December 16, 2010

Pay Off Your House

You need to consider paying off your house before you invest a dime.  Why?

Because to invest before your house is paid for (outside of a 401k or retirement plan) is basically borrowing from your house to buy securities, stocks, bonds and mutual funds.

You are borrowing at 5% to hopefully get a return higher than 5% and pocket the difference.  The key word is hopefully.  A lot of things have to line up for that to work.

Guess who is propagating this theory?

Thats right, the brokerage industry.  They want nothing to do with you paying off a mortgage. They need assets so they can collect commissions and fees!

I know its not very sexy to pay off your house and its cool to talk about your stockbroker or investment portfolio at parties but if you think logically for second, when you pay off your house, you are guaranteeing yourself 5% (or whatever your current mortgage rate is) and you just may enjoy a slightly less stressful life knowing your house is paid for.

Additionally, some states offer bankruptcy and lawsuit protection for your primary residence so thats nice, just in case.

Yes, I know you'd be missing out on the mortgage deduction come tax time but it has always seemed rather pitiful anyway but I am no tax guy.

December 7, 2010

What is #1 for Stockbrokers?

I came across a great article today which is exactly what I have been saying for years.  Below is the headline. 

What's No. 1 for Brokers?
Right now, securities firms don't have to put investors' interests first.  New regulations may change that—and Wall Street isn't happy..

For those of you who have read my blog or book, this comes as no surprise but for those that haven't, I hope the title is a little shocking.  You can read the entire article here

Bottom line is that stockbrokers do not have to put their clients interests first, yes, you read that correctly and is why I have been pounding the table encouraging investors to learn how to invest for themselves.

Its actually quite easy and you'll know that the person who is handling your money is the person who cares about it the most, YOU!