"There's the problem of inflation.
Let's say that you borrowed 100 k. to buy a house in 1980. The dollar has lost roughly 2/3 of it's value since that time. What it boils down to is that you're paying back the lender with devalued dollars that have only 1/3 the value of what he gave you.
It's a crazy crazy world. How on earth do you map your long term investment strategy when the traditional rules no longer apply ? I suppose you could bury your head in the sand and pretend inflation doesn't exist but at the end of the day you won't be any further ahead.
PM's do seem to move inversely relative to the value of the dollar. As the value of the dollar goes down the price of PM's go up accordingly. It's not a real gain but neither is it a loss."
I think you have correctly identified PM's nothing wrong with them but no real growth. An actual hedge against inflation, not in my opinion but if you have lots of money then why not own sum.
On home ownership my thoughts are echoed by others. The inflationary dollars you repay the mortgage with are less than the current dollars you would have to pay rent with. In addition the comfort you can obtain from home ownership is hard to replace.
For me the best part of owning a home is paying off the mortgage, save for a downpayment and get a 15 year mortgage.
And to Patriot's point I will say the beauty of compound interest is it works both ways. When you have a mortgage compound interest works against you when you invest compound interest works for you.
Diversification seems easy for most people to understand, "Don't put all you eggs in one basket".
Income averaging I take to mean Dollar Cost Averaging with would be: You invest the same amount of money each and every month so when the stock market goes up in price you purchase less stock when the stock market goes down you purchase more shares. History says you will win with this way of investing.
Like discussed in the beginning I only wish I knew this stuff and would have followed the advise when I was young or even middle aged.
73. Mike
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