Quote:
Originally Posted by RockCrusher
7% over time.... Maybe. But maybe not.
S&P 500 is up 4.7% YTD.
But over the last month the S&P 500 is down over 5%.
But the S&P 500 is up 20% in one year.
Bought my M2 April 14, 2023. Rather than paying cash had I invested say $70,000 in an S&P 500 mutual fund I'd be up about $14,000 in capital gains. 'course, there's taxes...
But had I bought an M2 last month and put $70,000 into that same S&P 500 mutual fund I'd be down by around $3,500.
I've never done it but I've been told if one has the cash to buy a car rather than pay cash he can finance it. But use the cash as collateral to get a very low interest rate. The principal is FDIC insured and if it proves needed the cash could be used to pay off the loan. In this case while one loses -- so to speak -- the cash he would own the car outright. And not be facing monthly payments.
Or put the $70,000 into a CD. Right now (in my area at least) bank CDs are paying ~5.2% (APY). 5.2% may not equal what the new car loan interest rate is but it does offset to some degree the new car loan interest. 'course, the interest the CD earns is taxable.
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Yes, what you're describing is market fluctuation.
My point was in the long run (decades) the market generally pays 7% if you invest in something like an ETF.
Since we can't read tea leaves, you just bank on that long term average because it's the only hard data we have.