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  • jfoxcpacfp
    replied
    For most physicians, there is no one “right” answer when it comes to investing excess liquidity in real estate, versus paying down debt, versus putting $ in taxable accounts and so on. You can generally afford to forego higher returns in one category if you prefer another (simplicity v absolute returns, for example). Those are decisions based more on emotion than math, perhaps, but when you are on track to die with multi-millions for heirs and charity, you have that luxury. Couldn’t agree more with this comment by WCI.

    The part that can trip HIPs, though, is letting emotion affect decisions that can have significant impacts on their NW (risk) - liquidating at the bottom of the market, betting millions they can’t afford to lose on a new idea for a medical device, significant lack of diversification (i.e. everything in real estate without enough liquidity when you really need it, investing in single stocks), etc. The risk is highest at the beginning of careers, of course.

    Leave a comment:


  • burritos
    replied










    We did all three, invest in paper assets, invest in real estate, and pay down debt.  And all of those things worked out well.

    Our highest returns were on real estate.  But those investments required extra work.  Higher risk, higher reward, more work.

    The paper assets also did well, but not as well as the real estate.  However, there is almost no work involved in investments in paper asssets. Easy peasy.

    Paying down debt also contributed to a growing net worth, but this gave us the lowest yield financially over the years.  However, the psychological yield on zero debt is very high.  So for the peace of mind, also highly recommended.  Lower risk, lower reward (financially speaking), but so worth it.

    If you want to develop extreme wealth, real estate can lead you down that path. But you can lose it all if you don’t know what you are doing.  Like most aspects of investing, the risks tend to balance out with the rewards.
    Click to expand…


    How aggressively did you pay down RE mortgages? Where did it rank above your regular mortgage vs paper assets vs saving for college?
    Click to expand…


    In our younger years, we focused on maxing out all of the tax deferred accounts, which we have also done every year since.  After that, we put 20% down on real estate investments in a market where I had good knowledge and could be fairly certain of quality tenants and positive cash flow.  In fact, our first real estate investment was made two years before we bought our first personal residence.  We did not do prepayment of either personal or investment property mortgages in the earlier days.

    As the excess income and cash started to build up, we started to pay down the mortgage on our home with extra payments and ended up paying off the 30 year mortgage in 15 years or so.  Mid-career we added more investment real estate, again leveraged, because we had experienced the positive returns and positive experience of our earlier investments.

    We did not do specific college savings, but rather timed payoff of investment property mortgages with college for the kids.  With the cash flowing rental income and no mortgage, we planned to cash flow the college expenses and that plan ended up working out well.

    Later career with rising rental income and plenty of extra cash, we did all three.  We continued to max the tax deferred space, bought more real estate, started building up significant taxable accounts, and also accelerated paying off real estate debts both personal and investment.  The total cash on cash yield on the investment real estate goes down when the properties are not leveraged, but the positive cash flows build nicely, adding passive income and increasing financial independence.

    Now in a debt free state, financially independent but still enjoying work (in between the many great trips we take every year), all we fund at this point is tax deferred and taxable.  Although my yields could potentially be better on investment real estate, a primary goal at this point is promoting simplicity.  We already have more than enough.
    Click to expand...


    Thank you very much for your answer. Did you do SFHs or multi or both? We have 4 SFH rentals, one paid off. Depending on how hard I want to got, 1-2 years from paying off second. I had intended to use paid off rentals as cashflow for education(like you did), but then FOMO crept in when we heard that other people were superfunding their 529 with the benefit of having tax free returns. So we veered that way for the last 5 years. Could have paid off another rental with those funds, but oh well, back on track with paying off our rentals. Nonetheless, I'm back and forth between maxing our equities and paying off rental mortgage. I know first world problems, but it does waste a lot of my gray matter bandwidth.

    Leave a comment:


  • White.Beard.Doc
    replied







    We did all three, invest in paper assets, invest in real estate, and pay down debt.  And all of those things worked out well.

    Our highest returns were on real estate.  But those investments required extra work.  Higher risk, higher reward, more work.

    The paper assets also did well, but not as well as the real estate.  However, there is almost no work involved in investments in paper asssets. Easy peasy.

    Paying down debt also contributed to a growing net worth, but this gave us the lowest yield financially over the years.  However, the psychological yield on zero debt is very high.  So for the peace of mind, also highly recommended.  Lower risk, lower reward (financially speaking), but so worth it.

    If you want to develop extreme wealth, real estate can lead you down that path. But you can lose it all if you don’t know what you are doing.  Like most aspects of investing, the risks tend to balance out with the rewards.
    Click to expand…


    How aggressively did you pay down RE mortgages? Where did it rank above your regular mortgage vs paper assets vs saving for college?
    Click to expand...


    In our younger years, we focused on maxing out all of the tax deferred accounts, which we have also done every year since.  After that, we put 20% down on real estate investments in a market where I had good knowledge and could be fairly certain of quality tenants and positive cash flow.  In fact, our first real estate investment was made two years before we bought our first personal residence.  We did not do prepayment of either personal or investment property mortgages in the earlier days.

    As the excess income and cash started to build up, we started to pay down the mortgage on our home with extra payments and ended up paying off the 30 year mortgage in 15 years or so.  Mid-career we added more investment real estate, again leveraged, because we had experienced the positive returns and positive experience of our earlier investments.

    We did not do specific college savings, but rather timed payoff of investment property mortgages with college for the kids.  With the cash flowing rental income and no mortgage, we planned to cash flow the college expenses and that plan ended up working out well.

    Later career with rising rental income and plenty of extra cash, we did all three.  We continued to max the tax deferred space, bought more real estate, started building up significant taxable accounts, and also accelerated paying off real estate debts both personal and investment.  The total cash on cash yield on the investment real estate goes down when the properties are not leveraged, but the positive cash flows build nicely, adding passive income and increasing financial independence.

    Now in a debt free state, financially independent but still enjoying work (in between the many great trips we take every year), all we fund at this point is tax deferred and taxable.  Although my yields could potentially be better on investment real estate, a primary goal at this point is promoting simplicity.  We already have more than enough.

    Leave a comment:


  • legobikes
    replied
    No one is going to mention gold?

    Leave a comment:


  • burritos
    replied




    We did all three, invest in paper assets, invest in real estate, and pay down debt.  And all of those things worked out well.

    Our highest returns were on real estate.  But those investments required extra work.  Higher risk, higher reward, more work.

    The paper assets also did well, but not as well as the real estate.  However, there is almost no work involved in investments in paper asssets. Easy peasy.

    Paying down debt also contributed to a growing net worth, but this gave us the lowest yield financially over the years.  However, the psychological yield on zero debt is very high.  So for the peace of mind, also highly recommended.  Lower risk, lower reward (financially speaking), but so worth it.

    If you want to develop extreme wealth, real estate can lead you down that path. But you can lose it all if you don’t know what you are doing.  Like most aspects of investing, the risks tend to balance out with the rewards.
    Click to expand...


    How aggressively did you pay down RE mortgages? Where did it rank above your regular mortgage vs paper assets vs saving for college?

    Leave a comment:


  • racelari
    replied
    Hey guys, I also just started binge listening to Dave Denniston podcasts (as I already binged listened WCI podcasts like twice!) and came across Buck's interview.  Having been screwed on whole life in the past, I am definitely dead set against buying his products though I did sign up to listen to his webinar Wealth Formula Banking vs Velocity Plus!  Just interested and I'm going to make sure I shield myself from being tempted to buy any of his crap as I have my financial plan in place.

    funny thing I downloaded Buck's book "7 Secrets to Eternal Wealth" and he quotes Jack Bogle at the beginning of chapter 1 . . . kind of hypocritical . . .

    Leave a comment:


  • Dont_know_mind
    replied




    ENT Doc, I understand your point, but I never said that a drop in your net worth means you’re not on the right track. There are many variables for that to happen. However, I do believe that for most anyone who improved their net worth for the year, they made a positive step in their finances. People on this forum can definitely critique things down to the minutiae to try to obtain the perfect investment strategy and will likely be very wealthy because of that. But that’s not the usual guy/gal I speak with in the doctor’s lounge. They’re doing good just to know what their net worth is. I like to keep things as simple (but effective) as I can.
    Click to expand...


    ENT is right. A drop in your net worth doesn't mean your strategy is wrong and an increase in your net worth doesn't mean your strategy is right. Due to the effect of chance, from just the result, it is very hard to tell if you were right and unlucky or wrong and lucky.

    I don't know if you can ever tell if you were right or lucky.

    An increasing equity curve over years can still be luck.

    And a flat equity curve may indicate a viable strategy that has had a few unlucky years.

     

    Leave a comment:


  • Dont_know_mind
    replied




    I haven’t heard Buck’s interview of Dave, but our discussion wasn’t particularly comfortable for either one of us due to his dogmatism.
    Click to expand...


    My day job sound easier. WCI sounds like he has a tough job sometimes. I think I'll stick to being a member of the peanut gallery.

    Leave a comment:


  • Zaphod
    replied







    I always have felt and continue to feel that the ‘this or that’ argument that Bogleheads/index funders and real estate people have is silly. I’m a Boglehead with my equity investing and a ‘real estate guy’ with my real estate investing. It’s just weird and I don’t get it. It’s like politics these days, you have to choose one side of the aisle and must hate all the ideas on the other side. It’s both foolish as well as short-sighted.

     

    The dogmatic approach that some people have on this is almost laughable. You may prefer or feel more comfortable with one asset class over the other, but the data shows over and over again that both are profitable. Go on the real estate forum and they’ll show you a favorable real estate graph, go to Bogleheads and they’ll show you the favorable index fund graph.

    Here’s what a lot of people (including myself) like: making money and having a good ROI. Luckily, we don’t have to choose one way.

     

    There are many ways to skin a cat, I think more people should have at least two cats.
    Click to expand…


    Agree completely; I listened to Buck as well, but when contacted him and had a bit of back and forth about his offerings, he was very dogmatic in asserting there’s no other smart way to invest.  Obviously, the things he promotes on his site including the insurance products make him money, so a conflict there.

    I choose to diversify, as do many others here with both stocks/bonds, and RE investments producing cash flow, and at about 60:40 currently.

     
    Click to expand...


    He may be right. The smartest way for him to have you invest is the way that makes him the most money.

    Leave a comment:


  • ScopeMonkey
    replied




    I always have felt and continue to feel that the ‘this or that’ argument that Bogleheads/index funders and real estate people have is silly. I’m a Boglehead with my equity investing and a ‘real estate guy’ with my real estate investing. It’s just weird and I don’t get it. It’s like politics these days, you have to choose one side of the aisle and must hate all the ideas on the other side. It’s both foolish as well as short-sighted.

     

    The dogmatic approach that some people have on this is almost laughable. You may prefer or feel more comfortable with one asset class over the other, but the data shows over and over again that both are profitable. Go on the real estate forum and they’ll show you a favorable real estate graph, go to Bogleheads and they’ll show you the favorable index fund graph.

    Here’s what a lot of people (including myself) like: making money and having a good ROI. Luckily, we don’t have to choose one way.

     

    There are many ways to skin a cat, I think more people should have at least two cats.
    Click to expand...


    Agree completely; I listened to Buck as well, but when contacted him and had a bit of back and forth about his offerings, he was very dogmatic in asserting there's no other smart way to invest.  Obviously, the things he promotes on his site including the insurance products make him money, so a conflict there.

    I choose to diversify, as do many others here with both stocks/bonds, and RE investments producing cash flow, and at about 60:40 currently.

     

    Leave a comment:


  • Dr.V. Investor
    replied
    i don't know the guy.  i have known people who are very successful just by building their own businesses.  it is something they can control, not reliant on the market.  when you have a business, you can sell it depending on multiples of the profit.  i have also known people who did this and still had to work in their 70s since all their money is in the business.  wci is not all bogleheads.  he has a profitable business that he can possibly sell so it does not matter if market tanks.  maybe same way as this guy.  some wealthy people also have nothing in the public markets besides their retirement account- some in real estate or private equity.  choose your own way to build wealth.

    Leave a comment:


  • Zaphod
    replied
    I dont know Buck, but as someone said, its much easier to find an audience and cultivate it with an extreme view. Your positions are easy to remember and require little thought to defend since you have an ideological position. Its a great marketing strategy.

    Leave a comment:


  • G
    replied
    Buck participated on this forum awhile ago.  I'm wondering if he'll get an alert due to this thread and return to posting here.  "Dogmatic" would be a fair summary of his contributions, if I recall correctly.  Not that I'm any different...I was all excited about getting to the bottom of this thread so that I could tout firearms and whisky as tangible, non-paper assets!

     

    Leave a comment:


  • wonka31
    replied
    Also, I don't really mind Buck's podcasts. I get exposure to a lot of things I'm oftentimes unfamiliar with. Some I further educate myself on, some simply isn't for me. I can't say that I've acted on a ton of his advice as I have with WCI's, but I've learned a lot (both good and bad) in listening to his podcast.

    Leave a comment:


  • wonka31
    replied
    I always have felt and continue to feel that the 'this or that' argument that Bogleheads/index funders and real estate people have is silly. I'm a Boglehead with my equity investing and a 'real estate guy' with my real estate investing. It's just weird and I don't get it. It's like politics these days, you have to choose one side of the aisle and must hate all the ideas on the other side. It's both foolish as well as short-sighted.

     

    The dogmatic approach that some people have on this is almost laughable. You may prefer or feel more comfortable with one asset class over the other, but the data shows over and over again that both are profitable. Go on the real estate forum and they'll show you a favorable real estate graph, go to Bogleheads and they'll show you the favorable index fund graph.

    Here's what a lot of people (including myself) like: making money and having a good ROI. Luckily, we don't have to choose one way.

     

    There are many ways to skin a cat, I think more people should have at least two cats.

    Leave a comment:

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