so why not borrow
never ever borrow to pump money into equities. Something about the market being able to remain illogical longer than you can remain solvent...
so why not borrow
This thread feels like Mad Money, except my television is off and I'm on SDN instead of the WSB subreddit. Mikkel could actually be Jim Kramer though.
The probability that an investment made at an S and p level of 2500 (like next week for example) is worth 20% more in 12 months is about 90%. In my lifetime, I have never seen such probability in any equity investment ever. Yes, I am putting my money where my mouth is and going from a 60%/40% allocation at the start of the crash to a 85%/15% allocation at 2200. Below 2100 I'd be 90/10. Even if we do not re-test 2200 again I'll be buying equities heavily once we get through April/early May. IMHO, the market will likely bounce quickly to 2800 once the pandemic gets under control.
I placed all my money into 4/20 and 5/1 220 SPY puts
I'm a actually shocked by how not authoritarian he has been. He seems to understand that taking more responsibility would also give him more burden for the outcomes, and thus is trying to be as hands off as possible. Trump wants money and power, but I think he damn well knows he couldn't pull off a dictatorship.The Republican party would love nothing more than a pretext for installing an autocratic regime. The longer this lasts, the longer they can brainwash the population, especially once they start censoring the press. Already Trump is trying to rewrite history.
I am much more afraid that we'll lose our democracy than of the economic losses. There is an increasing chance for the former. What we are seeing already is the severe erosion of democratic institutions, where nobody does the right thing because everybody is afraid to tell the emperor that he's naked.
I placed all my money into 4/20 and 5/1 220 SPY puts
I placed all my money into 4/20 and 5/1 220 SPY puts
I placed all my money into 4/20 and 5/1 220 SPY puts
He’s old, been playing a while and presumably has lots of savings to play with.How do you have the cash to keep investing so frequently? I only get paid once a month.
He’s old, been playing a while and presumably has lots of savings to play with.
Besides isn’t once a month deposits enough? Long as its regular? According to the financial experts?
Sure, you don't have a pile of cash around to invest because of prepaying the mortgage, but if you refinanced like I did, my rate is 40% less than before. I can put a lot more money into the market now because my monthly expenses are a lot less.
How long will it take to get to DOW 30k? 6 months? 1 year? 3 years? Impossible to know, but if you bought at DOW 30k before, that time you wait to get back to 30k to break even is time that could have been shortened if you prepaid. In other words, stocks held waiting for appreciation back to baseline is money and time wasted.
I have lots of retirement money invested at market highs, so it's not like I'm hoping things never recover.
and just to recap, anybody that paid off a mortgage was still a terrible idea from a financial point of view. S&P is up approximately 47% (including dividends) since March 1, 2020. Meanwhile almost any mortgage could have been refinanced to 3% or less this summer.
Over the short terms stocks go up and down. Over a long enough term they go up. Mortgages are fixed in rate, can potentially be lowered via refinance any number of times, have tax deductible interest, and are a hedge against inflation.
Paying off early is an emotional help, not a financial help. And I'm not against that if you need it to help make better decisions with the rest of your life, just don't pretend you will come financially ahead by doing it.
Car interest is not tax deductible and the loan term is very short compared to a 30 year mortgage so it is far less certain that stocks will outperform over that time frame.Curious how far you push this. If your wife wants a new Audi ($50k) do you pay cash or finance at 2% for 5 years and invest that $50k?
Did you take out a 15 or 30 year mortgage?Car interest is not tax deductible and the loan term is very short compared to a 30 year mortgage so it is far less certain that stocks will outperform over that time frame.
I don't really push anything. Just pointing out that going crazy to pay off a mortgage early is almost never a good idea if your goal is to maximize your net worth and/or retire as early as possible. A mortgage is a unique category of debt and rules that apply to other debts don't really apply.
Curious how far you push this. If your wife wants a new Audi ($50k) do you pay cash or finance at 2% for 5 years and invest that $50k?
Anyone looking to buy a home should definitely take advantage of these low interest rates. With inflation (3-4%) a distinct possibility locking in a 30 year mortgage below 3% is a smart decision. Buying that dream house today at 3% is a great deal considering the value of the US Dollar in 30 years.In the last 12 months, mortgage rates have been incredible. I went from 4% to 3.25% and now 2.75 (30 year fixed). Lender credits offset any fees so nothing out of pocket. My rates could have been lower but my loan to value ratio wasn't great.
Anyone who has a mortgage should have refinanced into a lower rate in the last year. It was too easy.
There really is no logical reason to pay this off early. Taking into account inflation, the bank is valuing the dollar they get today as the same they will get in 30 years. That is an amazing deal for homeowners.
Mortgage debt shouldn't be feared. It's the cheapest money you can borrow.
Unless I can pay off my home in one fell swoop, I don't want to put extra money into my mortgage when I can invest it instead. Why lose the liquidity? With stocks/ bonds, I can easily sell if I need the funds but I can't sell part of my house.
Did you take out a 15 or 30 year mortgage?
It’s taken a complete mental reset of my financial mindset, but I’m currently happy with my plan.
I appreciate this discussion. It has made me recalibrate some of my thinking.
Some questions:
Isn’t paying off more mortgage vs stock investing an apples to oranges comparison because of the risk differential (mortgage more like fixed income and stocks as equity)? So you are taking a much greater uncompensated risk to invest in equities and the comparison should be more toward your bond allocation.
For instance, my extra each month toward mortgage I figure into my fixed income and therefore reduce the amount of bonds I own. It diversifies the bonds a little because a portion of that is building equity in property (primary home).
So in deciding whether or not to put more into mortgage would a comparison of bond rates vs your mortgage rate be more appropriate as opposed to comparing mortgage to equities return?
My mortgage was <100k at 5.5%, and the other was also <100k at 3.8%. Hard to refinance less than 100k. So paid them off instead.and just to recap, anybody that paid off a mortgage was still a terrible idea from a financial point of view. S&P is up approximately 47% (including dividends) since March 1, 2020. Meanwhile almost any mortgage could have been refinanced to 3% or less this summer.
Over the short terms stocks go up and down. Over a long enough term they go up. Mortgages are fixed in rate, can potentially be lowered via refinance any number of times, have tax deductible interest, and are a hedge against inflation.
Paying off early is an emotional help, not a financial help. And I'm not against that if you need it to help make better decisions with the rest of your life, just don't pretend you will come financially ahead by doing it.
I have an unrelated question for the financial gurus on here. I’m pretty financially naive, element to educate myself but still feel like I’m missing some basic knowledge. The gist of my question is- where should I keep my money that might be spent in the next year or two?
I’m finishing fellowship soon, and worked as an attending in academics for one year prior to that. Starting at a PP this summer, with expected annual income around 400K. I have 130K left in student loans, and about 25K in a vanguard account which is 100% index fund/equities (VTI). I have about 175K in a money market account at my bank, which is currently earning essentially no interest. Apart from some money in a 403(b) and various other retirement accounts that I won’t be touching, I don’t have anything else in the way of assets.
I know that I should put more of my money into the market. However, I’ll be moving in a few months, looking to buy a house within the next year or two, and additionally I want to have some kind of emergency fund. I’m a bit hesitant to put all of the remainder of my money into my vanguard account given the short term volatility, along with my anticipated expenses within the next 1-2 years.. Other than the need for short and medium term reserves, I’m not trying to do anything fancy (no crypto, day trading, etc- just common sense stuff).
If you were me, where would you put the money that is currently in my money market account?
Apologies for what I would imagine is a very basic question. I know a thing or two about anesthesia, but when it comes to the money stuff I’m still a beginner.
I have an unrelated question for the financial gurus on here. I’m pretty financially naive, element to educate myself but still feel like I’m missing some basic knowledge. The gist of my question is- where should I keep my money that might be spent in the next year or two?
I’m finishing fellowship soon, and worked as an attending in academics for one year prior to that. Starting at a PP this summer, with expected annual income around 400K. I have 130K left in student loans, and about 25K in a vanguard account which is 100% index fund/equities (VTI). I have about 175K in a money market account at my bank, which is currently earning essentially no interest. Apart from some money in a 403(b) and various other retirement accounts that I won’t be touching, I don’t have anything else in the way of assets.
I know that I should put more of my money into the market. However, I’ll be moving in a few months, looking to buy a house within the next year or two, and additionally I want to have some kind of emergency fund. I’m a bit hesitant to put all of the remainder of my money into my vanguard account given the short term volatility, along with my anticipated expenses within the next 1-2 years.. Other than the need for short and medium term reserves, I’m not trying to do anything fancy (no crypto, day trading, etc- just common sense stuff).
If you were me, where would you put the money that is currently in my money market account?
Apologies for what I would imagine is a very basic question. I know a thing or two about anesthesia, but when it comes to the money stuff I’m still a beginner.
They way to look at your portfolio is as a whole. There are risk assets and riskless assets. Paying off a mortgage is kin to holding more riskless assets. There is no riskless asset whose return outstrips paying down a mortgage at this time.
Here is my 2 cents (5 cents with inflation)I have an unrelated question for the financial gurus on here. I’m pretty financially naive, element to educate myself but still feel like I’m missing some basic knowledge. The gist of my question is- where should I keep my money that might be spent in the next year or two?
I’m finishing fellowship soon, and worked as an attending in academics for one year prior to that. Starting at a PP this summer, with expected annual income around 400K. I have 130K left in student loans, and about 25K in a vanguard account which is 100% index fund/equities (VTI). I have about 175K in a money market account at my bank, which is currently earning essentially no interest. Apart from some money in a 403(b) and various other retirement accounts that I won’t be touching, I don’t have anything else in the way of assets.
I know that I should put more of my money into the market. However, I’ll be moving in a few months, looking to buy a house within the next year or two, and additionally I want to have some kind of emergency fund. I’m a bit hesitant to put all of the remainder of my money into my vanguard account given the short term volatility, along with my anticipated expenses within the next 1-2 years.. Other than the need for short and medium term reserves, I’m not trying to do anything fancy (no crypto, day trading, etc- just common sense stuff).
If you were me, where would you put the money that is currently in my money market account?
Apologies for what I would imagine is a very basic question. I know a thing or two about anesthesia, but when it comes to the money stuff I’m still a beginner.
But it is about the math. Inflation and devaluation of the US dollar is a real risk. If you can secure real estate today with interest rates less than 3% then by all means go for it. I still think if your student loans carry more than 3% interest rate you should refinance them or pay them off.For me it's not really about the actual math with rates, etc., it's about opportunity.
I have opportunities now that I’m not sure will be available to me in the future. Sure it’s a “risk” not paying off the student loans with excess funds, but I’m very happy with my choices thus far and can sleep at night, which is half the battle.
I was just reading through this thread minding my own business when I see someone suggested taking out a loan to yolo out of the money SPY options lol. Man I love this place and I mean it sincerely.If you have a high risk appetite and don't want to put huge amounts of capital down, you can buy way out of the money SPY options that expire in say...october...the contract prices are much lower than having to put down the capital for actual stock.
But it is about the math.
I would not be happy being age 50 with student loan debt but to each his/her own.
It kinda depends what rate you are paying on that student loan debt. When I consolidated mine at age 26 (for 30 years), it was at 1.7%. It's boring to watch that money come out of my bank account each month, but why ever pay it off??? Now if you are paying 8%, the math changes a bit.
It is always about the math.
I have an unrelated question for the financial gurus on here. I’m pretty financially naive, element to educate myself but still feel like I’m missing some basic knowledge. The gist of my question is- where should I keep my money that might be spent in the next year or two?
I’m finishing fellowship soon, and worked as an attending in academics for one year prior to that. Starting at a PP this summer, with expected annual income around 400K. I have 130K left in student loans, and about 25K in a vanguard account which is 100% index fund/equities (VTI). I have about 175K in a money market account at my bank, which is currently earning essentially no interest. Apart from some money in a 403(b) and various other retirement accounts that I won’t be touching, I don’t have anything else in the way of assets.
I know that I should put more of my money into the market. However, I’ll be moving in a few months, looking to buy a house within the next year or two, and additionally I want to have some kind of emergency fund. I’m a bit hesitant to put all of the remainder of my money into my vanguard account given the short term volatility, along with my anticipated expenses within the next 1-2 years.. Other than the need for short and medium term reserves, I’m not trying to do anything fancy (no crypto, day trading, etc- just common sense stuff).
If you were me, where would you put the money that is currently in my money market account?
Apologies for what I would imagine is a very basic question. I know a thing or two about anesthesia, but when it comes to the money stuff I’m still a beginner.
I have $200k left at 2.6% fixed (6 years left). Have $10k/mo extra to deploy to repaying debt or investing (after all living expenses/minimum payments and maxing retirement etc)...how would you handle that?
I have $200k left at 2.6% fixed (6 years left). Have $10k/mo extra to deploy to repaying debt or investing (after all living expenses/minimum payments and maxing retirement etc)...how would you handle that?
I have $200k left at 2.6% fixed (6 years left). Have $10k/mo extra to deploy to repaying debt or investing (after all living expenses/minimum payments and maxing retirement etc)...how would you handle that?
I have $200k left at 2.6% fixed (6 years left). Have $10k/mo extra to deploy to repaying debt or investing (after all living expenses/minimum payments and maxing retirement etc)...how would you handle that?
I have $200k left at 2.6% fixed (6 years left). Have $10k/mo extra to deploy to repaying debt or investing (after all living expenses/minimum payments and maxing retirement etc)...how would you handle that?
I do 50/50 loans vs investing, helps me sleep better at night.I have $200k left at 2.6% fixed (6 years left). Have $10k/mo extra to deploy to repaying debt or investing (after all living expenses/minimum payments and maxing retirement etc)...how would you handle that?
On a related note:
Everyone who told me I was wrong to prepay my mortgage instead of investing:
You were wrong.