nobody got into trouble paying down debt

mortgage freeI knew with this bull Market that started in 2009 that there would be a time I would consider paying down my mortgage faster. I have decided that at this point in 2017, it became a good option.

Now let’s be clear, it doesn’t mean I am not going to buy any stocks going forward, it just means the percentage of my investment allocation is not going to be the same. Yes my current mortgage rate is only 2.7% for the next 5 years. And there is a good chance I could get a better total return in the long run with my cash.

However there is a bigger motivation for me and that is the flexibility of my daily cash flow. If you ask anyone if they would like to have a debt load diminished by 30% (or more depending of how much your mortgages payments take of your home pay of there monthly expenses): the answer will be a yes sir!!!!

Being mortgage free allows you to take off financial stress. It allows you to take unpaid holidays, work part time…. you name it. It’s a tool to add flexibility to your life. My current portfolio will grow over time anyways. Valuations have become high enough for me to acknowledge and practice the quote of the day.

 

 

NOBODY GOT INTO TROUBLE PAYING DOWN DEBT.

261.5 Billions on cash balance

Sometimes you’re just trying to understand what this staggering figure could mean. To Give you an Idea Apple could buy every single Professional team in the following leagues

NFL/NBA/NHL …. and would still have some extra cash to invest in their business. What’s even more impressive is that with 1 Billion iOS users with a retention rate of 92%, you’re looking at a very stable and recurring income stream. Eventually I believe Apple will have to deploy this mountain of cash and it will be interesting to see how they will grow their business.

 

cash reserve

This is becoming a stock pickers market

After an 8 year long rebound where it’s been easy to make a substantial total return by just buying the SP 500 Etf, I believe you must be looking into a stock picking strategy that involves filtering financial statements of quality companies. The main reason being that valuations across all asset classes are stretched and it’s becoming harder to find decent total return stories. If you are willing to put the effort your performance will easily beat the most known benchmark. I am presenting 2 graph that explains what I mean:

 

you can see the very decent perfomance of the Index below….

sp 500 tot ret

Now if you would have done your homework on checking the potential of companies like MMM & Macdonalds & Microsoft and correctly purchased those names instead of the etf look at the difference….

The index is up 57%, while microsoft is up 128%, Macdonalds 197%, MMM 137%

stock picking 1

Of course the goal is now to predict what will beat the index by a wide margin. That’s where you have to put the effort and the discipline to go through those financial statements. You can’t be lazy and expect the same returns you had since the 2009 rebound. It’s also not a bad Idea to think about splitting between paying back your mortgage faster and investing in fat yielding utilities like Dominion ressources, Duke Energy, Realty income, and safe utilities and Reits. I believe favoring high yielding stocks is a good strategy right now.

Be well and get wealthy

 

FANTASTIC QUOTE FROM STEVE WOZNIAK CO-FOUNDER OF APPLE

 

 

I think about resilience as the speed and strength of your response to adversity. So when you encounter a difficulty, a hardship, a challenge, how quickly and how effectively are you able to marshal strength and either overcome that challenge or persevere in the face of it?”

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