Best Tip/suggestion for UG.

[efle]

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Taking loans to invest with makes a lot of sense if you can reliably expect value to gain faster than interest (+ fees) over a long period.

Thing is, buy + sell a few years later is not reliably going to beat student loan interest rates (+fees), not even for a company like Apple.

Just imagine if the dates had been a little different. If I'd bought as an incoming freshman in late August/early Sept 2012 (~$95) and sold at graduation time early May 2016 (~90-95), I would have followed your plan exactly and have only some minor losses to show for it.

 

[TXMED_1695]

You would not be following my plan. I do not even invest/trade, and I know buying on a quarterly high is idiotic. As said in my OP, talking to a CFP is not going to hurt you in anyway. This is why experts are experts. There is hedging, and a lot of different things that go along with investing.

Taking loans to invest with makes a lot of sense if you can reliably expect value to gain faster than interest (+ fees) over a long period.

Thing is, buy + sell a few years later is not reliably going to beat student loan interest rates (+fees), not even for a company like Apple.

Just imagine if the dates had been a little different. If I'd bought as an incoming freshman in late August/early Sept 2012 (~$95) and sold at graduation time early May 2016 (~90-95), I would have followed your plan exactly and have only some minor losses to show for it.

 

[efle]

You would not be following my plan. I do not even invest/trade, and I know buying on a quarterly high is idiotic. As said in my OP, talking to a CFP is not going to hurt you in anyway. This is why experts are experts. There is hedging, and a lot of difference things that go along with investing.

Oh my bad. I thought your plan was to invest. If the plan is only to invest on things that will go up, it's a great plan. If you feel your success is predictable and easily replicated, I am shocked you haven't maxed out all your credit and sold all extra assets you can to buy more stock that will soon do the same thing?

 

[efle]

By the way, Apple during this time period didn't simply have quarterly highs and lows. The valley you so fortunately bought during was Spring. A couple Springs later was a peak. This stuff is not reliable short-term no matter what your uncle tells you.

 

[TXMED_1695]

Coming up with an extreme analogy in a discussion is what children do.

Do you know what defined risk is?

70% of investors that invested in stocks in 2016 made money. Omg, why didn't they sell everything they own and buy stocks in 2017, they did so well in 2016!? (<----- sarcasm)

Oh my bad. I thought your plan was to invest. If the plan is only to invest on things that will go up, it's a great plan. If you feel your success is predictable and easily replicated, I am shocked you haven't maxed out all your credit and sold all extra assets you can to buy more stock that will soon do the same thing?

 

[mwsapphire]

I'm sorry that sarcasm doesn't travel well across a screen, but of course I wasn't being literal about the $20 comment. You're being ridiculous.

Not what I said in the slightest.
For the second time today, I'm going to learn to move on from these things and hit the lovely ignore button. Bye bye now.

 

[mwsapphire]

I am not an expert in finances, but is this suppose to be a smart loaded question - it's not. You do realize people take out loans and invest them into a lot of different stuff, right? The idea of taking out a loan for investment purposes occurred way before I was born. You are relating my action of investing the remainder of my student loan (interest free) to the extreme of, "why don't you take out as many loans as you can," it's just an ignorant comparison.

 

[deleted781806]

Every time I put money into my account, he would purchase Apple (AAPL) stock.

You would not be following my plan. I do not even invest/trade

Which is it, my dude?

 

[mwsapphire]

Which is it, my dude?

Let him live.
He's getting confused by his own "logic" XD
🤣

 

[efle]

Coming up with an extreme analogy in a discussion is what children do.

Do you know what defined risk is?

70% of investors that invested in stocks in 2016 made money. Omg, why didn't they sell everything they own and buy stocks in 2017, they did so well in 2016!? (<----- sarcasm)

Well I'm gonna have to keep operating at the child logic level for the sake of people glancing through this thread in the future.

You got extremely lucky and bought/sold Apple before/after a historic climb in its share price. Buying and selling at various other times in surrounding years would have instead brought an even break or even some losses.

You can credit your uncle as some kind of genius insider wizard...or you can recognize good fortune that does not make for general advice.

 

[aprilfools]

70% of investors that invested in stocks in 2016 made money.

Source please?
This statistic is not anywhere remotely close to being true.

 

[mwsapphire]

Source please?
This statistic is not anywhere remotely close to being true.

:troll:

 

[TXMED_1695]

He didn't instantly start buying at any price.

Which is it, my dude?

Apple is one of the most positively held positions, by the average investor. That is a lot of lucky people. What uncle are you referring to, do you always comment on posts without reading them?

Well I'm gonna have to keep operating at the child logic level for the sake of people glancing through this thread in the future.

You got extremely lucky and bought/sold Apple before/after a historic climb in its share price. Buying and selling at various other times in surrounding years would have instead brought an even break or even some losses.

You can credit your uncle as some kind of genius insider wizard...or you can recognize good fortune that does not make for general advice.

 

[TXMED_1695]

Google works wonders, but it took me 10 seconds to find the link.

77% of investors made money in 2016 -- and women beat men again

 

[efle]

Google works wonders, but it took me 10 seconds to find the link.

77% of investors made money in 2016 -- and women beat men again

Not the best choice to directly link to something where the first couple paragraphs describe the opposite effect the prior year.

Nearly 70% of investors lost money in 2015

This whole exchange kind of exemplifies the volatility I'm talking about. At the level of individual stocks, even Apple types, it's dramatic year to year

 

[efle]

What uncle are you referring to, do you always comment on posts without reading them?

Sorry, "family friend." Dang, all my points must have been wrong since I missed that 🙄

 

[mwsapphire]

Sorry, "family friend." Dang, all my points must have been wrong since I missed that 🙄

CLEARLY you don't know what you're talking about- as a FA receiver yourself!
It's his uncle! We have to trust him!
I'm laughing in class...

 

[deleted781806]

He didn't instantly start buying at any price.

Still doesn't make up for the direct contradiction you said, especially if we're going to ding people's points if they get the word "uncle" confused for "family friend".

*edit*: Also, your data-set is including people with long-term index fund investments, rather than just short-term investors.

 

[TXMED_1695]

Yes, it does. Go read my original post and what my suggestion is, and it is not to buy anything in the stock market. Also, what point are you trying to make here? I do not care how many people made money in the market in 2016. I was using sarcasm, (as pointed out) that what efle said is ridiculous. Because people have success in the market it does not mean they should go wild in their investing, or that they think it is easy to make money. By his reasoning, the 70% of people that averaged 5% on their investments in 2016, should sell all their assets and max out all their credit to invest because they had success in the market.

If you feel your success is predictable and easily replicated, I am shocked you haven't maxed out all your credit and sold all extra assets you can to buy more stock that will soon do the same thing?

Still doesn't make up for the direct contradiction you said, especially if we're going to ding people's points if they get the word "uncle" confused for "family friend".

*edit*: Also, your data-set is including people with long-term index fund investments, rather than just short-term investors.

 

[efle]

Yes, it does. Go read my original post and what my suggestion is, and it is not to buy anything in the stock market. Also, what point are you trying to make here? I do not care how many people made money in the market in 2016. I was using sarcasm, (as pointed out) that what efle said is ridiculous. Because people have success in the market it does not mean they should go wild in their investing, or that they think it is easy to make money. By his reasoning, the 70% of people that averaged 5% on their investments in 2016, should sell all their assets and max out all their credit to invest because they had success in the market.

...if you could accurately predict another popular stock that would double its value in 2 years, you would be a ****ing ***** not to invest as much as you possibly could on it.

But deep down you know there is no such stock. These things only happen BECAUSE it is unpredictable and can't be seen coming - if it were foreseeable all the "experts" would not have dumped stock to create that valley in the first place.

 

[TXMED_1695]

Now you are talking about stock strategy again, which has nothing to do with this post. Where do you come up with this stuff? Also, what you are saying is absolutely untrue. By your reasoning, everyone that makes money in the market are just lucky people, and it was all by chance. It is predictable, not by you or me, but by a lot of "experts" that have made profits y/y for decades. All in which has nothing to do with my original post.

...if you could accurately predict another popular stock that would double its value in 2 years, you would be a ****ing ***** not to invest as much as you possibly could on it.

But deep down you know there is no such stock. These things only happen BECAUSE it is unpredictable and can't be seen coming - if it were foreseeable all the "experts" would not have dumped stock to create that valley in the first place.

 

[deleted781806]

@TXMED_1695 Sorry, the better point to make is that even according to your provided article, those that made money through investments only averaged just over 5% increased value which is less than current student loan interest rates (especially GradPLUS). Therefore, the average student who put his remaining loan money into investments, at best, broke even with the rising interest, and the student who either immediately put remaining funds back into their loan/future loans would have fared substantially better.

Your original post told students to meet with a broker which is equivalent to "you should invest", don't try to weasel out of that.

Bottom-line: It is much more frugal and responsible to just not take out the extra funds or to put it back into your loan immediately at the end of the year.

 

[efle]

It is predictable, not by you or me, but by a lot of "experts" that have made profits y/y for decades.

It's not. If it was they'd all be billionaires. Wealth made in the market is overwhelmingly returns on long term, diverse investment, not a bunch of experts correctly picking individual winners or losers to buy or short.

It's going in circles at this point, so I'll let it rest. Congratulations on the perfectly timed 2.5x payoff on Apple. Please stop telling others to try and replicate. You haven't stumbled on 1 cool trick to pay for your education here, you've gotten very lucky, and for someone paying school on loans the correct advice is save leftovers to minimize future borrowing.

 

[deleted781806]

"Why do you guys keep arguing about investing, this isn't about investing?" Oh... I don't know...

Here is what he told me to do

He told me to open a brokerage account with him to invest the remainder of my student loans.

Every time I put money into my account, he would purchase Apple (AAPL) stock.

He told me to invest the remainder of the loan (I clearly stated that above), that I was already taking out .

He suggested (and explained the risk) that I could invest the remainder of the loans that were not used for housing and tuition, instead of using the remainder of the loans for daily operations.

here is probably a nice mean of students that were successful, and those that failed investing with student loans.

Wasting your student loans on a vacation has a tangible benefit, but investing the remainder of the loan is going to put you in a cardboard box later on in life. 10-4

You do realize people take out loans and invest them into a lot of different stuff, right? The idea of taking out a loan for investment purposes occurred way before I was born.

There is hedging, and a lot of different things that go along with investing.

Apple is one of the most positively held positions, by the average investor. That is a lot of lucky people.

It is predictable, not by you or me, but by a lot of "experts" that have made profits y/y for decades.

 

[akuko2]

@TXMED_1695 If you are going to borrow money to invest it why not go with a proven winner like this guy?

 

[deleted781806]

The only thing predictable about investing is that if I were to open up a diversified portfolio with an investor and put money into it slowly but surely over the course of my life, I would end up making money in the long-run. That's it. Everything else is stochastic and any broker who tells you otherwise is trying to scam you.

Efle puts it perfectly for all those reading this thread and trying to educate themselves about what they should do with their loan money:

Please stop telling others to try and replicate. You haven't stumbled on 1 cool trick to pay for your education here, you've gotten very lucky, and for someone paying school on loans the correct advice is save leftovers to minimize future borrowing.

 

[TXMED_1695]

This discussion is over your head. He is talking about predicting and timing the market, which has nothing to do with the original post. Sorry it is hard for you to understand what a CFP does, but they do not solely invest.

"Why do you guys keep arguing about investing, this isn't about investing?" Oh... I don't know...

 

[deleted781806]

Sorry it is hard for you to understand what a CFP does, but they do not solely invest.

Oh yeah, my puny little brain can't comprehend that there are other things a CFP does. But hey, at least I don't spend an entire thread talking about how I made *so* much money through investments and it was the "smart thing to do" with my loan money, and then tack on at the end that I was never *really* talking about investments. That dissonance is really impressive honestly, you should consider politics if the whole med school thing doesn't work out.

 

[ThoracicGuy]

Most people fail to plan adequately for their future.


Modern day philosophers and self-help motivational speakers all basically have the same essential steps, and one is to talk to a Financial adviser (a broker/CFP, not your financial aid adviser). Here is what he told me to do: (Note: This is a family friend, you can not trust some of these people).

1. He told me to work part-time and to cover as much of my day to day living expenses as possible with my job. Also, try to put in as many hours as possible, so get a job that will work around your schedule. (Even as a full-time student) Note: Obviously, only do this if your grades do not suffer, because they are just as important as your finances.

2. He told me to take out student loans, but do not piss away the money (his words, not mine). He showed me a study that after tuition and housing are paid, most students just waste the remainder of their loan on nothing (piss it away).

3. He told me to open a brokerage account with him to invest the remainder of my student loans. Note: You have to sign around 45 forms saying, "you understand that you can lose every cent of this money".

Every time I put money into my account, he would purchase Apple (AAPL) stock. Also, I had some savings before I started investing and I put it into investing as well. The share price was different because of splits, but back in 2013, I started getting the shares in the $60 range (after split happened). Fast forward four years, and I just had my AAPL shares sold in the $143 range on Friday. After taxes, I completely paid for my UG, and basically covered all my living expenses for medical school for the whole four years. You will never get told any real wisdom like this from your University/College, so my tip/suggestion is to speak to a CFP/Broker. He helped me setup a weekly, monthly, and yearly budget. It was really hard to stick with the budget, but it was really rewarding. He constantly reminded me, "if you fail to plan, you are planning to fail." Planning out your courses is good planning, but do not forget to plan out every faucet of your life. My financial situation in medical school is now literally smooth sailing.

 

[TXMED_1695]

Who ever says, that the market can be precisely predicted - no one. Trends and pattern are predictable by a lot of people, but no one is saying they can be precisely predicted. Also, what you are saying is extremely vague.

The only thing predictable about investing is that if I were to open up a diversified portfolio with an investor and put money into it slowly but surely over the course of my life, I would end up making money in the long-run. That's it. Everything else is stochastic and any broker who tells you otherwise is trying to scam you.

Efle puts it perfectly for all those reading this thread and trying to educate themselves about what they should do with their loan money:

 

[mwsapphire]

Oh yeah, my puny little brain can't comprehend that there are other things a CFP does. But hey, at least I don't spend an entire thread talking about how I made *so* much money through investments and it was the "smart thing to do" with my loan money, and then tack on at the end that I was never *really* talking about investments. That dissonance is really impressive honestly, you should consider politics if the whole med school thing doesn't work out.

 

[Welshman]

I encourage anyone thinking about investing money in anything to first read the Intelligent Investor by Benjamin Graham.

It's practically required reading. Give it a google and its reviews will speak for itself.

or just take this thread over to wallstreetoasis, see what they say. Doctors are notoriously bad investors after all....

 

[benjamin94559]

i guess getting income in the form of student loans is an interesting way of forcing yourself to dollar cost average

 

[JJRousseau]

Aside from the OPs defense of luck as the best tip. I think one could justify spending leftovers on the 5500 max contribution for a diversified Roth IRA. It's tax privileged at 7-8% expected return over 40-45 years. The loan will be payed off with future income and the 5500 borrowed at 3% or whatever the undergrad loan rate payed over 20 years or less will be well outpaced by the Roth IRA returns after 45 years.


Sent from my iPhone using SDN mobile

Edit: it's why during residency if spare cash appears many will advise Roth IRA contribution then paying loans down faster (though individual scenarios will affect this).

 

[ThoracicGuy]

Aside from the OPs defense of luck as the best tip. I think one could justify spending leftovers on the 5500 max contribution for a diversified Roth IRA. It's tax privileged at 7-8% expected return over 40-45 years. The loan will be payed off with future income and the 5500 borrowed at 3% or whatever the undergrad loan rate payed over 20 years or less will be well outpaced by the Roth IRA returns after 45 years.


Sent from my iPhone using SDN mobile

Edit: it's why during residency if spare cash appears many will advise Roth IRA contribution then paying loans down faster (though individual scenarios will affect this).

Unless one has income, there is no IRA contributions.

 

[JJRousseau]

Unless one has income, there is no IRA contributions.

True, but federal work study is a part of most undergraduate aid packages.

 

[ThoracicGuy]

True, but federal work study is a part of most undergraduate aid packages.

But unless you have income, you can't contribute.

 

[efle]

But unless you have income, you can't contribute.

FWS is employment, you get paid and can do whatever with the money. I think you're capped at only earning a few thousand per year though.

 

[ThoracicGuy]

FWS is employment, you get paid and can do whatever with the money. I think you're capped at only earning a few thousand per year though.

Though you get paid with that, rather than just getting a student loan. My point is that student loans are by themselves not enough to make you eligible for IRA contributions.

 

[JJRousseau]

I think we (@efle, @ThoracicGuy) are in agreement. You can't contribute to a Roth IRA unless you have income (which I should've mentioned in my post), but many will have a income on undergraduate financial packages as they will be paid work study.


Sent from my iPhone using SDN mobile

 

[Domepiece]

Backdoor Roth Q.E.D.

 

[The White Coat Investor]

Most people fail to plan adequately for their future.


Modern day philosophers and self-help motivational speakers all basically have the same essential steps, and one is to talk to a Financial adviser (a broker/CFP, not your financial aid adviser). Here is what he told me to do: (Note: This is a family friend, you can not trust some of these people).

1. He told me to work part-time and to cover as much of my day to day living expenses as possible with my job. Also, try to put in as many hours as possible, so get a job that will work around your schedule. (Even as a full-time student) Note: Obviously, only do this if your grades do not suffer, because they are just as important as your finances.

2. He told me to take out student loans, but do not piss away the money (his words, not mine). He showed me a study that after tuition and housing are paid, most students just waste the remainder of their loan on nothing (piss it away).

3. He told me to open a brokerage account with him to invest the remainder of my student loans. Note: You have to sign around 45 forms saying, "you understand that you can lose every cent of this money".

Every time I put money into my account, he would purchase Apple (AAPL) stock. Also, I had some savings before I started investing and I put it into investing as well. The share price was different because of splits, but back in 2013, I started getting the shares in the $60 range (after split happened). Fast forward four years, and I just had my AAPL shares sold in the $143 range on Friday. After taxes, I completely paid for my UG, and basically covered all my living expenses for medical school for the whole four years. You will never get told any real wisdom like this from your University/College, so my tip/suggestion is to speak to a CFP/Broker. He helped me setup a weekly, monthly, and yearly budget. It was really hard to stick with the budget, but it was really rewarding. He constantly reminded me, "if you fail to plan, you are planning to fail." Planning out your courses is good planning, but do not forget to plan out every faucet of your life. My financial situation in medical school is now literally smooth sailing.

Glad it worked out well for you. It was a huge gamble though. Best advice probably would have been to take out less in loans, or better yet, none at all.