even more quiddities and agonies of the ruling class - a new rolling new york times thread

I've only had a grown-up job for a few months tho so my major investment so far is my lack of children.

but what if you have a child now and train it to be the best human at sports?

i guess im suggesting putting yr 500 in an index fund and not looking at it or touching it for 25 years, basically

― max, Wednesday, March 27, 2013 1:19 PM Bookmark Flag Post Permalink

But it's more complicated than this. Over time, two things will happen: (1) the proportion of your mortgage payment going to equity vs. interest will gradually increase because of reverse amortization, and (2) the rent you would be paying will most likely go up (at least apace with inflation) while your mortgage cost remains fixed. If you're looking at staying somewhere, say, 10 years, your savings in ownership can wind up being quite significant assuming rent even keeps pace with inflation, especially considering that your home value in non-bubble or bust conditions (i.e. most of housing history) will also rise with inflation and thus your equity will increase. I would post some numbers but it's easier to see if you just use the nytimes rent/buy calculator and play with numbers. It factors in the "lost opportunity cost" of the investment return you could receive on your down payment and any savings from renting (minus cap gains tax).

Obviously there are lots of cases where renting is better, and ownership rarely works out better at less than five years in the place. Just saying I think the anti-ownership sentiment in the press has been overblown, just as the pro-ownership sentiment was pre-2008.

(I mean not overblown to anywhere near the same degree, but yeah)

that's all aside from stuff like the "forced savings" benefit of a mortgage payment (behavioral view that yeah you're probably not actually going to take the extra money and put it all into an index fund)

"yeah you're probably not actually going to take the extra money and put it all into an index fund"

yep

yah tbc I don't mean in all cases yr saving money... But assuming 8 pct avg annual return over 20 years (default in the nyt calculator is 4 pct) its p easy to construct scenarios where over that same horizon renting is "cheaper."

also yr mortgage being highly leveraged but not yr index fund has got to have something to do with it

8pct avg annual return!? good luck there.

over a 20 year time horizon i think thats an ok estimate?

its possible, but i wouldn't bet on it. if you want a more reasonable comparison to housing in terms of risk profile you shouldn't compare vs. the stock market, but vs. mid yielding bonds.

(first the artisan thread devolves into coffee talk, now this happens to the quid ag thread. oy vey)

iirc 8.5 as avg annual return for an index fun over the last 20 years is about right. maybe my facts are wrong

neway i think we should be interrogating the assumption that the left position should be to increase or make easy home ownership

yep

first against the wall, all of you

against the wall of my recently refi-d UWS 2BR with gorgeous light and WIC

yeah I'm fine with that, but otoh I would support a position along the lines of "we should still support homeownership for those who would benefit from homeownership and stronger renter protection for others" -- which is really what the left's position has been since the Great Depression. The period leading to the financial crisis is a relative blip in this history.

if you really want to end the left's favoring of homeownership, you should dismantle fannie mae and freddie mac altogether and end the 30-year-mortgage as we know it (which is only made possible by those GSEs). Leave ownership to people with huge amounts of cash and income to make large down payments and large monthly mortgage payments on 10 or 15-year mortgages.

dudes, take it to the suburbs thread.

The difficulty with a policy of ending the 30 year mortgage and leaving home ownership to people with huge amounts of cash and pushing far larger numbers of people toward rentals is that you put the nation's housing supply under the control of landlords. If you enact stringent renter protections, the natural reaction would be for capital to flow away from that market, creating a housing shortage. The present system has improved the nation's housing stock enormously compared to what prevailed before the advent of the 30 year mortgage.

take it to the suburbs thread

yeah. this is not something that frets the ruling class.

The difficulty with a policy of ending the 30 year mortgage and leaving home ownership to people with huge amounts of cash and pushing far larger numbers of people toward rentals is that you put the nation's housing supply under the control of landlords.

tried to make this point in the other thread, but apparently landlords are mostly cool guys so it's no biggie

http://nymag.com/thecut/2013/03/qa-princeton-mom-wishes-she-married-classmate.html

"He went to a school of almost no name recognition," she said, declining to name the institution. "Almost no name recognition. A school that nobody has respect for, including him, really."

Haha now I want to know the school

School of Hard Knocks

buzza where did you go to school???

"It's not that I'm anti-feminist," she said. "I completely understand that not all women want to be married, not all women want a family, not all women are heterosexual. I get all of that!" But ". . . I'm just saying, if as a young (Princeton) woman, you are thinking that you would like to have not just professional success but personal success as part of your life happiness, keep an open mind to the men that you're surrounded with now."

I get that not every woman is straight or wants a family, but if you want to be happy they would be!

if THEY want to be happy they would be. You know what I mean.

People who give unsolicited advice, because they are just bursting at the seams with the conviction that they know how everyone else ought to act.

https://twitter.com/sapatton55

https://twitter.com/sapatton55/status/273278999503970304

"He went to a school of almost no name recognition," she said, declining to name the institution. "Almost no name recognition. A school that nobody has respect for, including him, really."

for a lot of Ivy Leaguers, this would be ANY school that isn't an Ivy League school (or, if they're feeling generous, one of the Little Ivies).

imagine being married to a man who didnt respect his school

haha i don't respect my school! i am unmarried -- maybe THAT's why!!

Worse yet, imagine being married to a man who doesn't respect Princeton.

qa is right in the url like they _knew_.

Ooh damn!

NYCRUNNINGGIRL
Her son goes to New York Law School. How come she's not shouting that part from the rooftops?

Unless I missed it somewhere above, this quintessential Quid/Ag story almost slipped through our fingers:

http://www.nytimes.com/2013/03/26/your-money/trust-fund-children-need-an-education-about-money.html?src=rechp&_r=2&

It was not until Mr. Lucas was 24 — long after he knew the trust could finance his Ivy League education — that he understood its full monetary value; that was when the Carnation shares were converted into cash after Nestlé bought the company in 1985. It was a shock, suddenly “having a pile of cash that you have no experience in investing,” he said. “That’s a very scary and risk-fraught transition.”

For many American families with wealth, the moment when their children learn how much money they have at their disposal causes profound anxiety. They fear that their children will not know what to do with the money and either squander it or not work as hard as they might otherwise.

like my man puff say

afaics, American families with wealth have a very anxious relationship with their money because no one told them what money is for.

omg this article, i can't even

And that leads to uncomfortable surprises. Ms. Allred recalled a young inheritor who had finished graduate school and was sitting down with his family’s accountant and lawyer. When they told him how much he was going to inherit — the first time he heard the full dollar amount — he excused himself to go to the bathroom and never returned to the meeting.

Worse, she said, are children who end up going into professions they would not have gone into otherwise because their parents led them to believe that they would receive nothing. She knew of one who went into the military; another got a business degree when she would rather have done something artistic. Both resented their parents’ mixed messages.

fuuuuuuuuuuck youuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuuu

irl lols

In his 40s and retired for more than a decade, he appears to be a model client for any trust and estate planner: he has already put more than $10 million in various trusts.

I do get that there is a basic concern that if despite having money you are not a worthless douchenozzle, and you would desire your children aspire to something other than that, it is probably not good to tell them that they can buy small islands on a whim.

http://i.imgur.com/8jpirFf.png

he looks really old for a 24 year old

;)

if i were rich, i'd want to support my kids if it turned out that they had artistic talent or decided to pursue an academic discipline that wouldn't make them well-off (like philosophy or comp. lit.) or a religious vocation. if the kids wanted to go into business or become corporate lawyers, then i'd be less inclined to be so generous b/c i'd assume that they'd make their own money soon enough.

but i'm not rich so what do i know?!? though i suspect my attitude may be more common among old-money types than it would be w/ the current breed of wealthy Ayn Rand-loving assholes.

rich people kids are the most disgusting savages full stop

Dr. Eric Dammann, a therapist who is treating the stress of the current economic times.