Investing and Personal Finance

[rousseau]

This is something I'm starting to get into these days and thought it may be worth-while to get a general, all encompassing thread going on the topic, where people can ask questions and bring up anything they like.

I'm still in the beginning stages with it but I figure the outcome of my investments will be correlated with the energy and time that I put into it. The more I learn the better I'll do. As such I've picked up a couple books to get started, The Intelligent Investor, The Intelligent Asset Allocator, and a few other miscellaneous titles. I've also become more active on the Money Stack Exchange section which has proven to be a really great resource.

Anyway, will leave it at that for now, hopefully this thread ends up serving the forum well.

 

[fast]

Learn to compartmentalize with such veracity that you think you're immune to the effects of multiple personality disorder that you've carefully hidden like a chameleon in the midst of ever changing diversity.

Once you got that down, forget anything and everything you've ever learned about the benefits of thinking on your feet. It will steer you wrong each and every time.

I have exactly 6,998 more rules. Let me know when you're ready.

 

[rousseau]

Learn to compartmentalize with such veracity that you think you're immune to the effects of multiple personality disorder that you've carefully hidden like a chameleon in the midst of ever changing diversity.

Once you got that down, forget anything and everything you've ever learned about the benefits of thinking on your feet. It will steer you wrong each and every time.

I have exactly 6,998 more rules. Let me know when you're ready.

The Intelligent Investor touches on this. Actually, it touches on the brunt of common mistakes that people make, and goes further to make the argument that 'what is a popular investment strategy is usually bad'. Your biggest risks are your confidence in your knowledge and your own emotion during market fluctuations.

As I read more and more I'm starting to get the sense that the brunt of people who get into investing do so without enough of an intrinsic understanding of how the market works, so they don't actually have any reasonable idea when they should or should not be buying and selling products, or why. This has a double whammy effect because it increases stress and uncertainty during market down-turns.

 

[fast]

You need to have a very clear and sharp separation between your various activities. It's like owning a multitude of businesses. When you're engaged in one, you need to wear the hat that has you focused on that business alone--don't let the personality differences you bring to bare while wearing one hat influence you while wearing another hat engaged in another activity.

I'll give you an example. The risk you should be willing to make when investing absolutely must (MUST) be different than when you're trading. Let's say my empire is split between investing, housing, business, and other. Let's say 30% is in investing. Trading is a small part of the "other" category, where my risk is greater but still moderate. For fun, you can be crazy and wild with penny stocks if you're using play money, a few hundred or a few thousand depending on your capital.

When you invest, watch your long term ROI compared to a major index, like the S&P 500. When investing, just matching it puts you in the elite group over 20 years. Any idiot can beat the S&P 500 index over a three month period. Many can do it over 3 years. Few (comparatively) will make it happen over a 5 year time span. Masters at the stock market WILL have less than they do now 20 years later. Bank on it. One major problem is they gave up on investing and traded instead.

I'm a big advocate of trading, but if you're serious about investing, you damn well better leave your trading acumen and pride at the alter of humble when you step into the real world of investing. I am a safe (SAFE) investor. I leave my wild and crazy antics at the party when I walk the chambered halls of investing.

The problem so many of us have is getting started. We know the returns from investing is chump change compared to the breath taking windfalls of successful trading, so what do we do? We trade with everything we have. And we are so stupid for it. That's why I say you have to (you must) have a stark difference in your game plan for investing as you would otherwise for trading.

 

[beero1000]

I've been investing since high school, and have been managing my parents' retirement accounts since grad school.

By far, the VAST majority of people are best served by putting their money into the lowest-fee index funds they can find, and then not touching it. It's really, really hard to do better than that consistently.

 

[rousseau]

I've been investing since high school, and have been managing my parents' retirement accounts since grad school.

By far, the VAST majority of people are best served by putting their money into the lowest-fee index funds they can find, and then not touching it. It's really, really hard to do better than that consistently.

Yea that's the sense I'm starting to get too. Warren Graham claims your main decision is whether you want to be a defensive or enterprising investor. For the defensive investor index funds are a good bet.

Curious, what are your thoughts on dollar-cost averaging?

 

[beero1000]

I've been investing since high school, and have been managing my parents' retirement accounts since grad school.

By far, the VAST majority of people are best served by putting their money into the lowest-fee index funds they can find, and then not touching it. It's really, really hard to do better than that consistently.

Yea that's the sense I'm starting to get too. Warren Graham claims your main decision is whether you want to be a defensive or enterprising investor. For the defensive investor index funds are a good bet.

Curious, what are your thoughts on dollar-cost averaging?

It's inefficient. You are statistically going to get a worse return without lower risk, which is a no-no in portfolio design. The only reason to do it is if you have an external reason, e.g. it helps you psychologically, or you just don't have the money up front, etc.

Did you mean Benjamin Graham? Keep in mind that The Intelligent Investor was written in the 40s. Market players are much more sophisticated now, so it's much, much harder to do well.

 

[rousseau]

I've been investing since high school, and have been managing my parents' retirement accounts since grad school.

By far, the VAST majority of people are best served by putting their money into the lowest-fee index funds they can find, and then not touching it. It's really, really hard to do better than that consistently.

Yea that's the sense I'm starting to get too. Warren Graham claims your main decision is whether you want to be a defensive or enterprising investor. For the defensive investor index funds are a good bet.

Curious, what are your thoughts on dollar-cost averaging?

It's inefficient. You are statistically going to get a worse return without lower risk, which is a no-no in portfolio design. The only reason to do it is if you have an external reason, e.g. it helps you psychologically, or you just don't have the money up front, etc.

Did you mean Benjamin Graham? Keep in mind that The Intelligent Investor was written in the 40s. Market players are much more sophisticated now, so it's much, much harder to do well.

Yep, there's a bit of a freudian slip, to Buffett's credit.

So with the sophistication of those with money to throw around, the assumption is that the market is much more efficient, and speculating is less likely to offer a good return over the long haul? Basically you're warning against speculating?

How do index funds play into that? I don't know how they work too well yet, but my assumption is that they're like a mutual fund which is so diversified that it removes a lot of the risk involved? So over a long-term period you're more likely to beat less risky products?

 

[beero1000]

It's inefficient. You are statistically going to get a worse return without lower risk, which is a no-no in portfolio design. The only reason to do it is if you have an external reason, e.g. it helps you psychologically, or you just don't have the money up front, etc.

Did you mean Benjamin Graham? Keep in mind that The Intelligent Investor was written in the 40s. Market players are much more sophisticated now, so it's much, much harder to do well.

Yep, there's a bit of a freudian slip, to Buffett's credit.

So with the sophistication of those with money to throw around, the assumption is that the market is much more efficient, and speculating is less likely to offer a good return over the long haul? Basically you're warning against speculating?

How do index funds play into that? I don't know how they work too well yet, but my assumption is that they're like a mutual fund which is so diversified that it removes a lot of the risk involved? So over a long-term period you're more likely to beat less risky products?

Not just speculation. Any piece of information that the average person can find on a company, a quant hedge fund can get too, and their computers react in milliseconds, they don't sleep or get tired, and they (almost) don't make mistakes. They can do all of the standard company valuation calculations and much more besides. People like David Shaw, Jim Simons and others made billions in the 80s because almost none of the investors at the time had heard of eigenvalue analysis, even though they'd all read The Intelligent Investor.

But there's a trade-off... the more people who know about a technique, the more money backing it, the less effective it is. So they needed the next thing, and the next, and the next. To get them, they hire really smart people to figure out what everyone else is missing. I know an ex-Dartmouth professor, a 4-time Putnam fellow from Harvard, physicists, computer scientists, etc that work at these places. At this point in the arms race, they're scrabbling to shave a few miles off the fiber optic lines that carry their news and trade information so they can get them a few milliseconds earlier. Anything for the next edge.

So you have to think - the main possibilities are that they missed what you saw or that they saw it and decided it wasn't worth pursuing over other investments. Have you spotted something that all of those smart people (and AI now) missed? It's possible, but incredibly unlikely, especially if you're just using standard statistics. Much more plausibly, the opportunity you've spotted isn't on the  efficient frontier for them - either it doesn't have as high a return as you thought, or it has more risk.

The other options are almost scarier - that the hedge fund models are all wrong (like in 2007) and/or there is just so much irrational money being thrown around that it causes significant market inefficiencies (like in 2000 and 2007 and probably bitcoin).

Index funds are diversified and stable, and since everyone is trying so hard to wring every last penny out of the markets, they can't be off of the efficient frontier by too much or they'd be arbitraged back on track. So if you invest in them, you pay a small fee and get a pretty much guaranteed optimal risk/return investment. On the other hand, any other investment you could pick would only really be that good in the best case scenario, so on average they'd nearly always be sub-optimal.

Most hedge funds fall into this pit too. It's basically impossible to overemphasize how hard it is to beat an index fund; even experienced professionals fail. Warren Buffett just won million dollar bet about it. The main question investors face today isn't 'what stock do I buy?' it's 'what percentages should I allocate to each of these index funds?'.

 

[rousseau]

It's inefficient. You are statistically going to get a worse return without lower risk, which is a no-no in portfolio design. The only reason to do it is if you have an external reason, e.g. it helps you psychologically, or you just don't have the money up front, etc.

Did you mean Benjamin Graham? Keep in mind that The Intelligent Investor was written in the 40s. Market players are much more sophisticated now, so it's much, much harder to do well.

Yep, there's a bit of a freudian slip, to Buffett's credit.

So with the sophistication of those with money to throw around, the assumption is that the market is much more efficient, and speculating is less likely to offer a good return over the long haul? Basically you're warning against speculating?

How do index funds play into that? I don't know how they work too well yet, but my assumption is that they're like a mutual fund which is so diversified that it removes a lot of the risk involved? So over a long-term period you're more likely to beat less risky products?

Not just speculation. Any piece of information that the average person can find on a company, a quant hedge fund can get too, and their computers react in milliseconds, they don't sleep or get tired, and they (almost) don't make mistakes. They can do all of the standard company valuation calculations and much more besides. People like David Shaw, Jim Simons and others made billions in the 80s because almost none of the investors at the time had heard of eigenvalue analysis, even though they'd all read The Intelligent Investor.

But there's a trade-off... the more people who know about a technique, the more money backing it, the less effective it is. So they needed the next thing, and the next, and the next. To get them, they hire really smart people to figure out what everyone else is missing. I know an ex-Dartmouth professor, a 4-time Putnam fellow from Harvard, physicists, computer scientists, etc that work at these places. At this point in the arms race, they're scrabbling to shave a few miles off the fiber optic lines that carry their news and trade information so they can get them a few milliseconds earlier. Anything for the next edge.

So you have to think - the main possibilities are that they missed what you saw or that they saw it and decided it wasn't worth pursuing over other investments. Have you spotted something that all of those smart people (and AI now) missed? It's possible, but incredibly unlikely, especially if you're just using standard statistics. Much more plausibly, the opportunity you've spotted isn't on the  efficient frontier for them - either it doesn't have as high a return as you thought, or it has more risk.

The other options are almost scarier - that the hedge fund models are all wrong (like in 2007) and/or there is just so much irrational money being thrown around that it causes significant market inefficiencies (like in 2000 and 2007 and probably bitcoin).

Index funds are diversified and stable, and since everyone is trying so hard to wring every last penny out of the markets, they can't be off of the efficient frontier by too much or they'd be arbitraged back on track. So if you invest in them, you pay a small fee and get a pretty much guaranteed optimal risk/return investment. On the other hand, any other investment you could pick would only really be that good in the best case scenario, so on average they'd nearly always be sub-optimal.

Most hedge funds fall into this pit too. It's basically impossible to overemphasize how hard it is to beat an index fund; even experienced professionals fail. Warren Buffett just won million dollar bet about it. The main question investors face today isn't 'what stock do I buy?' it's 'what percentages should I allocate to each of these index funds?'.

Great post, thanks.

It seems the more I read the more I get funnelled toward index funds. Outside of that our mortgage should be a decent place to put some of our money.

 

[beero1000]

Great post, thanks.

It seems the more I read the more I get funnelled toward index funds. Outside of that our mortgage should be a decent place to put some of our money.

No problem. It's something I've been interested in for a long time.

As for mortgages, it depends on your rate, and you should make sure to do the calculations yourself before trusting any 'common knowledge' general advice. A lot of the financial recommendations I see online are pretty terrible, or at least conditional on personal specifics. I've been seeing a bunch of 'you should pay your mortgage off early' or the 'you should get a 15 year mortgage' articles recently, where they tout how much money you save by not paying interest. That's not how it works. I'm not putting extra money into paying down my low fixed-rate mortgage when I can invest it to get higher returns and additional tax incentives too.

 

[rousseau]

Great post, thanks.

It seems the more I read the more I get funnelled toward index funds. Outside of that our mortgage should be a decent place to put some of our money.

No problem. It's something I've been interested in for a long time.

As for mortgages, it depends on your rate, and you should make sure to do the calculations yourself before trusting any 'common knowledge' general advice. A lot of the financial recommendations I see online are pretty terrible, or at least conditional on personal specifics. I've been seeing a bunch of 'you should pay your mortgage off early' or the 'you should get a 15 year mortgage' articles recently, where they tout how much money you save by not paying interest. That's not how it works. I'm not putting extra money into paying down my fixed-rate mortgage when I can invest it to get higher returns and additional tax incentives too.

At this stage of the game I'm ignorant enough that I haven't been too comfortable with putting my money in stocks yet. I figured at a 2.85% rate putting some money into my mortgage would at least beat inflation and give me some time before I'm comfortable expanding outward. Right now the task is paying for my wedding, though, so for the time being I'm trying to learn as much as I can so I can actually make an informed decision.

That said, if indexes are really the only other reasonable option, and offer a bigger return with low risk over a long-period, it might just be a case of figuring out how I want to allocate my resources between an index fund, my mortgage, and whatever else.

 

[beero1000]

Great post, thanks.

It seems the more I read the more I get funnelled toward index funds. Outside of that our mortgage should be a decent place to put some of our money.

No problem. It's something I've been interested in for a long time.

As for mortgages, it depends on your rate, and you should make sure to do the calculations yourself before trusting any 'common knowledge' general advice. A lot of the financial recommendations I see online are pretty terrible, or at least conditional on personal specifics. I've been seeing a bunch of 'you should pay your mortgage off early' or the 'you should get a 15 year mortgage' articles recently, where they tout how much money you save by not paying interest. That's not how it works. I'm not putting extra money into paying down my fixed-rate mortgage when I can invest it to get higher returns and additional tax incentives too.

At this stage of the game I'm ignorant enough that I haven't been too comfortable with putting my money in stocks yet. I figured at a 2.85% rate putting some money into my mortgage would at least beat inflation and give me some time before I'm comfortable expanding outward. Right now the task is paying for my wedding, though, so for the time being I'm trying to learn as much as I can so I can actually make an informed decision.

That said, if indexes are really the only other reasonable option, and offer a bigger return with low risk over a long-period, it might just be a case of figuring out how I want to allocate my resources between an index fund, my mortgage, and whatever else.

Inflation works the other way on loans - i.e. assuming you have a fixed-rate loan, the dollar amount of your payment stays constant, so the longer you can wait to pay, the less value you have to repay and the better off you are. Not sure what the tax situation is on mortgage interest in Canada, but in the US a rate like 2.85% is as close to free money as you are likely to see (on an after-tax, after-inflation basis).

 

[fast]

Great post, thanks.

It seems the more I read the more I get funnelled toward index funds. Outside of that our mortgage should be a decent place to put some of our money.

No problem. It's something I've been interested in for a long time.

As for mortgages, it depends on your rate, and you should make sure to do the calculations yourself before trusting any 'common knowledge' general advice. A lot of the financial recommendations I see online are pretty terrible, or at least conditional on personal specifics. I've been seeing a bunch of 'you should pay your mortgage off early' or the 'you should get a 15 year mortgage' articles recently, where they tout how much money you save by not paying interest. That's not how it works. I'm not putting extra money into paying down my fixed-rate mortgage when I can invest it to get higher returns and additional tax incentives too.

At this stage of the game I'm ignorant enough that I haven't been too comfortable with putting my money in stocks yet. I figured at a 2.85% rate putting some money into my mortgage would at least beat inflation and give me some time before I'm comfortable expanding outward. Right now the task is paying for my wedding, though, so for the time being I'm trying to learn as much as I can so I can actually make an informed decision.

That said, if indexes are really the only other reasonable option, and offer a bigger return with low risk over a long-period, it might just be a case of figuring out how I want to allocate my resources between an index fund, my mortgage, and whatever else.

I'm not going to argue with beero1000 over whether to pay down a mortgage when he could otherwise invest at a higher rate. He's right; the math is in his favor; however, I disagree with the maneuver with such emotion that I tear up just thinking about it, especially when I hear you talk about paying for your wedding.

Personal finance is to investing as our land is to a foreign place. Priorities are crucial. No mortgage hovering overhead with no dollars committed for stock market investment for the future far far outweighs a compromise between simultaneously allocating between the two. The risk associated with a mortgage is highly underestimated, so much so that I'd highly encourage the advice you take for personal finance come from a different source than your investment learning.

 

[rousseau]

At this stage of the game I'm ignorant enough that I haven't been too comfortable with putting my money in stocks yet. I figured at a 2.85% rate putting some money into my mortgage would at least beat inflation and give me some time before I'm comfortable expanding outward. Right now the task is paying for my wedding, though, so for the time being I'm trying to learn as much as I can so I can actually make an informed decision.

That said, if indexes are really the only other reasonable option, and offer a bigger return with low risk over a long-period, it might just be a case of figuring out how I want to allocate my resources between an index fund, my mortgage, and whatever else.

Inflation works the other way on loans - i.e. assuming you have a fixed-rate loan, the dollar amount of your payment stays constant, so the longer you can wait to pay, the less value you have to repay and the better off you are. Not sure what the tax situation is on mortgage interest in Canada, but in the US a rate like 2.85% is as close to free money as you are likely to see (on an after-tax, after-inflation basis).

Ah, took me a second there but I get what you're saying now.. that's handy.

My line of thinking was that the money I'd save on interest would beat the deterioration of my savings due to inflation, but it sounds like the math is a little more complicated.

 

[rousseau]

At this stage of the game I'm ignorant enough that I haven't been too comfortable with putting my money in stocks yet. I figured at a 2.85% rate putting some money into my mortgage would at least beat inflation and give me some time before I'm comfortable expanding outward. Right now the task is paying for my wedding, though, so for the time being I'm trying to learn as much as I can so I can actually make an informed decision.

That said, if indexes are really the only other reasonable option, and offer a bigger return with low risk over a long-period, it might just be a case of figuring out how I want to allocate my resources between an index fund, my mortgage, and whatever else.

I'm not going to argue with beero1000 over whether to pay down a mortgage when he could otherwise invest at a higher rate. He's right; the math is in his favor; however, I disagree with the maneuver with such emotion that I tear up just thinking about it, especially when I hear you talk about paying for your wedding.

Personal finance is to investing as our land is to a foreign place. Priorities are crucial. No mortgage hovering overhead with no dollars committed for stock market investment for the future far far outweighs a compromise between simultaneously allocating between the two. The risk associated with a mortgage is highly underestimated, so much so that I'd highly encourage the advice you take for personal finance come from a different source than your investment learning.

Thanks for the balanced perspective, this is an important point.

One thing I'm recognising as I learn more (even in this thread) is how much I don't know. Untrue assumptions, missing information, and even the inexperience of having invested at all. Definitely something I could easily burn myself with, despite having a sense of confidence.

 

[beero1000]

I'm not going to argue with beero1000 over whether to pay down a mortgage when he could otherwise invest at a higher rate. He's right; the math is in his favor; however, I disagree with the maneuver with such emotion that I tear up just thinking about it, especially when I hear you talk about paying for your wedding.

Personal finance is to investing as our land is to a foreign place. Priorities are crucial. No mortgage hovering overhead with no dollars committed for stock market investment for the future far far outweighs a compromise between simultaneously allocating between the two. The risk associated with a mortgage is highly underestimated, so much so that I'd highly encourage the advice you take for personal finance come from a different source than your investment learning.

Of course, everyone needs to make their own decisions, and psychological and risk-assessment factors are definitely relevant, but it's important to look at it rationally.

I'd argue that a good amount of mortgage risk actually goes the other way. For most people, the main risk in their mortgage is something happening during their repayment period so that they stop being able to make their payments (e.g. illness, losing a job, etc). Those are exactly the situations where you really want to have actual liquid capital accessible instead of being tied down in home equity. The bank wants their payment every month regardless of how much extra you paid last month, so until you've completely paid off the mortgage having the funds available to keep making payments in case of emergency actually mitigates your risk at a very low cost (or even for a profit).

- - - Updated - - -

At this stage of the game I'm ignorant enough that I haven't been too comfortable with putting my money in stocks yet. I figured at a 2.85% rate putting some money into my mortgage would at least beat inflation and give me some time before I'm comfortable expanding outward. Right now the task is paying for my wedding, though, so for the time being I'm trying to learn as much as I can so I can actually make an informed decision.

That said, if indexes are really the only other reasonable option, and offer a bigger return with low risk over a long-period, it might just be a case of figuring out how I want to allocate my resources between an index fund, my mortgage, and whatever else.

Inflation works the other way on loans - i.e. assuming you have a fixed-rate loan, the dollar amount of your payment stays constant, so the longer you can wait to pay, the less value you have to repay and the better off you are. Not sure what the tax situation is on mortgage interest in Canada, but in the US a rate like 2.85% is as close to free money as you are likely to see (on an after-tax, after-inflation basis).

Ah, took me a second there but I get what you're saying now.. that's handy.

My line of thinking was that the money I'd save on interest would beat the deterioration of my savings due to inflation, but it sounds like the math is a little more complicated.

To give you a better idea of what early mortgage repayment will save you, I did some quick calculations.

For a 2.85% 30-year fixed-rate mortgage, after accounting for inflation (assuming it stays around the current 2.2%), you'd end up paying back $108.92 for every $100 borrowed. If you double your payment each month, you'd pay back the 30 year mortgage in just under 12 years and end up paying back $103.76 per $100 borrowed, after inflation. So doubling your payment and paying back the mortgage more than 18 years early will save you, over the 30-year life of the loan and adjusted for inflation, about $5.16 per $100 borrowed (i.e. you save 5% in repayments over the whole life of the loan).

Contrast that with (the generally considered extremely safe) US Government bonds that return, on average, 5% per year. Now, that's not guaranteed and there still is some risk, so depending on how risk averse you are different decisions might make sense, but a mortgage is as good of a loan as anyone is likely to get, and paying one back early can be (depending on the details) a terrible investment.

 

[rousseau]

Of course, everyone needs to make their own decisions, and psychological and risk-assessment factors are definitely relevant, but it's important to look at it rationally.

I'd argue that a good amount of mortgage risk actually goes the other way. For most people, the main risk in their mortgage is something happening during their repayment period so that they stop being able to make their payments (e.g. illness, losing a job, etc). Those are exactly the situations where you really want to have actual liquid capital accessible instead of being tied down in home equity. The bank wants their payment every month regardless of how much extra you paid last month, so until you've completely paid off the mortgage having the funds available to keep making payments in case of emergency actually mitigates your risk at a very low cost (or even for a profit).

- - - Updated - - -

At this stage of the game I'm ignorant enough that I haven't been too comfortable with putting my money in stocks yet. I figured at a 2.85% rate putting some money into my mortgage would at least beat inflation and give me some time before I'm comfortable expanding outward. Right now the task is paying for my wedding, though, so for the time being I'm trying to learn as much as I can so I can actually make an informed decision.

That said, if indexes are really the only other reasonable option, and offer a bigger return with low risk over a long-period, it might just be a case of figuring out how I want to allocate my resources between an index fund, my mortgage, and whatever else.

Inflation works the other way on loans - i.e. assuming you have a fixed-rate loan, the dollar amount of your payment stays constant, so the longer you can wait to pay, the less value you have to repay and the better off you are. Not sure what the tax situation is on mortgage interest in Canada, but in the US a rate like 2.85% is as close to free money as you are likely to see (on an after-tax, after-inflation basis).

Ah, took me a second there but I get what you're saying now.. that's handy.

My line of thinking was that the money I'd save on interest would beat the deterioration of my savings due to inflation, but it sounds like the math is a little more complicated.

To give you a better idea of what early mortgage repayment will save you, I did some quick calculations.

For a 2.85% 30-year fixed-rate mortgage, after accounting for inflation (assuming it stays around the current 2.2%), you'd end up paying back $108.92 for every $100 borrowed. If you double your payment each month, you'd pay back the 30 year mortgage in just under 12 years and end up paying back $103.76 per $100 borrowed, after inflation. So doubling your payment and paying back the mortgage more than 18 years early will save you, over the 30-year life of the loan and adjusted for inflation, about $5.16 per $100 borrowed (i.e. you save 5% in repayments over the whole life of the loan).

Contrast that with (the generally considered extremely safe) US Government bonds that return, on average, 5% per year. Now, that's not guaranteed and there still is some risk, so depending on how risk averse you are different decisions might make sense, but a mortgage is as good of a loan as anyone is likely to get, and paying one back early can be (depending on the details) a terrible investment.

Thanks for all the help, much appreciated.

Think I might bug you one more time here, do you have any recommendations for books or other resources, or have you done a lot of your learning off the cuff?

 

[poster]

Over the past four years, my investment of $60k has resulted in income averaging $80-100K annually.

 

[beero1000]

Thanks for all the help, much appreciated.

Think I might bug you one more time here, do you have any recommendations for books or other resources, or have you done a lot of your learning off the cuff?

I've had a mix. I obviously tend toward the formally mathematical, and would recommend staying away from 'pop' investing books. It's too hard to account for survivorship bias and there's no guarantee their techniques will work in the future.

I'd recommend real (and modern) finance textbooks, like Valuation by McKinsey & Co, and/or The Concepts and Practice of Mathematical Finance by Joshi.