Fully agree with this and everything above. However, ...

> I also do not recommend invest in stock market

> Instead I would save up enough money, buy a house. Owning a land or an apartment will do you far better in the long run. Buy some gold when you have spare.

Isn't this advice contradictory?

The goal is to reduce risk, isn't it?

Then buying a house is very risky. If it is old, reparation costs are impossible to predict. If it is new, you have to watch over a building site which can easily blow its initial budget, both in time and money.

Same for buying gold. Nowadays the gold price is almost decoupled from its material value. This is mostly circle speculating with how other people will perceive the value of gold in the future.

Of course buying individual stocks is much more risky than either houses or gold, but that's what index funds are for, aren't they?

In areas close to the city (Somerville, Belmont, and Cambridge), every new house listing is a bidding war. All contingencies waived. Because the demand is so high, a lot of people don't sell houses as a whole anymore. But instead opt to sell multi-family houses as condos. And these condos still sell quickly.

The reason for the demand is that house buying is actually a very stable investment. Rent money covers the mortgage. Remodeling cost always repays itself (and in most cases actually give you a net gain). House itself appreciates year over year. Even the last recession did not slow down the appreciation much.

The risks you mentioned actually only apply to people who are new to all this.

The idea of an index fund is that you don't have to do anything for it to bring relatively reliable profits.

I was posting mostly to counter the argument that buying investment house is risky.

I also don't subscribe to the idea that remodeling pays for itself either (partly because it's also an act of consumption IMO), but I also don't believe that most remodeling results in a >60% return of investment, let along consistently at/over 100%.

PS: If context matters, I own and live in Cambridge, MA.

Remodeling houses in Cambridge has been very lucrative for some time. One of our family friends bought a small 2-family house in Cambridge (his 2nd property there) for just under 700K. This was a little over 2 years ago. He got a good deal for buying directly from a neighbor (market price was probably 800K to 900K). He spent the subsequent 2 years remodeling (while working at a full-time job). Now the estimate on the house is 1.7M to 1.8M.

And he spent a little over 200K on the remodeling cost. This includes building an extension to the house. The reason the cost is so low and it took so long was because instead of hiring a general contractor, he took his time finding different contractors for specific jobs and let them compete over price.

His example may sound a little extreme, but I don't think I've ever heard about someone renovating an investment house in Cambridge ended up with a net loss.

The problem with the mortage crisis in 2008 has to do with bad credit. If you save money and have a steady income, go head. Right now is still a good time as interest rate is still low (I went from variable to fixed after building enough credit). The risk is people buy a house when they can barely afford one or can’t even afford one at all. Ask family to help contribute for your first buy, and pay back. I never get the “buy alone, never bother family” thing.

Disclaimer: my parents did buy the house and I refinanced the house so I paid back. That being said I have a mortage (3k) monthly for 20 years at 4.25%. If I can’t pay back I still have to sell the house or the bank will take away, so doesn’t matter if my parents did buy the house in full initially. The risk is the same, but the money is well-spebt if you start saving now.

As far as gold, you can buy gold and save them. Perhaps this is a Chinese thing. We buy gold from stores and keep them in a safe, we don’t buy virtual golds at all knowing we don’t really own anything. The point is sell them when you can, either at high or when you really need thr cash. Remember physical is better than paper bills. Coin itself is worth more than a piece of paper. This is why I believe owning a car is far better in the long run. My dad bought one for $8000 SUV and it last about 10 years before he decided to get a new one. That old car about 15 years old was sold for $3000. Good deal!

There is a Chinese saying: we work to buy a brick. Because a brick can be reused, but a piece of contract can’t. This is so evident in NYC as Chinese immigrants own so many apartments/houses, and they rent them out to make $$. I also rent out my second floor to help pay back my mortage...

I know all the above can’t apply to everyone, espeically for those who live in expensive areas like SV (which is why I avoid working there). But look around, there must be a way for you to save money.... just review your monthly spend. Cancel a service you rarely or don’t use anymore... $100 save every month means $1200 a year.

You are basing many of those decisions based on your personal luck and other people's anecdotal experiences, but not what the data said.

Seriously, be open minded about subjective opinion. There is no right/wrong. If my method works for me, it works for me. My starting statement said there is no one definite way to live.

So let's respect that.

Risk tolerance is, but refusing to diversify outside of real estate and precious metals is objectively a risky strategy without a history of outperforming lower-risk ones.

Oh well, I think people will agree that following the advice in courses in reputable universities, perhaps, makes people wealthy more frequently than following advice that people disagree with on HN.

Some of your other points I agree with, others are debatable, but this here is just objectively incredibly bad advice. A life insurance is one of the worst investments you can possibly make: You'll pay huge fees (hidden, of course) and get very limited returns (far worse than an average stock) just for the peace of mind of not having to see the value of your investment go down (which should not matter over a 20-30 year timeframe).

Unlike some other kinds of insurance, you're not the one that will get the most benefit from it.

Start 2017, end 2037

0 portfolio to start, leave the rest of the defaults.

0 spending on the right hand side.

Scroll down and plug the annual premium (not the monthly) in as "other income" from 2017 through 2037.

Hit the big green "Run Simulation" button at the top.

I'm guessing you'll see a much higher number than $500,000. I ran the simulation with a $12,000 premium and got an average $500k payout, but the premiums are probably quite a bit higher than that if he has a $500k cash value.

Whole life and other investments-mixed-into-insurance frippery are designed to make the insurance companies and salespersons more money.

Buying term and investing the difference is almost surely a +EV play.

Imagine you get $3000 a month for a $60,000 plus $1000 to have someone manage your house on a regular basis. You get back your investment in 3 years. Let's be realistic too. How about in 8 years? Now you have a steady income $2000-$3000 a month. That's a nice bonus to your annual income.

Can you afford buying Apple stock and hope to make $500 a month with the stock is already so high? Every month you are paying more and more to cover more share. You will realize you are not making anything. Buy low-price stocks that will take off instead.

Finally, when you need $200,000 for whatever emergency, you can refinance from the bank. Can you do this from your stock investment which again has very low return? I know people who make several thousands a month but these are rare. Housing isn't. If buying property can't generate revenue, no one would be buying property and renting out. There is a reason why the property market is so expensive now, because owning a piece of land == sell high. We bought the house here for half a million, and if I actually sell it right now to build a condo I could get back my investment in 10 years or less (or sell it directly to someone).

Why do you bring up the straw man of buying individual stocks? Trying to get clever about picking stocks and when to buy/sell is directly contrary to the course's advice. Nobody but you seems to be recommending a non-diversified approach here, and you seem to hold some strange ideas as to the historic performance of various asset classes.

If my ideas are strange, no one lives in a house. We'd all be living on the street, because why would anyone bother to buy a house and rent to people? Look at New Zealand which recently bans foreigner investing in new properties, because they are rising property price, knowing people need a place to live. Why does university have campus housing? Because university can make income.

The point is, a land is worth more than a stock. Your mortgage market can fail, but the potential sell of a land is guarantee to be high after the crash. Don't buy a house if you cannot afford it yet.

Older generation knows how to make money, yet, new generations like so many here are clueless.