Freddie Mac announced last week that mortgage rates reached their highest level in over 20 years. And if you are considering on what you should do next, let me help you decide and explain what I am currently doing and plan on doing going forward in hopes that the housing crisis can get better.
The following list are some things that I am currently doing to help better my position financially. It is in no particular order.
- Paying down debt more heavily: Okay so this one I actually started earlier this year and had this as a goal. My plan is to pay down debts, like vehicle loans, to free up some extra cash that I could invest into the stock market with or pay for a rental property.
- Looking for extra income/new job: So this isn’t really anything new that I have done, I have actually been doing this my whole life. I will say, I feel more and more pressured to keep trying to earn more and more money. The reasoning 0f this is because the higher inflation goes, the higher mortgage rates go, the less value money becomes. We end up having to spend more money, so I figure to combat this, I need to make more money. Back in the day, it was good to stay with a company for 20+ years, but nowadays, job hopping is more beneficial. Google “benefits of job hopping” or anything like that, and you’ll read many stories about people jumping companies and receiving pay raises because of this.
- Save money in a savings account/money market account: If you can save a decent portion of money, I suggest putting it into a high-yield savings account or a money market account. Look for accounts that have a high interest rate, and you can earn a decent chunk of change. I personally use my ally savings account and ally money market account. Ally savings is earning 4.25% and the Ally money market account is earning 4.40% as of 8/20/2023.
- Investing into the stock market: Alright, so this section might be a little longer than the others, fair warning. As of right now, I am trying to ramp up my investments in the stock market. My reasoning? Well with mortgage rates soaring into space, I am shifting my focus from saving up for the next down payment, to maxing out my Roth IRA another year. I feel I can get a greater return in the stock market now and going forward than I could trying to buy a rental property. Now last weeks blog was more for beginners that have little to no knowledge about investing, today I am going to go a little more in depth as to what I like to invest in. My bread and butter investments are ETFs, and I am going to list my favorites, and why I love them so much.
- Vanguard S&P 500 Index (VOO): This is something Warren Buffet suggests. He believes that anyone can just invest into the S&P 500 index and be set for life. What is the S&P 500? It is the top 500 publicly traded companies in the United States of America. This is my favorite ETF, and my bread and butter. It pays a great dividend every quarter, has a low expense ratio, and has increased about $200/share since a first started investing. This has given me astronomical growth in my portfolio.
- Vanguard Total Stock Market (VTI): This ETF is another great ETF. This is my second favorite ETF, and is currently almost half the price of VOO. This ETF focuses on investing in the whole entire stock market. So if gives you much more diversification across the whole stock market including small, mid, and large cap stocks.
- Vanguard High Dividend Yield (VYM): I love this ETF so much that it has become the largest holding in my portfolio. This portfolio hasn’t helped my portfolio grow all that much, but it has paid me some really nice dividends. The main reason that got me into investing was because of dividends. Seeing my dividends multiply and multiply that then begin buying me free shares just by compounding, makes me that more excited to keep investing. After all, being able to retire requires you to be able to live off those dividends.
VOO, VTI, and VYM are the 3 ETFs that are my bread and butter. Each of them has their own part that it plays in my portfolio. I do invest in other individual stocks like Apple, Tesla, Bank of America, Walmart, Exxon and a few others. This blog I wanted to go a little more into detail as compared to last week. I would say feel free to invest into any stock, index fund, ETF, etc. as you like, as long as it is a good investment. To find good investments, do your due diligence and look at past performance of that investment. I like to look back over the last week, then the last month, and even over the last year.
Alright, let’s wrap this up with a joke that you can tell your friends at an upcoming tailgate!
The joke:
There are 2 men standing opposite sides of a river. One man yells at the other man, “Hey! How do I get to the opposite side of the river?” The other man replies, “You are on the opposite side of the river.”
Alexander Kroening- REALTOR 