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No. of Recommendations: 8
Lots of fallacies in this set of 'claims'.


#1 big mortgage.....while Kiyosaki in RDPD advocates this, and many tax planners who want to minimize your current tax payments, rather than your long term financial health necessarily, advocate buying big house with big mortgage, you will find most millionaires and aspiring millionaires buy reasonable houses in reasonably priced areas, and STAY IN THE SAME HOUSE forever, and don't refinance. No moving up to bigger house because they need more 'mortgage interest deduction.

Similarly, houses don't always go up. Talk to people in Dalls in 1983, who bought at the peak....they are about even after the real estate crash of 1986, 14 years later...... most houses are 'poor' investments overall, especially when inflation is only a few percent.

A house bought in Dallas ten years ago is worth maybe 10-15% more now.

The secret is to buy LESS house than you can afford, and invest the rest.

You won't necessarily make more money in 'the market'. DOW, SP500, are down 10+% in a year. If you had borrowed money and sank it into market, you would have lost 10%, not made any money in past year. NO telling what this year will do either.....what worked in the 1990s won't necessarily work in the 2000s....

Every dollar you owe to the bank is a dollar of debt. It subtracts from assets. THe more you owe, the worse it is.
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#2 - for young people, 100% stock is probably not bad advice....for someone within 5-10 years of retirement, it is high risk to be 100% in stocks.

You always want at least six months living money somewhere accessible.
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#3 could be, if they bought them 40 or 50 years ago....almost irrelevant unless they specify the holding time.....you could have invested $24 in the 1600s, and it would be worth trillions today....so what?
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#4 Yes and no.....long term buy and hold is a great philosophy (and John Bogle says it very well, along with Malkiel in A Random Walk Down Wall STreet).

Look at your brokerage statement every month. Any error not caught within a reasonable time, usually 30 days, is considered a valid transaction. If someone zeroes out your account, and runs off with the money, if you don't look at your statements, it will be you, not the brokerage, responsible for the disapperance of your money!....

That is failure to do due diligence !

That said, don't worry about exactly what your investments do month to month...it is yearly trends that are important....
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#5...Don't get hung up on SP500 or DOW, but if your investments lag, then you aren't doing a good job.....

INDEX INDEX INDEX..... see THe Asset Allocator......by Bernstein, or visit his site, the Efficient Frontier......

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