Recommended posts and links for the week ending July 4, 2010.
1. Must Have Equity in your Portfolio: Subramoney quotes Dr. Jeremy Siegel, author of Stocks for the Long Run, who has done a study of the returns of different types of assets over the past 200 years.
What he discovered is dramatic. $1 invested in gold in 1802 would have been worth $32.84 at the end of 2006. The same dollar invested in T-Bills, with interest reinvested, would have grown to $5,061. $1 invested in bonds would be worth $18,235. And $1 invested in common stocks with dividends reinvested – drum roll, please – is now worth more than $12.7 million. Even adjusted for the 2008 crash, equities still stand head and shoulders over the other asset classes by a mile. And we are talking passive investing – no Vallabh Bhansali or Ken Fisher to help you get better returns.
2. Should we Invest or Prepay Mortgage: JDR thinks that unless your mortgage rate is very high, it makes more sense mathematically to invest your money. But most gurus agree that psychologically, you should do what works for you. If paying off your mortgage would take a weight off your shoulders, then pay off your mortgage. Sure, you might be losing a bit in the long-term, but you’re still making a smart choice. As I said earlier, it’s like choosing between an apple and an orange. One may be better for you, but they’re both good.
3. Manish has posted an interesting conversation between an Insurance agent and a patient listener! Check out OK, Sir ji
4. Sandip Sabharwal has a post on how the decoupling will play out. He says, “The Dow went up from a level of 1938 at the end of 1988 to a level of 11500 by the end of the year 1999. In the same time period the Japanese markets fell from a level of 39000 at the end of 1989 to a level of 19000 at the end of 1999. Thus the biggest boom of the stock markets in the US corresponded to the big decline in Japanese stock markets and the economy.
I believe that a similar thing is likely to happen over the next decade for India (and some other emerging economies).”
5. Decluttering And Your Money by TSD: Clutter eats money.. Most stuff has a financial cost. The more stuff you have, the more hard-earned money you’ve dumped into it (and the less time you have to enjoy each item).
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