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by bosco 4190 days ago
The issue is he is telling this story from 2009-today in a frothy market. Yes, historically markets have gone up 9.2% on average over the last 50 years in a balanced portfolio but what happens if he invests from 2003-2008. It's a little different story. It's hard to use long term data for a short term notion.

Going forward, we are in a different environment where 9% might not be the annual return. Interest rates are almost nothing and not going back to late 70's level in the foreseeable future.
3 comments
simplemts 4190 days ago
I couldn't agree more. Has an investors returns been 10% or more since 2000? No, 2007, no?

This guy basically got lucky by having spare income to invest at the bottoms of a stock market. Hardly advice I would give anyone now, where investing now is closer to buying at the top of the market at 2007 than at the bottom of 2009.

Better advice, pay off your debt with the highest interest rates first, have an emergency fund, invest any extra income you have.

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bigtunacan 4190 days ago
I'm sure some investors lost during that time and others made well over 10% during the same time periods.

I've always invested and paid minimums to student loans and mortgage. I also locked in student loans and mortgage at very low rates, plus the effective interest rate is lowered by the tax advantage.

I've been investing in low fee index funds, because I'm not a stock broker, since 2002 and I have averaged about 14% growth year over year. That is much higher than I expected, but even at a modest 6 or 7% annual growth I would still be well ahead of paying off my student loans and mortgage. I never carry a balance on higher interest forms of debt such as credit cards.

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GIFtheory 4190 days ago
Inflation is another important factor. If the rate of inflation exceeds your debt's interest rate, for example, your debt is effectively shrinking over time just due to inflation. http://www.investopedia.com/terms/r/realinterestrate.asp
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golergka 4190 days ago
I don't think that what he means. He doesn't say that you have invest in stock market; rather, at least investigate your options, instead of focusing solely on repaying the debt.
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