Investing 102

[Bucketlist2012]

Originally Posted by GregWeld

Life is what happens to us while we're busy making other plans....

Boy Greg, you said a mouthful there..

Health Issues will eat through money like termites through wood..

I have been too busy lately dealing with my own health care issues, and even with great Insurance, I still have to pay thousands for my share..

I should of, would of, could have taken better care of myself....Spilled Milk.

So you younger Guys follow the Health thread and take good care of yourself...Otherwise the money you Save and Invest will get eaten up later by Hospitals and Doctors...

MIke

[Tony_SS]

Originally Posted by Bucketlist2012

Boy Greg, you said a mouthful there..

Health Issues will eat through money like termites through wood..

I have been too busy lately dealing with my own health care issues, and even with great Insurance, I still have to pay thousands for my share..

I should of, would of, could have taken better care of myself....Spilled Milk.

So you younger Guys follow the Health thread and take good care of yourself...Otherwise the money you Save and Invest will get eaten up later by Hospitals and Doctors...

MIke

Wise words Mike. Hope you're doing well.

[GregWeld]

Good to hear from you Mike!


Keep up the good fight buddy!

[CarlC]

Originally Posted by Bucketlist2012

I should of, would of, could have taken better care of myself....Spilled Milk.

So you younger Guys follow the Health thread and take good care of yourself...Otherwise the money you Save and Invest will get eaten up later by Hospitals and Doctors...

MIke

Words beyond wisdom. Money won't buy you health. Steve Jobs can attest to that.

Part of financial planning should be the "what if's" of future health costs. My father's passing was a real eye-opener for me in that his sudden departure was in many ways a blessing. He left life on his own terms and it did not have to destroy his estate to pay for in-home or nursing care (I didn't care if he died broke, but HE did.)

There are no easy or inexpensive options here. In the long run, if one wants to protect their assests and pass them on to their children the the best thing to do is talk to a tax and financial professional/lawyer and start planning now. There are timeline rules for what can, and cannot, be done for asset protection.

[Bucketlist2012]

Originally Posted by CarlC

Words beyond wisdom. Money won't buy you health. Steve Jobs can attest to that.

Part of financial planning should be the "what if's" of future health costs. My father's passing was a real eye-opener for me in that his sudden departure was in many ways a blessing. He left life on his own terms and it did not have to destroy his estate to pay for in-home or nursing care (I didn't care if he died broke, but HE did.)

There are no easy or inexpensive options here. In the long run, if one wants to protect their assests and pass them on to their children the the best thing to do is talk to a tax and financial professional/lawyer and start planning now. There are timeline rules for what can, and cannot, be done for asset protection.

Carl...

I was 50 years old 3 years ago when suddenly I was on my Death bed and NO Will or Trust.

My Wife called a Trust attorney and his Notary and he drove through heavy traffic at 400.00 an Hour plus the Notary wages, to rush to my Deathbed to notarize a Will and Trust at the last moment..

I did pull through and I am fighting hard, But I almost left my family at the hands of our thieving Government...

PLEASE, EVERYONE...No matter what your age, prepare and set up a Trust and Will and Advanced Health Directive for you and your Loved ones...

When something goes wrong, it happens fast and unexpectedly...

Investing does no good if the Government is just going to take it and leave your Family without your hard earned money..

[realcoray]

Here's an alternative I've started to do lately in addition to my retirement stocks.

Peer to peer lending via Prosper.com or LendingClub.com. Essentially you are buying notes for unsecured loans, in tiny slices.

I used prosper in the past and was less than pleased but with lending club it's been great minus one thing, how long it takes from the point where I put up money, until the note is issued. It is decidedly not an invest and forget endeavor.

Anyways, the idea is that people want to borrow money, to do things like consolidate other loans like high interest credit card debt, home improvement, small business loans etc. These are the types of loans you could get at a bank, but eliminating the bank means that people can borrow at a lower interest rate.

Other people, have money and want to earn a return. You can invest as little as 25$ per loan and the company in between services the loan and you collect the interest (minus fees).

In the case of lending club, the interest rates are between 6 and 25% based of course on the risk that the person who receives the loan will default. They have plenty of information to convey the risk, including their own scoring system, the persons FICO, various credit history details (how many late payments etc), their debt to income ratio, and so forth. They also have an area where the person can describe what they are using it for, but it's generally not ideal to let emotion control who gets your money.

The key thing here is that you need to diversify here just the same as anything else, by both investing in enough notes and spreading out your risk profile. The more notes you have, the less impact an individual note defaulting has on the overall portfolio.

The other big thing is that it is a loan, so the payments you receive each month, are principal + interest. Similar to dividend re-investing, but more importantly you have to re-invest these, since you get principal back.

The pros here are:

High interest rates - my blended rate is 10%, but you can go riskier and get 12-15%
Easy to use and manage
Lending club seems on top of rejecting shady applications, they say they accept only 10% of applications, and then they do more checking once a loan is funded.

The cons are:

Long delays to fund loans - Two weeks for me to fund 80% of the loans I have tried.

Lots of maintenance. If you had the suggested 20k+ invested, you'd have to re-invest in 20+ new notes every month, which generally involves checking every few days to see what has funded or not.

The tax issues are more complicated than most although they have streamlined the reporting they give you in terms of the interest you received, defaults etc.

Not very liquid. You can sell your notes, but it takes time to do so.

[WSSix]

If I had more money, I'd do this I think. I believe in helping people and if one of the ways I could do that was to lend someone money, I'd consider it. However, I'd only be willing to put up money I could lose and not see again without hurting myself. While I'm not really a fan of big banks, they have their lending criteria for a reason.

[GregWeld]

Remember that INTEREST is taxed as INCOME.... and you're adding to your income -- so let's say that you make a $1500 a week... at your regular job...and have withholding at the appropriate tax rate. Now a year goes by and you've added 20 grand in INTEREST INCOME. So be careful of 'bracket jumping' your income!

That's why dividends are so popular - they're not added to your income... and are taxed at a fixed rate of 20%...


72,500 is the top at 15%... make 72,501 and you're now paying 25% on that last dollar earned.

In most states there is also a STATE income tax.... so you've got to factor that in as well.

I'm not arguing against doing this kind of diversification etc... What I'm pointing out to ALL that read - is that don't forget that income taxes play a HUGE roll in your overall investing strategy! Don't overlook them! They will and do, affect your net return.

[realcoray]

Originally Posted by GregWeld

Remember that INTEREST is taxed as INCOME.... and you're adding to your income -- so let's say that you make a $1500 a week... at your regular job...and have withholding at the appropriate tax rate. Now a year goes by and you've added 20 grand in INTEREST INCOME. So be careful of 'bracket jumping' your income!

That's why dividends are so popular - they're not added to your income... and are taxed at a fixed rate of 20%...


72,500 is the top at 15%... make 72,501 and you're now paying 25% on that last dollar earned.

In most states there is also a STATE income tax.... so you've got to factor that in as well.

I'm not arguing against doing this kind of diversification etc... What I'm pointing out to ALL that read - is that don't forget that income taxes play a HUGE roll in your overall investing strategy! Don't overlook them! They will and do, affect your net return.

Indeed, the tax side of things is complex but they do have IRA accounts which avoid that.

They also say you shouldn't have more than 10% of your money in this sort of thing because I imagine if there was another recession the defaults probably go up.

[toy71camaro]

I thought this was a good read today...

what do to about the doom and gloom of the impending "correction"... basically? not a whole lot for us long term dividend investors. LINK