Miguel Floriano ya definitely possible to occasionally get 20, 50, 100+ returns, but unfortunately you can’t do it consistently over decades nor can you guarantee it (which is how I interpreted the advice the caller was getting from their friend). I’m a big fan of research :)
That person is stupid in saying 20%, but the idea of not buying a house and put money in stock market is far from stupid. You get 10-12% in market and a house loan is 2-3%. Why on earth will you buy house on cash and not put in market?
eh...i like watching my money grow fast than 3% a year. losing money never gave me peace of mind. my peace of mind comes from knowing that i could pay off my house at anytime i want, or invest in whatever i want without having to sell my house.
Dave relies on average rate of return which is very misleading. An investment that increases 100% one year and then decreases 50% the next has a 25% average rate of return despite no actual return. Average actual compounded return is more like 7%.
I am constantly amazed at Ponzi schemes that rake in lots of gullible people every year with promises of high rates of return, high enough that should peg the suspicion meter of folks, yet the "victims" line up for some of the action. Eventually, they lose their money, or maybe eventually recover a few cents on the dollar. Greed in investors is the principal reason these folks get fleeced. As the "rate of return" rises, the risk of loss multiplies. How lucky do you feel?
Dave is way off here. First of all the guy says he bought a business for 280k and is selling it for 600k. He then says he has 60k in debt. 600 - 280 - 60 = 260k, and thats without paying taxes on that, so take a third of that away and you are left with 170k. Dave's response is "it sounds like you have 400-500k" uh what? Putting that 160k in a mutual fund will most definitely return more than a house that generally appreciates a little more than inflation even with rent increases included. Also it completely depends on the interest rate of the debt. It may actually make more sense to pay the debt off slower if the interest rate is really low.
There are advantages and disadvantages to each choice. If you buy a house, you have the advantage that you control the property, and there is no middleman skimming profit from your ownership. The disadvantage is that it is the ultimate in non-diversification. You are buying a single plot of land with a single building in a specific location, and that can turn out to be very good, or a serious mistake. If you put your money into a total stock market index fund, you have the ultimate in diversification of your investment. You are diversified across companies, industries, and locations. But you have many middlemen all of whom are skimming little slices of profit from each enterprise.
Marc Donvito True but the dude is renting and needs a place to live anyway. He can always start investing after buying a house, I am sure this is not the only investment he is going to do in his entire life.
Also, instead of buying the house in cash why not take a loan @ 2-3% and rest put in index fund where you get 10-12% anyway! It is stupid decision to pay off mortgage which is only 2-3% and in market you get 10-12% easily and more if you know how to pick stocks (though not recommended for new comers)
Owning a home free & clear gives you a place to live with little bills & peace of mind. I can travel & know I have a homebase. No debt, no mortgage, no rent. I'm truly in control of all my income now, it's so freeing.
Excellent- congratulations!!!! I wish there were more women like you. I’m in the same boat, semi retired at 49. Home paid in full, no credit debt and a solid 7 figures in investments. It’s nice to hear I’m not fishing in a lake with no fish in it.
With mortgage rates at 3% and stocks at 12% it seems like a no brainer to just borrow the money for that dirt cheap rate and invest what you would have paid in cash for the house in the stock market instead.
Not to mention the tax advantages of a mortgage. The interest is tax deductible, and you pay it at the highest earning time in your life. You pay capital gains taxes on that mutual fund 11%, and it’s far from guaranteed. Up to $500k in profit on real estate sales is tax free. And all of this is academic because in 15 years it’s going to cost 4-5k to rent a bedroom in any major city. And there won’t be a house under a million dollars within an hour of them.
That person is not just stupid. That person they spoke to is flat out greedy. All they’re trying to do is make money off of them. Unbelievable what stock brokers try and pull to convince people to invest their money. Use your heads, people. It’s not worth investing if you have debts and no savings account.
I strongly disagree with Ramsey's philosophy on debt. I think debt is good because it helps you save on opportunity cost. Stocks increase at a much higher rate than your mortgage interest rate so it's miles beyond simply making up for debt. Depending on the range of rents in the area, you could probably even do better renting a apartment and putting your savings in stocks than locking up all your money in a downpayment for a house. You just have to compare the rent, mortgage, and stock rates to see what's right for YOUR situation. You can't just rely on hard rules like "Buy a house instead of putting it in stocks" or "Rent is a waste of money", you have to think critically about YOUR circumstances to see what would make YOU the most money.
I might eventually regret this but I don't want a house. I like renting an apartment in downtown so I can walk to nice places , and have a quick commute to any job I'd want in the area. I don't like the idea of having to settle in a house far away from the bus lines, and having to worry about appliances, security, etc.
Owning a home in certain situations & cities can be the worst investment. I sold my home & rent again. I'm in no hurry to buy again. Between HOA fees, warranty, insurance, up keep & God forbid repairs & renovations, it's not saving you anything in certain situations. You do you.
You won't regret it if you have your savings invested in a good stock instead of buying a house. The main reason people end up broke from not buying a house is because they don't invest their savings in stocks to make capital which is a huge waste. Too few people know about stocks and that is really hurting them financially. They think buying a house is the only way to build capital when it isn't.
I would like to think buying a home cash would be a great bet. Lol “that person is stupid”. 😂. 20%. On $200,000! That guy was probably thinking about his commission when he pitched it to the guy.
Passive investing will not get you an annual return over 10 percent. And considering he very likely will want to touch the money in 3 to 5 years, he will only realize 4 percent per year at best. The question is how much risk you are willing to take on, and the market itself is risky at its all time high right now. Invest if you will be active in your investments. Use the money for equity in property if not.
Buy a house. Pay for the whole thing right away, then you have a home of your own and don’t have payments on it, and you can definitely think about investing
@@pkal244 I love how all the city dwellers want to talk down about "low paying jobs" while they live in a city where they can't afford to buy anything bigger than a janitors closet. If you can't afford a house where you live, your job isn't a high paying job. People like that just like the bragging rights of telling people what their gross income is. Big freakin' deal, you make 6 figures. I would rather make $80k in the midwest and live in a 3 bed/3 bath on my half acre with a nice fenced yard and a 2 car garage than make $160k a year and live in a glorified cubicle where my dog and kids need to take an elevator and a bus ride before they can play outside.
Don't understand why Dave would want him to use the rest of his capital to buy 1 house! I don't think a house is a good investment. That is far from diversifying. He should invest it with an investment banker that has a good track record. Thats it. And 20% a year is achievable for sure, but not using Mutual Funds!
There are massive advantages to investing it over real estate in this instance simply because it is a large lump sum. Time is such an important factor. The compounding on a sum that large will far out weigh profits from a real estate purchase (baring blackswans like covid)
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got talking about investment and money. I started investing with $120k and in the first 2 months , my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and gets more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family...
I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second daughter. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks.
@@BintuDelacroix Quitting may not be the best approach if you ask me. This is where an AI comes into the picture. I barely have time to trade myself as my job swallows up most of my time. *MARGARET MOLLI ALVEY* , a licensed fiduciary whom has made me over 5 figures in profit in less than seven months, handles my investments. I could leave you a lead if you need help.
Honestly! Debt is good because it helps you save on opportunity cost. Stocks increase at a much higher rate than your mortgage interest rate so it's miles beyond simply making up for debt. Depending on the range of rents in the area, you could probably even do better renting a apartment and putting your savings in stocks than locking up all your money in a downpayment. You just have to compare the rent, mortgage, and stock rates to see what's right for YOUR situation. You can't just rely on hard rules like "Buy a house instead of putting it in stocks" or "Rent is a waste of money", you have to think critically about YOUR circumstances to see what would make YOU the most money.
Since I have been selling online since the age of 14. I've learned how to buy low sell high on ebay/amazon, mobile apps, forums,etc so I would definitely take 200k, but just use 50k and turn that into 6 figures annually as an additional income. The only jobs i've ever been able to get only pay max $400-$500 a month, but on the internet I reign supreme.
@@Stormy_Dawn Who said I was rich? It depends on what is selling well at the moment. You have to keep up with the times, or fall apart. You have to factor in what is over saturated as well, because the more people selling the same thing, the lower your profits will be. No one is going to tell what they sell for "free", and have their business sabotaged, nor where they get their products from.
@@MisterUrbanWorld you are saying that you can essentially take 50k & turn it into a 6 figure income...yearly. It's all relative but to me 6 figures each year is rich.
You guys...this is easy & this world of online flipping isn't as profitable anymore because EVERYONE & their grandmother is doing it. They buy from wish, Ali Express, wholesale through companies & become a "drop shipper" for top 10 items selling on ebay & Amazon. Don't spend a dime on a program to teach you how to do it. There are FREE videos on youtube. But, there are a lot of draw backs & anyone working minimum wage in america will clear a grand, so not sure what his struggles are with working.
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@@Lourd-Bab However, if you do not have access to a professional like Clementina Abate Russo, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments.
Who said you can’t have a relationship with a broker at Schwab or even pay for a management fee with a consultant at schwab ? Or invest 25K and get a CFP and a rob advised portfolio tailored for you at schwab ?
Buying a house is an investment. All of the money that you might be paying now for rent will turn into money invested into equity of a house. Just have to compare that equity to any interest that you may earn from investment. At average of 8% return a year, 200K would give you 16k interest per year. Then multiply the monthly payment on a 200k house by 12 and compare the two. But at the same time, owning your own house gives you freedoms and piece of mind, not to mention that you can improve it for your own comfort or to simply raise the value.
not if you are renting a cheap place to stay if you are signle/couple, the house tax payment/insurance/utilities/etc that you will never get back, will cover your yearly rent without any liabilities to worry about.
Not really my friend. If you’re not getting a rental from the house, or the house doesn’t bring money into your pocket somehow, then it’s not an investment, but a liability. Investment is something that brings money to your portfolio or creates cash flow. What takes money out of your pocket is a liability. There’s a big difference between these two
It could Work with the stock and you get more you have another 400K in Back up if the Stock Does not well. Even 6% Per Year Pays for your Credit and then you have still the 200K left. Second House would be the Best thing for earnings but great for safety. Pay the Credit just removes your 200K.
I need similar advice I had enough for a 20% down payment on a house I was gna rent out but I decided to put most of my money in etf and safe blue chip stocks that pay dividends. I wanted to get my dividend income up before I dived into real estate investing good idea? Or should I have done the opposite
Not sure if you are aware, that for a company to pay their dividend, the stock drops on ex dividend day the same amount as the dividend distribution. Many times you wouldn't notice it because the share price may go up that day because the market as a whole, that sector or even that stock happened to go up. If you are looking at accumulating assets, and don't need the yield to live on, you may be better to focus on total return, which is growth, capital gain & yield.
@Anne Day There are three philosophies regarding dividends, and they are all good depending on your own situation. One, probably more for the less experienced investor in the accumulation stage, is to simply let the dividends paid, continue to buy more of the same stock. Another, which I use, is to take the dividend payments in cash & use to purchase more shares of whatever stock in my portfolio is cheap at that time. The third option is for retirees, to collect the dividends in cash to use for everyday living expenses. They all work fine, and I have used the first two methods in the past & will use the third in retirement.
Anne Day Totally agree. Think long term, especially for young investors. As Albert Einstein famously called compound inter “ the eighth wonder of the world, those who understand it make it and those who don’t pay it”
A house is nice if you're starting a family, but kindof a net negative otherwise. You now need to spend time on lawn mowing, snow blowing, gutter cleaning, etc, plus purchase and maintain all of these machines. Regular maintenance will run ya 1-3% of your home's value every year. Roof, basement, driveway, etc. All these things consume your time and energy too. On top of all that you're paying property taxes and all utilities, and that's without mortgage payments. You could rent a townhome or a duplex in a normal city(not NY or LA lol), only pay water and electric, have a landlord that mows the lawn etc, regularly invest in the S&P500, and you'd STILL be better off financially, time and energy, than buying a house!
Dave is wrong here , this guy should definitely pay off the debt and invest the rest of his money reason being , once he pays off this house he’s going to owe 8-10 k a year in taxes , he will have to spend another 3-4K in up keep , he’s going to have grass to cut snow to shovel and the worst part about the entire idea none of these expenses are deductible because this property is not a investment property!!! Dave means well but he needs to learn who his audience is , not everyone out there falls under his lineage of financial advice
One more example that no one knows what will be in the market. Check the price history for Charles Schwab now 4 years later. It went from 32 to 64 in that time and toped in 2022 at price of 95usd. So he would get his 100% return in 4 years or 170% if he would sell at all time high in two years also get dividends from it.
Since Joe is renting, first thing to do is just buy a house cash, that is a form of investment which will almost guarantee great returns over long term anywhere especially in New York unless there is some nuclear bomb explosion or Tsunami wipes entire state. This is a better advice because Joe needs place to live anyway, so money saved on rent, money saved on interest and value appreciation all lead to a better investment rather than renting and throwing money on mutual funds where no one is going to give him more than 10% average.
People will get all hung up on the "stupid 20%" but at the same time feel very confident about a 6% compounded annual growth rate. Plot twist: BOTH are EQUALLY STUPID if the associated risk is not quantitatively defined. In fact, the 6% might even be riskier for all you know. Returns are not performance. Only expectancy is.
I don’t know which advice was worse, his friend’s 20% or Dave’s 0% (buying a house, a liability, cash). Why doesn’t Dave advise people to invest in real estate? The caller should buy investment properties which would pay for his house. That, my friends, is a faster way to becoming a millionaire.
My grandpa is a self made millionaire ($50M) and a stock broker his whole life and says the market average is 7% So which millionaire is right? Is it 12% or 7%?
The long term market average is around 10%. Your grandpa may be referring to the return after inflation and fees. Keep in mind though, given the run we have been on since 2008, returns are likely to be 5%-6% going forward. A crash that brings values down substantially would put us back on track for 10% returns going forward.
@@Sesshyru with a 250k house your are still paying close to $1000 a month in taxes and other fees not to mention maintenance so take your condescending question elsewhere
How can you pay RENT with $500k in cash? if you don't want to invest all that money in buying a house in cash, get a mortgage. We are dumb enough to still waste our money in Rent. So waste your money in a property that is at least under your name. I would rent part of my house and have someone pay for my mortgage. Never invest in something you don't have a Ph in, plain simple. No one cares about our money and investment than YOU!!!!!!!
Crypto is risky as many would say but I think the actual risk in Crypto is not investing, buying the capitulation isn't a tough call, but it is a very tough call to figure out what to do aside holding. I remember when I just got into crypto back in 2019 but later in 2020 I ended up selling it because I was dumb and I didn't understand it. I studied and learned and now I know how it works. Got back into crypto early in 2023 with 10k and I’m up with 128k in a short period of time
How can one start,most times people don't know where to start when it comes to crypto. But it would be great if you can provide proper guidance on steps to follow please
As a beginner investor, it’s essential for you to have a mentor to keep you accountable. Myself, I’m guided by Alex Gomez. A widely known crypto consultant
Dave doesn't really teach you how to make money he just wants you to be debt-free.But if you're smart with leveraging debt and making that debt make you money that's not a bad thing.
*I think this is a tough question, cause some have made a good argument for investing in lieu of home purchase(sidenote: obviously pay off the debt in full) but I'd say that Dave gave sound advice* 💪🌚
Calling people dumb is weak and unnecessary. Buying a house is no more of a surefire or bad investment than a mutual fund. "You friends dumb, me friend clever". Really, Dave?
I get a feeling this guys not only going to take his friends advice and use all the money to invest rather than pay off the debt first, but somehow he’s going to get talked into investing 100k of his money into bitcoins
Do both if you are a disciplined person! Get a mortgage and then invest the cash. You will make 3-4% on the capital after paying the mortgage. *Markets are unpredictable and if you are the kinda person who gets nervous on the first dip then just buy the house with cash.*
200k invested in the s&p would yield him 11% out of Dave’s own mouth. That’s 22k. That’s a 3rd of his debt being paid with none of his principle investment. How’s that dumb?
I have friends who get excited saying that their finance guy is getting them 6-7% a year return. I do my own investments. I tell them that I would fire them if that is all they got for me. Of course I get that puzzled look of what??? I average 10-14% a year. I actively watch my investments. I mostly invest in medical mutual funds. I also have made an absolute killing off of Amazon. I bought in around 1845. It's up around 3100 right now.
I wonder how Dave makes his money from, and how people listen to him(if there is) Because I never take his advice from him about investing my hard working money into something I know for sure that I will go bankrupt.
100% invest in stocks if you doubt. But only index fund wins long term. With a house your risk is tight to a house, the repair/maintenance, interest rate, even geographically to a city, neighborhood and street!
I don’t know about that... I’m long on many stocks and with drips I’ve gone from 200k saved to 1.8 mill saved in 15 years. I earn over 40k in dividends. I also have a couple ETFs, and Mutual Funds but the way they rebalance, they never seem to give a consistent return. My stocks average over 18% annual (with the drip). My mutual funds around 13% with dividends reinvesting.
@@retiredmanager510 I love your username! I have more of these stocks knowledge built in my vlogs as well usually.. but to come to the point: 10% on average plus dividends and you can sell anytime. Try this with a property
@@retiredmanager510 Getting the First Million and investing it would make any Person able to have a wealthy life. Most get to 100K then Slowly to 200K and Maby if they are Lucky 300K in under 20 Years.
Naw, no house. Thats so 1960's. No need to tie yourself down to one location. The guy didn't seem to want to settle either. If i stock market gives 10% but not guaranteed its useless. You coulf invest in foreign banks for 10%, and they have same fdic, but their region.
WOW. A house is a type of investment. You don't need to live in that house. You can rent it, flip it, fix it and hold it for future. This year a purchased a foreclosed for 80k, invested 95k in fixing it, sold it for 270k recently. I did lots of the work didn't required a licensed professional such as Electrician, Plumber, etc. I also own my own house.
@@earthishome1866 i totally agree with you. If he was not married i would suggest. But you know a wife will want to move in and fill it with kids. Not rent out.
@@sagepirotess6312 This is what I would do if I had 600k in my hand, with a wife and a soccer team of kids, lol. I would pay ALL my debts. Buy me a decent building of at least 2 floor and a basement. I would rent 2nd floor to adults only. Live in 1st and basement with wife and soccer team. Have 2nd floor to pay for all expenses and what's left save it . Invest the rest of the money.
The dude needs to start looking for 8-12 apartment building in his area to invest in. Use this money for that purpose and make 6k/month. This is how im able to retire at just 35.
Huh? Graham wouldn't say that at all. Graham would say put down at least 20 percent on a duplex where you can charge the tenant enough rent to cover your mortgage plus expenses. Then you're basically living for free off a leveraged asset that someone else is paying the debt on. That's what a lot of real estate ppl will tell you...until that tenant leaves, trashes your property, and then all of your gains get eaten up by repairs. Or the market drops and you're over leveraged.
Graham Stephen Knows how to life cheap if it goes down now he build up backups with investments and can get more wealthy and increase what is considered cheap from him ? Around $6K a Month?
lol, 20% return.
You can get it. Just know where to look.
@@gabegall mhm..
@@phamily-tv check TQQQ
I got 20% return within this week with AMD stocks .. Just gotta do some research.
Miguel Floriano ya definitely possible to occasionally get 20, 50, 100+ returns, but unfortunately you can’t do it consistently over decades nor can you guarantee it (which is how I interpreted the advice the caller was getting from their friend). I’m a big fan of research :)
“Well that person is stupid.” 😂😂 Dave is as blunt as he can be.
That person is stupid in saying 20%, but the idea of not buying a house and put money in stock market is far from stupid. You get 10-12% in market and a house loan is 2-3%. Why on earth will you buy house on cash and not put in market?
@@koushikutFacts , that’s where I disagree with Ramsey.
There is a certain peace of mind that you gain with a paid off house.
eh...i like watching my money grow fast than 3% a year. losing money never gave me peace of mind. my peace of mind comes from knowing that i could pay off my house at anytime i want, or invest in whatever i want without having to sell my house.
@@Kevinschart your not factoring risk
@@shootmovecommunicate3322 Real estate is not risk free.
A lot of experts say Dave's 12% is way too optimistic. Now you go this guy's "friend" saying 20%. lol.
Dave relies on average rate of return which is very misleading. An investment that increases 100% one year and then decreases 50% the next has a 25% average rate of return despite no actual return. Average actual compounded return is more like 7%.
The average return of the S&P 500 from 1957-2018 is 7.96% before fees, if you happen to hold it in a mutual fund.
I am constantly amazed at Ponzi schemes that rake in lots of gullible people every year with promises of high rates of return, high enough that should peg the suspicion meter of folks, yet the "victims" line up for some of the action. Eventually, they lose their money, or maybe eventually recover a few cents on the dollar. Greed in investors is the principal reason these folks get fleeced. As the "rate of return" rises, the risk of loss multiplies. How lucky do you feel?
That's why you get snp500 in an index not a active managed account with high fees
I can't remember if it was 8% or 12% but if you invest in the S&P 500 it has an incredibly reliable long-term return of one of those 2 percentages.
Just give me the 200k since you are so conflicted.
*IRS has entered the chat*
@@elmagnificodep 🤣🤣🤣🤣🤣
@@elmagnificodep By IRS I'm sure you meant Rothschild and company.
Natty Fatty Powerlifting If you deposit more than $10,000 the bank will notify the IRS. You better keep that under the mattress.
@@elmagnificodep why?
Dave is way off here. First of all the guy says he bought a business for 280k and is selling it for 600k. He then says he has 60k in debt. 600 - 280 - 60 = 260k, and thats without paying taxes on that, so take a third of that away and you are left with 170k. Dave's response is "it sounds like you have 400-500k" uh what? Putting that 160k in a mutual fund will most definitely return more than a house that generally appreciates a little more than inflation even with rent increases included. Also it completely depends on the interest rate of the debt. It may actually make more sense to pay the debt off slower if the interest rate is really low.
？？he gets the full 600 by selling the business? What r u talking abt?
Unless he took out a loan of 280 to buy that business, which he never mentioned
There are advantages and disadvantages to each choice.
If you buy a house, you have the advantage that you control the property, and there is no middleman skimming profit from your ownership. The disadvantage is that it is the ultimate in non-diversification. You are buying a single plot of land with a single building in a specific location, and that can turn out to be very good, or a serious mistake.
If you put your money into a total stock market index fund, you have the ultimate in diversification of your investment. You are diversified across companies, industries, and locations. But you have many middlemen all of whom are skimming little slices of profit from each enterprise.
Marc Donvito True but the dude is renting and needs a place to live anyway. He can always start investing after buying a house, I am sure this is not the only investment he is going to do in his entire life.
Also, instead of buying the house in cash why not take a loan @ 2-3% and rest put in index fund where you get 10-12% anyway! It is stupid decision to pay off mortgage which is only 2-3% and in market you get 10-12% easily and more if you know how to pick stocks (though not recommended for new comers)
Owning a home free & clear gives you a place to live with little bills & peace of mind. I can travel & know I have a homebase. No debt, no mortgage, no rent. I'm truly in control of all my income now, it's so freeing.
Excellent- congratulations!!!! I wish there were more women like you. I’m in the same boat, semi retired at 49. Home paid in full, no credit debt and a solid 7 figures in investments. It’s nice to hear I’m not fishing in a lake with no fish in it.
@@retiredmanager510 I own rentals... Will soon finish up my 8 unit apartment building. I will then be able to retire. I am 34.
nay sayers would say you don't own it and it's not free and clear since you have to pay property taxes.. but you're right.
@@jeanlenor1858 Are you single? Asking for a friend.
@@ChrisMFlorida haha! Love it. RUclips the new dating app.
With mortgage rates at 3% and stocks at 12% it seems like a no brainer to just borrow the money for that dirt cheap rate and invest what you would have paid in cash for the house in the stock market instead.
Not to mention the tax advantages of a mortgage. The interest is tax deductible, and you pay it at the highest earning time in your life.
You pay capital gains taxes on that mutual fund 11%, and it’s far from guaranteed. Up to $500k in profit on real estate sales is tax free.
And all of this is academic because in 15 years it’s going to cost 4-5k to rent a bedroom in any major city. And there won’t be a house under a million dollars within an hour of them.
That person is not just stupid. That person they spoke to is flat out greedy. All they’re trying to do is make money off of them. Unbelievable what stock brokers try and pull to convince people to invest their money. Use your heads, people. It’s not worth investing if you have debts and no savings account.
I strongly disagree with Ramsey's philosophy on debt. I think debt is good because it helps you save on opportunity cost. Stocks increase at a much higher rate than your mortgage interest rate so it's miles beyond simply making up for debt. Depending on the range of rents in the area, you could probably even do better renting a apartment and putting your savings in stocks than locking up all your money in a downpayment for a house. You just have to compare the rent, mortgage, and stock rates to see what's right for YOUR situation. You can't just rely on hard rules like "Buy a house instead of putting it in stocks" or "Rent is a waste of money", you have to think critically about YOUR circumstances to see what would make YOU the most money.
I might eventually regret this but I don't want a house. I like renting an apartment in downtown so I can walk to nice places , and have a quick commute to any job I'd want in the area. I don't like the idea of having to settle in a house far away from the bus lines, and having to worry about appliances, security, etc.
Owning a home in certain situations & cities can be the worst investment. I sold my home & rent again. I'm in no hurry to buy again. Between HOA fees, warranty, insurance, up keep & God forbid repairs & renovations, it's not saving you anything in certain situations.
You do you.
You won't regret it if you have your savings invested in a good stock instead of buying a house. The main reason people end up broke from not buying a house is because they don't invest their savings in stocks to make capital which is a huge waste. Too few people know about stocks and that is really hurting them financially. They think buying a house is the only way to build capital when it isn't.
Buy a rental that can cover it's taxes and your rent
I would like to think buying a home cash would be a great bet. Lol “that person is stupid”. 😂. 20%. On $200,000! That guy was probably thinking about his commission when he pitched it to the guy.
Passive investing will not get you an annual return over 10 percent. And considering he very likely will want to touch the money in 3 to 5 years, he will only realize 4 percent per year at best. The question is how much risk you are willing to take on, and the market itself is risky at its all time high right now.
Invest if you will be active in your investments. Use the money for equity in property if not.
Buy a house. Pay for the whole thing right away, then you have a home of your own and don’t have payments on it, and you can definitely think about investing
buying a house is a type of investment if you do it the right way!!!!!!
There are no houses for $200k in NY. He would have to do a mortgage or move to a state with cheap homes and low paying, harder to find jobs
@@pkal244 I love how all the city dwellers want to talk down about "low paying jobs" while they live in a city where they can't afford to buy anything bigger than a janitors closet. If you can't afford a house where you live, your job isn't a high paying job. People like that just like the bragging rights of telling people what their gross income is. Big freakin' deal, you make 6 figures. I would rather make $80k in the midwest and live in a 3 bed/3 bath on my half acre with a nice fenced yard and a 2 car garage than make $160k a year and live in a glorified cubicle where my dog and kids need to take an elevator and a bus ride before they can play outside.
@@penguin12902 haha as a city dweller there's definitely some truth to what you said.
Still prefer the city though :x
You always have payments on a house.
Don't understand why Dave would want him to use the rest of his capital to buy 1 house! I don't think a house is a good investment. That is far from diversifying. He should invest it with an investment banker that has a good track record. Thats it. And 20% a year is achievable for sure, but not using Mutual Funds!
There are massive advantages to investing it over real estate in this instance simply because it is a large lump sum. Time is such an important factor. The compounding on a sum that large will far out weigh profits from a real estate purchase (baring blackswans like covid)
TQQQ invested from 10/15/2019 until today 11/15/2019 yields at 14% gain. 200k + 14% = 228,000. There's half the debt paid off. :)
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got talking about investment and money. I started investing with $120k and in the first 2 months , my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and gets more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family...
I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second daughter. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks.
@@BintuDelacroix Quitting may not be the best approach if you ask me. This is where an AI comes into the picture. I barely have time to trade myself as my job swallows up most of my time. *MARGARET MOLLI ALVEY* , a licensed fiduciary whom has made me over 5 figures in profit in less than seven months, handles my investments. I could leave you a lead if you need help.
@@ThamaraSchlossarek Oh please I’d love that. Thanks!
@@BintuDelacroix *MARGARET MOLLI ALVEY*
Lookup with her name on the webpage.
why is ramsey so down on ALL debt? nothing wrong with mortgage debt if you are investing your excess cash
Honestly! Debt is good because it helps you save on opportunity cost. Stocks increase at a much higher rate than your mortgage interest rate so it's miles beyond simply making up for debt. Depending on the range of rents in the area, you could probably even do better renting a apartment and putting your savings in stocks than locking up all your money in a downpayment. You just have to compare the rent, mortgage, and stock rates to see what's right for YOUR situation. You can't just rely on hard rules like "Buy a house instead of putting it in stocks" or "Rent is a waste of money", you have to think critically about YOUR circumstances to see what would make YOU the most money.
Eliminate the mortgage debt and invest all that money ..why is it so hard for people to grasp his concept
Since I have been selling online since the age of 14. I've learned how to buy low sell high on ebay/amazon, mobile apps, forums,etc so I would definitely take 200k, but just use 50k and turn that into 6 figures annually as an additional income. The only jobs i've ever been able to get only pay max $400-$500 a month, but on the internet I reign supreme.
Just what are you buying & selling that's made you rich?
@@Stormy_Dawn Who said I was rich? It depends on what is selling well at the moment. You have to keep up with the times, or fall apart. You have to factor in what is over saturated as well, because the more people selling the same thing, the lower your profits will be. No one is going to tell what they sell for "free", and have their business sabotaged, nor where they get their products from.
I would love to get in touch with you!!!! I have money to invest.
@@MisterUrbanWorld you are saying that you can essentially take 50k & turn it into a 6 figure income...yearly. It's all relative but to me 6 figures each year is rich.
You guys...this is easy & this world of online flipping isn't as profitable anymore because EVERYONE & their grandmother is doing it. They buy from wish, Ali Express, wholesale through companies & become a "drop shipper" for top 10 items selling on ebay & Amazon.
Don't spend a dime on a program to teach you how to do it. There are FREE videos on youtube.
But, there are a lot of draw backs & anyone working minimum wage in america will clear a grand, so not sure what his struggles are with working.
Amazing video, A friend of mine referred me to a financial adviser sometime ago and we got to talking about investment and money. I started investing with $150k and in the first 2 months, my portfolio was reading $274,800. Crazy right!, I decided to reinvest my profit and get more interesting. For over a year we have been working together making consistent profit just bought my second home 2 weeks ago and care for my family.
Hi. I’ve been forced to find additional sources of income as I got retrenched. I barely have time to continue trading and watch my investments since I had my second child. Do you think I should take a break for a while from the market and focus on other things or return whenever I have free time or is it a continuous process? Thanks
@@Lourd-Bab However, if you do not have access to a professional like Clementina Abate Russo, quitting your job to focus on trading may not be the best approach. It is important to consider all options and seek guidance from reliable sources before making any major decisions. Consulting with an AI or using automated trading systems can also be helpful in managing investments while balancing other commitments.
@@lennoxmutterick6434 Oh please I’d love that. Thanks!.
@@Lourd-Bab Clementina Abate Russo is her name.
Lookup with her name on the webpage.
Who said you can’t have a relationship with a broker at Schwab or even pay for a management fee with a consultant at schwab ? Or invest 25K and get a CFP and a rob advised portfolio tailored for you at schwab ?
Buying a house is an investment. All of the money that you might be paying now for rent will turn into money invested into equity of a house. Just have to compare that equity to any interest that you may earn from investment. At average of 8% return a year, 200K would give you 16k interest per year. Then multiply the monthly payment on a 200k house by 12 and compare the two. But at the same time, owning your own house gives you freedoms and piece of mind, not to mention that you can improve it for your own comfort or to simply raise the value.
not if you are renting a cheap place to stay if you are signle/couple, the house tax payment/insurance/utilities/etc that you will never get back, will cover your yearly rent without any liabilities to worry about.
Not really my friend. If you’re not getting a rental from the house, or the house doesn’t bring money into your pocket somehow, then it’s not an investment, but a liability. Investment is something that brings money to your portfolio or creates cash flow. What takes money out of your pocket is a liability. There’s a big difference between these two
It could Work with the stock and you get more you have another 400K in Back up if the Stock Does not well. Even 6% Per Year Pays for your Credit and then you have still the 200K left.
Second House would be the Best thing for earnings but great for safety.
Pay the Credit just removes your 200K.
I need similar advice I had enough for a 20% down payment on a house I was gna rent out but I decided to put most of my money in etf and safe blue chip stocks that pay dividends. I wanted to get my dividend income up before I dived into real estate investing good idea? Or should I have done the opposite
Not sure if you are aware, that for a company to pay their dividend, the stock drops on ex dividend day the same amount as the dividend distribution. Many times you wouldn't notice it because the share price may go up that day because the market as a whole, that sector or even that stock happened to go up. If you are looking at accumulating assets, and don't need the yield to live on, you may be better to focus on total return, which is growth, capital gain & yield.
@Anne Day There are three philosophies regarding dividends, and they are all good depending on your own situation. One, probably more for the less experienced investor in the accumulation stage, is to simply let the dividends paid, continue to buy more of the same stock. Another, which I use, is to take the dividend payments in cash & use to purchase more shares of whatever stock in my portfolio is cheap at that time. The third option is for retirees, to collect the dividends in cash to use for everyday living expenses. They all work fine, and I have used the first two methods in the past & will use the third in retirement.
Anne Day Totally agree. Think long term, especially for young investors. As Albert Einstein famously called compound inter “ the eighth wonder of the world, those who understand it make it and those who don’t pay it”
What I do is invest into stocks and other financial assets online but stocks is most effective for good monthly thanks to my fiduciary
How so? I don’t know anything about stocks and it’s rudiments, can you guide me or direct to who can
Mr Benjamin Ravies he’s a senior investment analyst and manages my portfolio
Okay, I am also looking to build my 401k savings and invest invest into something profitable
@@willian8156 thanks how do I find him
A house is nice if you're starting a family, but kindof a net negative otherwise.
You now need to spend time on lawn mowing, snow blowing, gutter cleaning, etc, plus purchase and maintain all of these machines.
Regular maintenance will run ya 1-3% of your home's value every year. Roof, basement, driveway, etc. All these things consume your time and energy too.
On top of all that you're paying property taxes and all utilities, and that's without mortgage payments.
You could rent a townhome or a duplex in a normal city(not NY or LA lol), only pay water and electric, have a landlord that mows the lawn etc, regularly invest in the S&P500, and you'd STILL be better off financially, time and energy, than buying a house!
Buy a house and rent it out to others.
Dave is wrong here , this guy should definitely pay off the debt and invest the rest of his money reason being , once he pays off this house he’s going to owe 8-10 k a year in taxes , he will have to spend another 3-4K in up keep , he’s going to have grass to cut snow to shovel and the worst part about the entire idea none of these expenses are deductible because this property is not a investment property!!!
Dave means well but he needs to learn who his audience is , not everyone out there falls under his lineage of financial advice
I agree with you Dave!
One more example that no one knows what will be in the market. Check the price history for Charles Schwab now 4 years later. It went from 32 to 64 in that time and toped in 2022 at price of 95usd. So he would get his 100% return in 4 years or 170% if he would sell at all time high in two years also get dividends from it.
Since Joe is renting, first thing to do is just buy a house cash, that is a form of investment which will almost guarantee great returns over long term anywhere especially in New York unless there is some nuclear bomb explosion or Tsunami wipes entire state.
This is a better advice because Joe needs place to live anyway, so money saved on rent, money saved on interest and value appreciation all lead to a better investment rather than renting and throwing money on mutual funds where no one is going to give him more than 10% average.
You'r not factoring in taxes or maintenance. $6k in taxes per year. That's half your rent right there.
Didn’t Bernie Madoff promise those types of returns? We know what happened to those investors!
One of the 3 mutual funds in my retirement fund has a ytd of 22%
It's one of fidelity's funds. Its 10 yr avg is around 9%
Dallas Harvey that’s what I was thinking, the friend saw that or the 20% year we had in 2016
I have 3 that do that... the average of mine is about 10-12% like dave says.
may you list the fund? please?
@@ChrisMFlorida may you list them please?
FEQIX
As of this posting
YTD 23.1%
1YR 12.68%
3YR 10.38%
10YR 10.45%
Life of fund 11.22%
Fund Inception 05/16/1966
30 day yield 1.78%
People will get all hung up on the "stupid 20%" but at the same time feel very confident about a 6% compounded annual growth rate. Plot twist: BOTH are EQUALLY STUPID if the associated risk is not quantitatively defined. In fact, the 6% might even be riskier for all you know. Returns are not performance. Only expectancy is.
I don’t know which advice was worse, his friend’s 20% or Dave’s 0% (buying a house, a liability, cash). Why doesn’t Dave advise people to invest in real estate? The caller should buy investment properties which would pay for his house. That, my friends, is a faster way to becoming a millionaire.
My grandpa is a self made millionaire ($50M) and a stock broker his whole life and says the market average is 7%
So which millionaire is right? Is it 12% or 7%?
The long term market average is around 10%. Your grandpa may be referring to the return after inflation and fees. Keep in mind though, given the run we have been on since 2008, returns are likely to be 5%-6% going forward. A crash that brings values down substantially would put us back on track for 10% returns going forward.
Investing would be better option
So you are saying invest the money and keep paying rent vs owning a home with no mortgage?
@@Sesshyru with a 250k house your are still paying close to $1000 a month in taxes and other fees not to mention maintenance so take your condescending question elsewhere
Dave Ramsey has great saving tips! He’s inspired me to create videos on my channel!
PoopCoin Patrick no idea what you’re talking about. Can you explain?
@@mazeikateam4527 ignore him he whines a lot
the doge ok gotcha
How can you pay RENT with $500k in cash? if you don't want to invest all that money in buying a house in cash, get a mortgage. We are dumb enough to still waste our money in Rent. So waste your money in a property that is at least under your name. I would rent part of my house and have someone pay for my mortgage. Never invest in something you don't have a Ph in, plain simple. No one cares about our money and investment than YOU!!!!!!!
Crypto is risky as many would say but I think the actual risk in Crypto is not investing, buying the capitulation isn't a tough call, but it is a very tough call to figure out what to do aside holding. I remember when I just got into crypto back in 2019 but later in 2020 I ended up selling it because I was dumb and I didn't understand it. I studied and learned and now I know how it works. Got back into crypto early in 2023 with 10k and I’m up with 128k in a short period of time
How can one start,most times people don't know where to start when it comes to crypto.
But it would be great if you can provide proper guidance on steps to follow please
As a beginner investor, it’s essential for you to have a mentor to keep you accountable. Myself, I’m guided by Alex Gomez. A widely known crypto consultant
Please how can I get in touch with this Alex Gomez ? I really need to give him a try
This is he’s telegrams user name
@AlexRcoin THAT IS THE USER NAME
THAT IS HIS USER NAME
He should continue that thought ... these are the people we recommend since they pay us $$$ to be recommended by us.
Dave doesn't really teach you how to make money he just wants you to be debt-free.But if you're smart with leveraging debt and making that debt make you money that's not a bad thing.
you do not need a financial advisor, just read dave books and get an index fund and your GOLD!
Which book and which index
*I think this is a tough question, cause some have made a good argument for investing in lieu of home purchase(sidenote: obviously pay off the debt in full) but I'd say that Dave gave sound advice* 💪🌚
Calling people dumb is weak and unnecessary. Buying a house is no more of a surefire or bad investment than a mutual fund. "You friends dumb, me friend clever". Really, Dave?
Maybe buy a few rentals or 4... The cash flow from rentals with none little mortgage would be 3 to 4 k a month, perpetual. 🤔 ?
I get a feeling this guys not only going to take his friends advice and use all the money to invest rather than pay off the debt first, but somehow he’s going to get talked into investing 100k of his money into bitcoins
I hope he did :)
This aged well haha
Do both if you are a disciplined person! Get a mortgage and then invest the cash. You will make 3-4% on the capital after paying the mortgage. *Markets are unpredictable and if you are the kinda person who gets nervous on the first dip then just buy the house with cash.*
20% is unrealistic look at 4-8% in reality. Wait to buy a house put the money into a CD we’re about to hit a major recession
Lol how wrong in hindsight
July 2022 now, this advice is now no longer applicable
200k invested in the s&p would yield him 11% out of Dave’s own mouth. That’s 22k. That’s a 3rd of his debt being paid with none of his principle investment. How’s that dumb?
Dave’s 11% return is as absurd as the callers 20%....
Buying a house is renting. Try to not pay for a few months and see what happens.
Pay off debts buy house cash great idea
I wonder what Dave would say to someone in this scenario who had zero interest in buying a home.
And live where
@@jayc4715 renting
Pay off debt, buy your home (its also considered as an investment anyways) stop making your landlord rich.
But it's cheaper to rent
by readHolliday not if you have a paid for house. And you get to file property taxes at the end of the year.
Invest all of it after having complete ownership on your assets.
12% return per year??
I have friends who get excited saying that their finance guy is getting them 6-7% a year return.
I do my own investments. I tell them that I would fire them if that is all they got for me. Of course I get that puzzled look of what???
I average 10-14% a year. I actively watch my investments. I mostly invest in medical mutual funds.
I also have made an absolute killing off of Amazon. I bought in around 1845. It's up around 3100 right now.
I wonder how Dave makes his money from, and how people listen to him(if there is) Because I never take his advice from him about investing my hard working money into something I know for sure that I will go bankrupt.
Debt is debt, you owe some one money. Debt free life is unbeatable
There are plenty of places to invest your money where you can make upwards of 60% a year. Just gotta know the right people.
Yeah sure sleazeball.
*what do you think Dave would've said?* lol
Does anybody else not believe this call? I’m not buying it, it’s not credible.
Wow 20%! I would love to know what fund(s) those are! LOL
That’s a bad friend. Leave him
I get 20% from my neighbor crazy Pete. He invested my life savings in pork bellies.
I did mine in tulip bulbs.. getting 47% average since 1927.
100% invest in stocks if you doubt. But only index fund wins long term.
With a house your risk is tight to a house, the repair/maintenance, interest rate, even geographically to a city, neighborhood and street!
I don’t know about that... I’m long on many stocks and with drips I’ve gone from 200k saved to 1.8 mill saved in 15 years. I earn over 40k in dividends. I also have a couple ETFs, and Mutual Funds but the way they rebalance, they never seem to give a consistent return. My stocks average over 18% annual (with the drip). My mutual funds around 13% with dividends reinvesting.
@@retiredmanager510 I love your username! I have more of these stocks knowledge built in my vlogs as well usually.. but to come to the point: 10% on average plus dividends and you can sell anytime. Try this with a property
in my book, unless you are a multi-millionaire you share a property to have the other person pay for the expenses.
@@retiredmanager510 Getting the First Million and investing it would make any Person able to have a wealthy life. Most get to 100K then Slowly to 200K and Maby if they are Lucky 300K in under 20 Years.
200K in savings and having debts? oh americans!
20% huh
Buy the house bro. Cash it out like Dave says. Stop listening to your friend's silly advice.
Who’s joe
Naw, no house. Thats so 1960's. No need to tie yourself down to one location. The guy didn't seem to want to settle either.
If i stock market gives 10% but not guaranteed its useless. You coulf invest in foreign banks for 10%, and they have same fdic, but their region.
WOW. A house is a type of investment. You don't need to live in that house. You can rent it, flip it, fix it and hold it for future. This year a purchased a foreclosed for 80k, invested 95k in fixing it, sold it for 270k recently. I did lots of the work didn't required a licensed professional such as Electrician, Plumber, etc. I also own my own house.
@@earthishome1866 i totally agree with you. If he was not married i would suggest. But you know a wife will want to move in and fill it with kids. Not rent out.
@@sagepirotess6312 This is what I would do if I had 600k in my hand, with a wife and a soccer team of kids, lol. I would pay ALL my debts. Buy me a decent building of at least 2 floor and a basement. I would rent 2nd floor to adults only. Live in 1st and basement with wife and soccer team. Have 2nd floor to pay for all expenses and what's left save it . Invest the rest of the money.
@@earthishome1866 thats what i do in Vietnam
@@sagepirotess6312 Excellent!!!!!
"You have money. Now you're obligated to hop on the property ladder."
Ridiculous.
LOL
Forehead=Tesla logo
elon musk doesnt own a house btw.
200000 dollars is a lot of money but we are gonna have to earn it
The dude needs to start looking for 8-12 apartment building in his area to invest in. Use this money for that purpose and make 6k/month. This is how im able to retire at just 35.
@PoopCoin Patrick that is called fear mongering. If you believe it to be true then stop investing and buy all the physical gold and silver you can.
@PoopCoin Patrick Lolll, that's the language of the poor. Only looking for excuses and not opportunities to get rich.
Can you say ponzi
All in TSLA stock lol
Could be buying a mansion with this plan a year ago. LOL
Well he would have gotten 25% 😂 look at the S&P today
FSCSX 32% ytd
22.07% 3 yr
18.60% 5 yr
19.58% 10 yr
Boom!!!
Don't forget TQQQ
Get 2 Cadillac Escalade 2020, one for and other for your partner 👍👍
Lol
Worst advise ever lol
Dave just called this dudes wife stupid haha
Delta Coman or one of their parents I was thinking lol 😂
@@autiger621 hes just missing the asking for a friend line haha
His friend is probably named Graham Stephen.
Huh? Graham wouldn't say that at all. Graham would say put down at least 20 percent on a duplex where you can charge the tenant enough rent to cover your mortgage plus expenses. Then you're basically living for free off a leveraged asset that someone else is paying the debt on.
That's what a lot of real estate ppl will tell you...until that tenant leaves, trashes your property, and then all of your gains get eaten up by repairs. Or the market drops and you're over leveraged.
Graham Stephen Knows how to life cheap if it goes down now he build up backups with investments and can get more wealthy and increase what is considered cheap from him ? Around $6K a Month?
QQQM has almost 20% for the past 10 years