financial advice RE: high interest credit card debt and taking advantage of the benefits of early retirement planning are indisputable and shouldn't be in the same conversation.
Dpeck--nothing?
It is dated because it is far more true when mortgage interest rates are high than when they are at historic lows. If your money performs better in the market, you get the difference (say 5% vs 4% to be conservative) plus the tax break.
I didn't say it was a BAD idea to pay off your mortgage. I would image few have ever done it and thought to themselves, "what a tremendous mistake!" However, reasonable people disagree.
For example: this!
http://www.huffingtonpost.com/2012/08/30/mortgage-payments-why-doing-faster-doesnt-pay-off_n_1842499.html
You can read a lot more about it with a quick google search.
The other financial advice RE: high interest credit card debt and taking advantage of the benefits of early retirement planning are indisputable and shouldn't be in the same conversation.
I work in finance and trust me not every investment is a win. This potential arbitrage is just that. Potential arbitrage. In many cases arbitrage back fires but debt elimination never does. Sure in my case in theory I could beat 3.625% on my ten year mortgage but it is like buying a CD from myself and while not sexy I can't do something stupid with the money. Also as time goes by you have a paid off asset that can either limit the need for cash flow or generate it. Most people are prone to making mistakes with money whether it is losing it in the market, spending more then they should or finding themselves investing in a bad project like a restaurant so the small savings cost each year might not make you rich but it will never make you broke. Many like myself do not get a mortgage deduction because the interest isn't high enough to send me past the standard deduction so the potential tax break doesn't exist for me. I find it more wise for most to pay down asset backed debt because it is a no brainer and if the asset should fall you are always in an equity position. One of the best financial decisions I have ever made was shortening my mortgage and making extra payments as overtime you develop very solid equity as you rapidly attack the principle.
Just agree, man. I never said that it was a bad idea to pay off your mortgage. Just not right for a lot of people who would rather trust themselves to put their money in the place where it does the most for them, which was the initial premise of the whole conversation. It's really not controversial.
Debt elimination backfires when it forgoes better financial options. It's similar to why it is better to rent in some situations than own. The idea that this is rock-solid financial advice like "don't carry tons of high interest credit card debt" because either it works for *you* or because it is a widely-held article of faith propagated by folks who were paying 14% in 1984 is just wrong.
Just agree, man. I never said that it was a bad idea to pay off your mortgage. Just not right for a lot of people who would rather trust themselves to put their money in the place where it does the most for them, which was the initial premise of the whole conversation. It's really not controversial.
Paying off debt is better for more people then building equity alongside debt. Leverage is only good when things are rising. Keep in mind when you pay down things like mortgage debt that are asset backed you can borrow against them in the future if you are in a solid equity position which gives you financial flexibility. You wont find me agreeing because after working in finance for 15 years I have seen first hand financial reality and more conservative people generally win when it comes to finance. There are cases where someone is a serious entrepreneur and clearly modest interest rates can easily be eclipsed and increase returns exponentially because of leverage but this is the exception and not the rule
So, we do agree!
I've been struggling with the idea of paying my home off. I have a $315 mortgage payment and, I think, the interest rate is 3.7% (I know it's less than 4%). At first I was all about paying it off, then my dad said it would be better NOT to and to use that extra money elsewhere. He has several rental properties and was motivated to pay the mortgages off because of the high (but normal at the time) interest rates. Since he said that I've been stumped on what to do, so I've been saving, saving, saving.
That is a pretty small mortgage payment but with loans it is all just percentages and a relative issue. If you have been putting those funds into a cash equivalent account earning more then 0.60% it is uncommon so in a case like this there is still a spread of over 3.00%. Since mortgage payments are level you can easily quantify what your savings is and it is with after tax dollars. I have six years to go to payoff my condo and my rate is 3.625%. This means every dollar that goes to principle at this moment I save 21.75%. Find me an investment where you can risk free make this return for six years after tax. You can't. I look at each principle payment like buying a CD that matures at some point. The single greatest issue that retirees face is cash flow and having a house paid off reduces the amount of liquidity needed to finance retirement. Perhaps this isn't as big of an issue to someone in their 30's but having the option of turning a property into a cash flow generator and at the same time eliminating an out flow is a wonderful thing. Both of my cars are paid off at this point and it certainly makes things easier not having two car payments to send out every 15th. The good news is you are saving the funds so regardless which route you choose at least your balance sheet looks better.
1988 Donruss Baseball
DO you know where I can find them?
Hehe..I think they are still being made and sold at Walmart!
Work in progress - Unopened Racks/Cello/Wax with star power for Baseball, Football and Basketball
Collecting unopened 80's boxes and graded packs
I may be hoarding too much 80's junk wax but I like it!
Bowman Baseball -1948-1955
Fleer Baseball-1923, 1959-2007
Al
. My 401k is my most important asset by far and just because you are in a retirement account doesn't mean you have to be aggressive and risk substantial principle loss in the short run. I am 100% in bonds in my 401k and 36 so you don't have to simply go on a wild ride. If you have an employer match even if you put that cash in the money market you still will never find an investment where you can get 50%.
Agree that forced savings is the way to go because too many people get to the end of the month and find a bill or two that does not allow their best plans to succeed. Did you say you were 100% in bonds? I would like to hear the theory surrounding that move. Maybe if you were 60-70 years old, it at 36 don't you think that is way too conservative - does not seem to follow Buffett or Benjamin Graham.
The rationale for being in bonds is very simple. The market in my view became wildly disconnected from fundamentals a few years ago and I simply didn't want to risk my largest asset to the eventual decline. There is a big misconception that you can't make money in bonds. It couldn't be any further from the truth. Bonds obviously pay a coupon or interest payment and also move up and down in value. The price movements are predicated on two factors. Prevailing interest rates and credit risk. Most believe it is a simple math equation of interest rates go up and bond prices go down or vice versa. That is true for treasuries but not true for all other types of bonds. That said I became convinced and still am that interest rates can't rise much as the interest expense will cripple us and global economies have become addicted to low rates. Lower mortgage rates for example create more affordability and the ability for prices to be bid up and also in the case of automobiles a more affordable payment based on much higher purchase prices. I have been an outlier with this forecast as most thought interest rates on bonds would rise. Fortunately I was right and made 14.4% in 2014 and just under 5% last year. Clearly with the ten year at just over 2% the potential for capital appreciation is lower but if I am right and bond yields fall further you could easily make a nice return in the coming year. The obvious risk is that coupons are low so if rates move back to 2.50% you will be in a short term loss for certain as the bond prices will fall more then the coupon.
There are so many different schools of thought when it comes to employer sponsored retirement accounts. In my view it is less important to make money then it is to contribute because in my case my employer matches 7%. Last year for example I put in the $18,000 and then your employer if they match can do so up to a maximum of $260,000 in wages. Assuming one is able to completely max out their contribution you are in a situation where you are at just over 100% rate of return on your investment immediately. The other major issue is it becomes a lot harder to be a long term investor in risk assets as your balance gets larger. When you start out wild fluctuations really have little consequence good or bad. Once you have been investing for a number of years a 10% hit is a new luxury car and much harder to watch evaporate even if it is only temporary. I personally do not see the market moving up a great deal in the coming years and have no interest in a standard let it right strategy. My income is also at risk from a prolonged downturn and having my largest asset get killed at the same time just doesn't interest me.
The other extremely important issue with high quality bonds is they are what you call a self healing asset. For example lets say that the bond declines by 10%. You know as long as it doesn't default that within a few years based on coupon payments you will recoup your losses and much easier to stay invested. So many people say they aren't worried about price decline from investments until it comes. Once it has arrived the masses are prone to making adjustments that hurt them. Taking a slower approach with less draw down risk works for some people. Not everyone can stomach 30% declines. My primary goal is to always have the balance rising whether it from gains or from contributions.
How you invest in a 401k is up to you but the issue is just doing it and getting the match and building a pile of money for the long run.
I also would like to hear Dpeck's thoughts on bonds vs. stocks when you're in your 30s. I am 31 and overwhelmingly in stocks -.
31? At best you've been thru one downturn and not a full cycle. Don't worry, you'll complete that fairly soon I'm afraid. Until you've been thru a couple you have no idea what you're in for. Once you have you'll cling onto the equity in your house and your retirement funds. I hope you have some of that after conquering the S & P 500.
Always looking for Topps Salesman Samples, pre '51 unopened packs, E90-2, E91a, N690 Kalamazoo Bats, and T204 Square Frame Ramly's
(I really hate them right now!)
That said, I've been buying, selling and trading vintage packs for 40+ years now and I don't remember a time I actually sold a pack for less than I paid for it. As a matter of fact, I've bought the SAME pack more than once and still made a decent profit when I sold it the 2nd or 3rd time. I keep wondering if these old things are recession proof and I'm really starting to believe they are!
But, as strongly advised, diversification is key when considering good future investments and keeping your money in the 401K is still a GREAT idea.
I was just sharing a story with a collector buddy of mine telling him how a few years back, I was going to ONLY invest in vintage unopened product and stop putting funds into my ROTH IRA's. Well, my banker and friends discouraged me from investing in "children's" baseball cards and make manly investments in stocks and bonds!
(I really hate them right now!)
That said, I've been buying, selling and trading vintage packs for 40+ years now and I don't remember a time I actually sold a pack for less than I paid for it. As a matter of fact, I've bought the SAME pack more than once and still made a decent profit when I sold it the 2nd or 3rd time. I keep wondering if these old things are recession proof and I'm really starting to believe they are!
But, as strongly advised, diversification is key when considering good future investments and keeping your money in the 401K is still a GREAT idea.
With post tax dollars I would bet there are plenty of collectors who have done better on a percentage basis or in actual dollars in collectibles.
There are plenty of items that have out performed the market. Heck I bet every high grade Mantle card since 2000 has destroyed the returns of the stock market.
In 2001 a 1952 Topps PSA 8 Mantle was $29,000.
I've been VERY pleased with the performance of the majority of MY collectibles over the years.
Plus it's a FUN hobby! WIN WIN!!!