Monday Links – Where to invest your money

Investing

Bill Ackman, the head of Pershing Square investments, (perhaps inadvertently) suggested that you (i.e. EVERYONE) may be better off investing in a broad-based index fund, like the S&P 500 or the Russell 2000, rather than trying to go it alone or use a fund manager. As I’ve repeated here many times. Since fund managers underperform the market 80% of the time, finding that fund manager who continually outperforms the market is extremely difficult. Most of us, are likely better off in index funds.

Timing the market is really difficult. Unfortunately, during tough times, when the market is tanking, the way it’s been to start this year, a lot of people pull their money out of the market. If you’re in it for the long haul, that’s likely the worst thing you can do. When are you going to put your money back in the market? How will you time the market? What if you missed the best 20 days in the market since 1999? A $10,000 investment more than doubled during that time (Dec. 31, 1999 through Dec. 31, 2014). Those who missed the best 20 days lost money ($10,000 dropped to $7,297). Those who missed the best 30 days lost more ($10,000 to $5,048), and those who missed the best 40 days lost even more ($10,000 to $3,628).

Real Estate

Mortgage rates are down again, lower for the fourth consecutive week. The average 30-year fixed mortgage averaged 3.79 percent for the week ending Jan. 28, down from 3.81 percent the previous week. A year ago, mortgage rates stood at 3.66 percent.

Are you biting off more than you can chew? Here’s an article from The Motley Fool which looks at the real costs of homeownership. It delves into various expenses that you might not be considering when thinking about renting vs. buying. Further, it lays out the key ratio that lenders look at when considering you for a mortgage.

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