Under 35? Hurray for the meltdown!

[jeffrey]

If you're 35 or older, the financial crisis may seem to have no upside. Your retirement funds, home equity, job prospects and credit lines have withered so much that it's hard to focus on anything but what you've lost.

If you're young, though, the biggest threat to your future financial security isn't the current crisis. Your greatest risk is that fear will cause you to miss some once-in-a-lifetime opportunities...

Under 35? Hurray for the meltdown! - MSN Money

[red92s]

Other than the part about continuing to invest in long-term funds, I don't see much to like in that article.

Houses are on sale. Home prices are down 27% from their July 2006 peaks

Since we all generally seem to agree that home price trends were an unsustainable "bubble" back in 2006 . . . why are we touting them as "on sale" now. Maybe they are not so much "on sale" now as they were "way overpriced" back then. A return to sustainable, historical pricing trends is not a "sale".

[kork13]

Originally Posted by red92s

Since we all generally seem to agree that home price trends were an unsustainable "bubble" back in 2006 . . . why are we touting them as "on sale" now. Maybe they are not so much "on sale" now as they were "way overpriced" back then. A return to sustainable, historical pricing trends is not a "sale".

I think it's more like an out-of-balance equilibrium. I expect that home prices really are currently lower than they should be ("on sale"), just because of a reaction to market conditions. Average values are lower than they should be, and will probably return to some higher value (though less than what they were during the 'bubble'). It's the same as with the investments market. As a reflex to current conditions, valuable stocks are currently underpriced as an over-reaction -- people freaked out and sold too far. So in that, I agree with the author.... it's a good time to invest or buy a home, IF THAT WAS ALREADY PART OF YOUR PLAN. Someone shouldn't go try to buy a home right now just because the market's good for buyers.

Two things I think the author missed, however... first, she said this:

Interest rates are still near generational lows but are likely to shoot up once the recovery begins.

.... what that means to me, a 22-y/o who won't be buying a house for at least 5-10 years, is that when I go to buy, my mortgage rate will be through the roof.... great.... Also, she totally ignores inflation. With all the gov't spending going on right now, we're gonna have inflation like crazy in a decade or so. I can't really consider that "good news"....

[MonkeyMama]

To original article - no kidding! I cringe to hear 20 year olds opting out of the stock market right now. We have been buying stocks HALF the price we have been most of our adulthood. I can't imagine what this translates to in the long run. Though, on the flip side, we didn't have a lot invested to lose in the first place. win-win. (& moving forward, once stock bounce back to some level of normalcy, I have the feeling this will buy us the luxury to invest more conservatively in the long run - which we probably will after watching all that has gone on the last year).

On the houses? I have to agree with the comments. I have friends who have told me I was stupid to buy (in 1999 by the way) and they would NEVER buy (said as recently as 2008). Suddenly they are all out buying houses. ??? We paid $100k less in 1999. Hello??? Not sure how much of a sale this is. & it doesn't take rocket science to know recent years prices were completely unsustainable.

[GREENBACK]

Originally Posted by MonkeyMama

On the houses? I have to agree with the comments. I have friends who have told me I was stupid to buy (in 1999 by the way) and they would NEVER buy (said as recently as 2008). Suddenly they are all out buying houses. ??? We paid $100k less in 1999. Hello??? Not sure how much of a sale this is. & it doesn't take rocket science to know recent years prices were completely unsustainable.

You're right MM, it doesn't take rocket science but most don't pay attention to this stuff in good times. In bad times they suddenly realize how stupid they've been. This applies not only to housing but to everything financially related.

[ThriftoRama]

Uh, that's partially a load of crap. I'm 34 and I'm not cheering. Maybe because I have been "doing the right thing" all along. I already own a house, and I have been saving in retirement and other funds for years. Hubby and I have lost over 200k in hard-earned savings since last October. (ON paper at least). It's made us wish we had just spent it instead. We have nothing to show for scrimping. We should have just gone on the fancy vacations and lived it up and bought gadgets, because saving apparently got us nowhere.

[ceejay74]

I just turned 35, and I don't have much to invest, but I tried what I could to take advantage: I switched my 401(k) from a moderate-risk to a high-risk portfolio, with more money in stocks. Hope it pays off in the future at some point!

As for my house, I bought at the absolute peak of home values, so it's gonna be a looong haul just to break even on the thing. Thus, I'm not selling it until I can.

[LivingAlmostLarge]

Already debated on my blog here.