July 2013

Saturday, July 6, 2013

Carnival of Passive Investing #31 - June 2013 Edition Now Live at Investing Monk

The 31st (June 2013) edition of the Carnival of Passive Investing is now live on The Investing Monk at the link below. A big thanks to Vipin over at that site for hosting this time around!

Carnival of Passive Investing # 31 - June 2013 Edition

Thanks to everyone for participating. Congrats to this month's top picks (shown below)!

1. Anton Ivanov presents Why Stock Market Timing Is a Waste of Time posted at Dreams Cash True. The sad truth is that market timing is largely futile. The vast majority of active traders fail to outperform long-term investing strategies that do not rely on timing the market. Many investors end up with large losses, loose their motivation and proclaim that stock market investing is dead.

2. PK presents Want to Be a Better Investor? Ask Your Wife! posted at Don’t Quit Your Day Job.Here are some hard facts that might blow a hole in your passive plan – even though men generally control the investing strings, women are better investors. Consider this evidence when coming up with your strategy!

3. Jacob @ My Personal Finance Journey presents Should You Include Emergency Fund and Specifically-Earmarked Savings in Your Overall Asset Allocation? posted at My Personal Finance Journey. Should savings that are earmarked for specific short/intermediate-term needs (vacations, buying a car, home down payment, college savings, doggie emergency fund, buying a new $3,000 bike, saving for a pool, saving for a rental real estate investment) and one’s emergency fund be included in your long-term asset allocation percentages? Or, should it be considered as a completely separate basket(s)? This post answers these questions.


A big thanks to our participants and host, Investing Monk! Our host of the next (July 2013 - # 32) edition, scheduled to go live on June 30th, 2013 will be A Rich Life! Be sure to get your articles in now (see instructions below)!

Since Blog Carnival has ONCE AGAIN started to not work at all recently (most everyone that I know has had technical difficulties), you can use the Blog Carnival HQ submission form clicking here.

Thanks again for tuning in!

Until next time, 

-Jacob - Creator/Owner/Organizer, Carnival of Passive Investing

Opportune Time To Buy As Rates Begin To Climb

The housing market is in an interesting position, where prices are coming down, while mortgage interest rates are beginning to rise.  People are repeatedly warned that the days of record low affordable home financing are behind us.  Where once if you planned to purchase a home in the medium to long term it was considered unaffordable, the cost is now getting more expensive in the short term as well.

In the real world, nine out of ten would-be homebuyers require a mortgage to purchase a home, the few exceptions being those with at least $400,000 to spare.  The cost of a mortgage over the lifetime of the loan increases with interest, which becomes more expensive depending on the corresponding mortgage rate.
In the period during and immediately after the Great Recession, mortgage rates were reduced to near record lows to help soften the economic impact on the housing market.  The lower rates allowed more people to remain active participants in the housing market.  Housing is an important part of the economy, and without a strong housing sector, the economic recovery is abysmal at best.

However, the days of record low rates are moving quickly behind us.  Housing indeed remained strong, and helped drive the economy back to a robust state.  As a result, the need for lower financing rates has passed, and would-be buyers can expect the cost for a home loan to increase in the weeks and months ahead.
Economists and realtors are advising buyers who may be on the fence to find an affordable mortgage rate, and lock in now.  In the last few weeks, rates increased by 50 basis points, and as the economy projects stronger numbers in GDP, employment, and trade opportunities rates will continue to rise with the economic indicators.  An advertised mortgage rate today could be significantly higher as early as next week.

At the same time, people are advised to only apply for a loan if they can afford the payments.  Easy access to credit resulted in a number of bad loans prior to the recession, which eventually caused the economic turmoil.  If current rates are unaffordable or barely manageable today, consider holding off on becoming a homeowner until you can afford unexpected changes in the cost of your mortgage.