Investing 102

[Bucketlist2012]

Originally Posted by sik68

If you would oblige, how about a little more Non-Investing 102? A lot has already been said to the effect of paying down debt before investing. My wife is in school, so we're borrowing from the government under their nice ''interest accrues upon disbursement" plans. By the time she graduates, we will have a California-house-sized loan that will even make the numbers Greg is working with look small. In the meantime, we have a buffer, and are continuing to keep our accounts flat...adding money towards our savings or retirement accounts now will just hurt us later.

Perhaps the experts in here will weigh in more succinctly...


A lot of people say you should attack the loans with the highest APR first. To me, it seems like the mathematically advantageous approach is to pay down the loan with the greatest overall accrual growth.

As an example:
100*5% APR = $5/year
50*8% APR = $4/year
So you pay down the $100 loan until the annual accruals are equal (at $80) then pay them down equally, no?

Sure mathematically it makes sense...But you have that theory, and then you have Dave Ramsey who believes in the "Debt Snowball", effect of killing the lowest balance first to build up the psychological Victory...

Two different theories to get to the same result...debt free except a mortgage...

I never bought Dave ramsey's stuff, but I did use some techniques to get debt free...I do use and pay credit cards and have ahigh FICO..Ramsey doesn't believe in that, But to answer your question, the debt snowball theory is the other method...Or you attack your highest rate loan first...

[Bucketlist2012]

Originally Posted by toy71camaro

I need to tackle my 401k too. ugh. mutual funds are a whole nother ball game. lol

They are the Dogs of investing...But we need to have them to get company matching, and to have tax deffered assets...

Then the company changes plans and you have to do it all over again..

But we can squeeze as much as we can out of the Dogs...

Most of my money is in Schwab...Is that he best thing to do ????

For me it is....I am in control of it, and it is liquid...

[GregWeld]

Originally Posted by sik68

If you would oblige, how about a little Non-Investing 102? A lot has already been said to the effect of paying down debt before investing. My wife is in school, so we're borrowing from the government under their nice ''interest accrues upon disbursement" plans. By the time she graduates, we will have a house-sized loan that will even make the numbers Greg is working with look small In the meantime, we have a buffer, and are continuing to keep our accounts flat...adding money towards our savings or retirement accounts now will just hurt us later.

Perhaps the experts in here will weight in more succinctly...


Greg, a lot of people say you should attack the loans with the highest APR first. To me, it seems like the mathematically advantageous approach is to pay down the loan with the greatest overall accrual growth.

As an example:
100*5% APR = $5/year
50*8% APR = $4/year
So you pay down the $100 loan until the annual accruals are equal then pay them down equally, no?

Ah Steven.... You open a can o'worms my friend!

#1 -- Sorry

#2 --

#3 -- I'm not for paying down low interest rate loans... I'm for paying down -- or better yet - not creating - Credit card debt....

So there's about as many opinions on this as there are people. IF -- BIG IF -- you can handle the debt AND save... the savings (especially the kind we're talking about) will help you pay off the debt.

So it's a balancing act. If your cash flow is adequate -- it should actually grow over time -- making the debt a smaller and smaller piece of the pie... and if you're saving at the same time -- that should also GROW...

TIME -- IF YOU'RE YOUNG is the biggest factor in all of this! Savings/INVESTING -- should return you 10% or so compounded over time... that is just HUGE...

Your debt is declining over time... and if they're student loans -- they have a very favorable interest rate that is fixed(?) The problem with most people is that they continue to pile on debt -- and never save... so the best advice to give them is to pay down debt.

Here's my thinking.... If you have 100K in the bank -- and you owe 100K... two years from now you should have 120K in the bank and you should only owe 95K... and this keeps going like this... decreasing debt -- compounded investments. It's why big commercial companies borrow money... because they make money on their money. But they're also very much in control of their cash flow and their expenses and they have CFO's and Boards of Directors watching over these relationships.

Mere mortels don't watch over these things and tend to let them get out of balance. More debt - no savings... totally upside-down!

So if you can't control yourself - and have a bad ass case of the "I wants" -- then even if you pay down your debt.... you're going to be in debt again shortly. So what's the friggin' point. Now you're just older -- getting closer to being retired and you haven't saved/invested. You're screwed and you have nobody to thank but yourself!

SO ---- If you're young -- and IF you think your income - over time - will grow... and your current cash flow is "okay"... then I'd put just a little EXTRA each month on the debt... If you're paying $450 a month -- just write the check for $500 and keep plugging along.... and make sure you are also SAVING NOW every stinking dime that you can. And that's not saving to spend later -- it's real savings for investing.... and when you get a grand -- buy some stock -- get another grand buy some more. As your income rises -- don't pee it away.... INCREASE your savings...

The math is so powerful! Compounded interest -- I did this earlier in the thread -- way back...

TIME -- that's what you need!

1000 now - 7 years later -- 2000 -- 7 more years -- 4000 -- 7 more years -- 8000 -- 7 more years 16,000 -- 7 more years 32,000

So in just 35 years - you're lousy $1000 is now $32,000 -- and the biggest gain was THE LAST 7 YEARS -- not the first 7!

SO if you save a couple grand every year beginning at 21 years of age -- and only save until you're 31 -- you'll have nearly a million at retirement

If you start saving a couple grand a year at 31 and do that every year until you retire - you'll have about half that.

Pretty powerful that thing we call TIME....

[Sieg]

Originally Posted by GregWeld

Too hard to answer that question without more info... use? Term? Age? Other funds? Etc.

If you're well set already - and middle aged -- go for some gusto... if you're an old coot and have no money and lots of debt -- a different response.

I'll be 54 in May, small 12.5 year mortgage, insurance and utilities are the extent of debt. Separate Retirement acct. Personal stock account of which this IRA would represent 2-3%.

Gusto, something that could put a smirk on your face annually.

Or I could just give it Blake up north eh?

[Bucketlist2012]

Originally Posted by GregWeld

Many many lazy people out there.... and they just don't want to have to do ANY work. That's their problem not ours.

When we're enjoying our well deserved retirement -- they'll be wondering how to downsize their house - their cars - their lives... to fit with the meager amount of money they have to live on. Sad.

Albert and Greg...

I got that reality on a new thread today...

" We don't need no stinking money management and investment Help"...Is what i was told...

I said well OK.... I tripled a portfolio in three years but whatever..No I DID NOT TELL THEM THAT...But I was a little upset.

But then I read their posts of turbos, and 2010 trades for 2012 cars, and I realized, give it up Mike...Move on...

So Albert..you found me at the right time...And now you have found the Elite crew here I told you about..

Yes, the others wanted the secret, or the easy answer... The others thought I am a Jerk for thinking their money management skills need work...Well they did, and do need work .

Almost ALL of them need it.. But I am learning when and who to help as not to look like a Jerk..

Because I am not one...If i was , I would NOT have tried to direct people here.. A jerk would have Tried to PLAY top dog on the other site...Haha, NOT ME..I bring you here where I am a Guppy compared to Greg...

But your knowledge was my passion, not my Ego...So I recommended smart people to help you..

For your effort, you will gain greatly...Others will lose long term..But I learned. Other than here I am a deaf Mute from now on, on ALL other sites..I learned

[toy71camaro]

Originally Posted by solarguy09

Albert and Greg...

I got that reality on a new thread today...

" We don't need no stinking money management and investment Help"...Is what i was told...

I said well OK.... I tripled a portfolio in three years but whatever..No I DID NOT TELL THEM THAT...But I was a little upset.

But then I read their posts of turbos, and 2010 trades for 2012 cars, and I realized, give it up Mike...Move on...

So Albert..you found me at the right time...And now you have found the Elite crew here I told you about..

Yes, they wanted the secret, or the easy answer...And I am a Jerk for thinking their money management skills need work...

A hello, almost ALL of them need it.. But I am learning when and who to help as not to look like a Jerk..

Because I am not one...If i was , I would NOT have tried to direct people here.. A jerk would have Tried to PLAY top dog on the other site...Haha, NOT ME..I bring you here where I am a Guppy compared to Greg...

But your knowledge was my passion, not my Ego...So I recommended smart people to help you..

For your effort, you will gain greatly...Others will lose long term..But I learned. Other than here I am a deaf Mute from now on, on ALL other sites..I learned

Don't let a bad apple ruin the tree. let it roll off your back and move on. people get jealous of other successful people. its just the way it is.. lol.

[GregWeld]

Originally Posted by Sieg

I'll be 54 in May, small 12.5 year mortgage, insurance and utilities are the extent of debt. Separate Retirement acct. Personal stock account of which this IRA would represent 2-3%.

Gusto, something that could put a smirk on your face annually.

Or I could just give it Blake up north eh?

Drive to the nearest Casino -- put it all on Black....





You're in good shape... well... not physically... but you have a while longer to live... I'd put it into a good high dividend payer... PM - MO - CHKR - NNN - T - VZ - KMP

They're all 6% and growth (well not so much on T and VZ)...

The dividend will help you compound while you're busy sleeping... and there should be enough growth over 10+ years to bag you near a triple. Then you'll be like Warren Buffet and you'll be getting paid dividends more than you're initial investment!

[Bucketlist2012]

Originally Posted by toy71camaro

Don't let a bad apple ruin the tree. let it roll off your back and move on. people get jealous of other successful people. its just the way it is.. lol.

It is cool Albert...If one person learned something...I am happy...And YOUR smart questions to Greg and your eagerness to actually do the work is refreshing to me and I will bet to Greg and others..

So again welcome, and keep at it...These Guys here are COOL and SMART..Deadly combo...

I am the lucky and somewhat smart guy. So no i am not burned by it.. Luckily i did not start any new thread, and I went through and deleted any posting info...All is good..

Actually if they were not going to study and were just going to ask stupid questions like "lookie lou's" window shopping and not buying, then we are better off they dropped off.. they want to drive through and get the answer..

ATM them the magic bullet.. Instant results and wealth..WHO am I ....TOMMY VU ??? because i can do a MEAN Tommy VU impersonation....You may be too young for Tommy VU...Don Lapre ? Dave the belly Del Dotto ?? LMAO>>

[Bucketlist2012]

Greg's long post about money management a few post ago was beautiful..



I recently bought the Wife a newer car...Paid cash for most of it, but was going to pull the money out and pay for all of it.

But I can leave that money making three times the loan rate...So the loan gets paid and I have two thirds left... But I do hate loans..


Next is the "warren Buffett" truck..I have proven my point at 200K miles on it and 2000 dollars maintinence in the last 5 years ...Only gas, reg, and insurance...

But I have decided to splurge.. But I can, or i would drive the truck forever if I had to...

[70 chevelle]

Originally Posted by GregWeld

Here's an easier site to work with for that.


http://www.dividend.com/ex-dividend-dates.php


Seeking Alpha is good "reading" but is kind of a loosely structured bunch of people just writing articles vs a "here's this in this spot always - day in and day out" kind of website. I find good stuff to read and tickle my pea brain on Seeking Alpha... but it's not really a research website.

Thank you.