Gold, Silver, Real Estate and Crypto

[bogey21]

About 70 years ago when I was 17 I bought a publication titled The Price of Gold Must Go Up. At the time gold was $35 oz. I have owned gold and silver ever since. Today the price of gold and silver are under pressure. I think what is happening is that many are switching from gold and silver to Real Estate, Bitcoin and other Crypto as their stores of value...

George

 

[easyrider]

About 70 years ago when I was 17 I bought a publication titled The Price of Gold Must Go Up. At the time gold was $35 oz. I have owned gold and silver ever since. Today the price of gold and silver are under pressure. I think what is happening is that many are switching from gold and silver to Real Estate, Bitcoin and other Crypto as their stores of value...

George

1780 - 35 = 1745 / 35 = 49.875 x 100 = 4985% The gold value has increased almost 5000% in 70 years.

240000 - 24000 = 216000 / 24000 = 9 x 100 = 900%. The real estate value has increased about 900% in 70 years. Interesting thing is if the rent is added in averaging $6000 a year for 70 years = $420,000.

420000 + 240000 = 660000 - 24000 = 636000 / 24000 = 24.5 x 100 = 2450% Owning real estate including rents for 70 years has an increase of about 2450%.

Average s&p 500 stock return average for 70 years is about 10%. 100-10=90/10= 9 x 100 = 900% increase

I wonder if I did the math right because it looks like gold has the best increase over 70 years.

Bill

 

[am1]

I am for real estate. But it’s a job and a half managing and not as liquid as gold/stocks.

 

[bizaro86]

1780 - 35 = 1745 / 35 = 49.875 x 100 = 4985% The gold value has increased almost 5000% in 70 years.

240000 - 24000 = 216000 / 24000 = 9 x 100 = 900%. The real estate value has increased about 900% in 70 years. Interesting thing is if the rent is added in averaging $6000 a year for 70 years = $420,000.

420000 + 240000 = 660000 - 24000 = 636000 / 24000 = 24.5 x 100 = 2450% Owning real estate including rents for 70 years has an increase of about 2450%.

Average s&p 500 stock return average for 70 years is about 10%. 100-10=90/10= 9 x 100 = 900% increase

I wonder if I did the math right because it looks like gold has the best increase over 70 years.

Bill

I couldn't follow your math on stock returns, and it's definitely wrong.

70 years ago (1951) the S&P 500 closed at 23.77. It closed yesterday at 4605. That is 193x, or 19,300% return over 70 years. It also excludes dividends, which if reinvested makes a very big difference.

S&P 500 Index - 90 Year Historical Chart

Interactive chart of the S&P 500 stock market index since 1927. Historical data is inflation-adjusted using the headline CPI and each data point represents the month-end closing value. The current month is updated on an hourly basis with today's latest value.

www.macrotrends.net

 

[easyrider]

I couldn't follow your math on stock returns, and it's definitely wrong.

70 years ago (1951) the S&P 500 closed at 23.77. It closed yesterday at 4605. That is 193x, or 19,300% return over 70 years. It also excludes dividends, which if reinvested makes a very big difference.

S&P 500 Index - 90 Year Historical Chart

Interactive chart of the S&P 500 stock market index since 1927. Historical data is inflation-adjusted using the headline CPI and each data point represents the month-end closing value. The current month is updated on an hourly basis with today's latest value.

www.macrotrends.net

Historically, the s&p has been at about 10% over a long time span. What is the percentage increase of $100 after 70 years ? A compound interest calculator answers $106,428.

Bill

 

[bluehende]

1780 - 35 = 1745 / 35 = 49.875 x 100 = 4985% The gold value has increased almost 5000% in 70 years.

240000 - 24000 = 216000 / 24000 = 9 x 100 = 900%. The real estate value has increased about 900% in 70 years. Interesting thing is if the rent is added in averaging $6000 a year for 70 years = $420,000.

420000 + 240000 = 660000 - 24000 = 636000 / 24000 = 24.5 x 100 = 2450% Owning real estate including rents for 70 years has an increase of about 2450%.

Average s&p 500 stock return average for 70 years is about 10%. 100-10=90/10= 9 x 100 = 900% increase

I wonder if I did the math right because it looks like gold has the best increase over 70 years.

Bill

You have to take into account compounding. The stock number is way off.

 

[bogey21]

My point was not which was better, precious metals or stocks. Stocks won hands down. My point is that I think the money going into crypto and real estate today is money that in the past went into gold and silver...

George

 

[bizaro86]

Historically, the s&p has been at about 10% over a long time span. What is the percentage increase of $100 after 70 years ? A compound interest calculator answers $106,428.

Bill

That would be about 1000x return over 70 years, which just shows that your initial calculation of 9x was deeply wrong.

I'm also not sure why you'd use a rule of thumb when exact data is available.

 

[bizaro86]

My point was not which was better, precious metals or stocks. Stocks won hands down. My point is that I think the money going into crypto and real estate today is money that in the past went into gold and silver...

George

I agree with this. It will be interesting to see how crypto all shakes out. My personal bet is that the bubble will burst, but just like the tech bubble in 2001 a few long term winners will emerge.

I think dogecoin is probably the pets.com equivalent. But I have no idea which one is the Amazon equivalent, so have 0 crypto exposure.

 

[easyrider]

My point was not which was better, precious metals or stocks. Stocks won hands down. My point is that I think the money going into crypto and real estate today is money that in the past went into gold and silver...

George

What makes you think that George ? This year Blackwater and other Investment companies were selling stocks and buying up real estate. Many investment companies bought large amounts of precious metals too. I don't know if they are buying up cryptos.

I know some people that are buying real estate and crypto. Many people younger than I are into crypto's. My niece was explaining her dogecoin earnings this year. She did pretty good. She is part of a reddit group. They are or were into shiba inu recently. Most people I know don't buy physical gold and silver or invest in real estate. Most like like managed stocks even when they tank.

Bill

 

[Brett]

My point was not which was better, precious metals or stocks. Stocks won hands down. My point is that I think the money going into crypto and real estate today is money that in the past went into gold and silver...

George

Stocks win in the long term but stocks get a tax break compared to interest bearing assets like CD's and bonds
Precious metals and RE have good returns
but crypto ... not sure about the long term

 

[easyrider]

Stocks win in the long term but stocks get a tax break compared to interest bearing assets like CD's and bonds
Precious metals and RE have good returns
but crypto ... not sure about the long term

Everyone thinks stocks are the way to go but from what I can tell it takes discipline and a bit of luck to actually have a decent retirement portfolio. The median retirement portfolio at retirement is about $140,000 in the USA.

Imo, real estate wins for most people because their paid off home has increased in value more than their stock value at retirement.

Bill

 

[bizaro86]

Everyone thinks stocks are the way to go but from what I can tell it takes discipline and a bit of luck to actually have a decent retirement portfolio. The median retirement portfolio at retirement is about $140,000 in the USA.

Imo, real estate wins for most people because their paid off home has increased in value more than their stock value at retirement.

Bill

Its easier to leverage real estate.

 

[PigsDad]

Everyone thinks stocks are the way to go but from what I can tell it takes discipline and a bit of luck to actually have a decent retirement portfolio. The median retirement portfolio at retirement is about $140,000 in the USA.

Imo, real estate wins for most people because their paid off home has increased in value more than their stock value at retirement.

I think the difference has more to do with how much and how consistently people "invested" in each of those. With your house, you "invest" every month with your mortgage payment for 30 years or more. How many people do you know that also invested that same amount each month, starting at the same point in their lives, in their retirement portfolio?

And no, it is not hard to match the S&P returns -- simply invest in an index fund. Simple. Easy. No luck involved.

Kurt

 

[bizaro86]

I think the difference has more to do with how much and how consistently people "invested" in each of those. With your house, you "invest" every month with your mortgage payment for 30 years or more. How many people do you know that also invested that same amount each month, starting at the same point in their lives, in their retirement portfolio?

And no, it is not hard to match the S&P returns -- simply invest in an index fund. Simple. Easy. No luck involved.

Kurt

Completely agree. Although in fairness to the OP, that wasn't true in the 50s. The first Vanguard index fund didn't launch until 1976.

 

[easyrider]

I think the difference has more to do with how much and how consistently people "invested" in each of those. With your house, you "invest" every month with your mortgage payment for 30 years or more. How many people do you know that also invested that same amount each month, starting at the same point in their lives, in their retirement portfolio?

And no, it is not hard to match the S&P returns -- simply invest in an index fund. Simple. Easy. No luck involved.

Kurt

Kurt, I think you are over looking the luck aspect. Picking the right funds at the right time makes a huge difference on the outcome.

Bill

 

[Brett]

Kurt, I think you are over looking the luck aspect. Picking the right funds at the right time makes a huge difference on the outcome.

Bill

sure, if one believes actively managed stock mutual funds can beat the long term "market"
But I'm a believer in low cost diversified index funds

https://www.thebalance.com/why-index-funds-beat-actively-managed-funds-2466411

 

[Brett]

Completely agree. Although in fairness to the OP, that wasn't true in the 50s. The first Vanguard index fund didn't launch until 1976.

yes, and that's about when I started investing with Vanguard and Schwab

 

[bogey21]

Completely agree. Although in fairness to the OP, that wasn't true in the 50s. The first Vanguard index fund didn't launch until 1976.

I remember my Mother investing in the Wellington Fund in the early 50s. When I checked its daily price in the newspaper I think there were only about 10 mutual funds listed...

George

 

[MULTIZ321]

Bitcoin FOMO is here.

Bitcoin FOMO is here

Fear of missing out drives a new mania

theweek.com

.


Richard

 

[DrQ]

Kurt, I think you are over looking the luck aspect. Picking the right funds at the right time makes a huge difference on the outcome.

Bill

In equities and bonds, you make your own luck.

Our FA is looking for undervalued quality stocks and manage our portfolio. It will be interesting to see where he goes as we seem to be entering a period of stagflation.

Real estate is very illiquid, but is a tangible asset. Unless it has been improved/developed it does not produce income and can be an expense.

Crypto can be stolen from you virtually, there are so many new cryptocurrencies and some of the brokers are questionable for converting to cash. Some of the new crypto funds are questionable in their backing and are using the cache of crypto to reel in investors. If it goes bad, it will be very ugly, it reminds me of Dutch tulips.

Precious metals seem to be driven by times of uncertainty but at least is a tangible asset. Right now, stagflation and competition from crypto seems to have held it back.

 

[PigsDad]

Kurt, I think you are over looking the luck aspect. Picking the right funds at the right time makes a huge difference on the outcome.

What luck is there involved w/ index funds? I'm talking long-term, consistent investment, as this was in reply to your mention about how retirement funds compared to home investment. Invest in your retirement fund each pay period in an index fund and there is no timing, no decisions, no luck involved at all. If someone can have the discipline to make their monthly mortgage payment, they certainly can have the same discipline to invest in their retirement fund with each pay check.

Kurt

 

[easyrider]

Crypto can be stolen from you virtually, there are so many new cryptocurrencies and some of the brokers are questionable for converting to cash. Some of the new crypto funds are questionable in their backing and are using the cache of crypto to reel in investors. If it goes bad, it will be very ugly, it reminds me of Dutch tulips.

I'm not into cryptos but some of my younger family members are. Last year I asked where they get their info. It's Reddit, so out of curiosity I joined Reddit too. I have been watching the posts on the shibainu coins and tokens. I watch Wall Street bets, Wall Street silver and a bunch of others. It's so easy to be involved with any of these products using a phone and an online broker. It reminds me of day trading.

Bill

 

[easyrider]

What luck is there involved w/ index funds? I'm talking long-term, consistent investment, as this was in reply to your mention about how retirement funds compared to home investment. Invest in your retirement fund each pay period in an index fund and there is no timing, no decisions, no luck involved at all. If someone can have the discipline to make their monthly mortgage payment, they certainly can have the same discipline to invest in their retirement fund with each pay check.

Kurt

Most people that I know use a financial planner and have their fingers crossed as they retire. Even with index funds, volatility can substantially reduce the amount of cash in even the best index funds. It is true that if you wait long enough it comes back but as you get short on years you don't want to be short on cash. My point is that there is luck involved with every asset class including index funds. If you buy the right one at the right time it is often luck.

I kind of doubt that many people have the kind of discipline it takes to invest on their own. Without an employer matching contribution most investors would likely invest less than they do. I read that only a third of all workers are invested in stocks because most of this group has employer contributions.

I get what you are saying about the monthly contributions being more of a discipline than luck because that money invested in index funds is pretty safe and does accumulate over time.

Bill

 

[PigsDad]

I get what you are saying about the monthly contributions being more of a discipline than luck because that money invested in index funds is pretty safe and does accumulate over time.

Don't get me wrong -- I'm not saying that index funds provide any more safety than the general market, just that it is easy to replicate the S&P returns without any luck involved. An index fund is an index fund -- any one that tracks the S&P will perform almost exactly like any other. For safety, one needs to diversify -- I don't recommend that one has 100% of their funds in an index fund.

As for discipline, yes, that is an issue for many. I really don't think that most people need to use a financial planner, as very few of them can consistently outperform the overall market. The problem is that people try to time the market, and that rarely works out for them. Most would fare better is they just left their investment ride, and stick to a reasonably diversified portfolio. I know it has worked out very well for me -- I never changed course or panic sold through the three major stock market crashes I have encountered (dot com, 2007 Great Recession, and 2020 Pandemic).

Kurt