Paying
Navigator
Joined: Sep 2019
Posts: 9
Likes: 9
Some illustrative arithmetic:
Suppose the out-the-door price of a C8 is $80,000.
You have saved $80,000 and are considering two options:
1) pay $80,000 cash, and deposit what would have been the monthly car payment in an income fund paying 7.00% return.
2) take out loan for 60 months at 3.00 percent, which is a $1,437 monthly payment (principal and interest). Keep your $80,000 cash invested in an income fund 7.00% return.
Where do you stand at the end of 60 months under these two options?
1) you paid cash 5 years ago, you now own a 5-year old C8 free and clear, and you now have $102,879 in your investment account
2) you took out a loan 5 years ago which is now paid off, you now own a 5-year old C8 free and clear, and you now have $113,410 in your investment account
Suppose the out-the-door price of a C8 is $80,000.
You have saved $80,000 and are considering two options:
1) pay $80,000 cash, and deposit what would have been the monthly car payment in an income fund paying 7.00% return.
2) take out loan for 60 months at 3.00 percent, which is a $1,437 monthly payment (principal and interest). Keep your $80,000 cash invested in an income fund 7.00% return.
Where do you stand at the end of 60 months under these two options?
1) you paid cash 5 years ago, you now own a 5-year old C8 free and clear, and you now have $102,879 in your investment account
2) you took out a loan 5 years ago which is now paid off, you now own a 5-year old C8 free and clear, and you now have $113,410 in your investment account
Melting Slicks
Joined: Jul 2014
Posts: 2,195
Likes: 479
From: Bonita Springs Florida
Clarifying #1: take all their savings to buy the item = no debt but broke ( 4 in 10 adults couldn’t cover an unexpected $400 expense without selling something or borrowing money) #2 live on credit and make minimum payments in perpetuity.= broke (the typical American household now carries an average debt of $137,063. The median debt was only $50,971 in 2000.)
Last edited by 1SG_Ret; Oct 26, 2019 at 10:23 AM.
Drifting
Joined: Mar 2006
Posts: 1,578
Likes: 550
From: Florida
Banned Scam/Spammer
Joined: Sep 2016
Posts: 4,004
Likes: 3,929
From: Philadelphia PA (Birthplace of the USA, UNESCO World Heritage City)
Some illustrative arithmetic:
Suppose the out-the-door price of a C8 is $80,000.
You have saved $80,000 and are considering two options:
1) pay $80,000 cash, and deposit what would have been the monthly car payment in an income fund paying 7.00% return.
2) take out loan for 60 months at 3.00 percent, which is a $1,437 monthly payment (principal and interest). Keep your $80,000 cash invested in an income fund [negative] -7.00% return.
Where do you stand at the end of 60 months under these two options?
Suppose the out-the-door price of a C8 is $80,000.
You have saved $80,000 and are considering two options:
1) pay $80,000 cash, and deposit what would have been the monthly car payment in an income fund paying 7.00% return.
2) take out loan for 60 months at 3.00 percent, which is a $1,437 monthly payment (principal and interest). Keep your $80,000 cash invested in an income fund [negative] -7.00% return.
Where do you stand at the end of 60 months under these two options?
If it was a guaranteed or low risk return, that would be a different story. And 60 months (5 years) is not a long enough period of time to smooth out any market downturns.
Last edited by ArmchairArchitect; Oct 25, 2019 at 08:01 PM.
Drifting
Joined: Mar 2006
Posts: 1,578
Likes: 550
From: Florida
I have been hearing how the market is going to crash since 2011. That its over the top, not going to last. For all these years, I have been making real money. My Apple split at $77 and is now $246......Home depot, I bought at $27 is now $235...........the FB I bought at $32 and sold at $178..........I keep hearing that, all the while I have made a killing. So, even if there is a correction.........you will claim I lost money.......
Le Mans Master
Joined: Dec 2007
Posts: 8,000
Likes: 659
From: Puget Sound
There sure are a lot of keyboard financial experts on this thread. If they knew what they were actually talking about, they would factor in capital gain taxes and income taxes into all their B.S. claims.
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Safety Car
Joined: Feb 2016
Posts: 4,980
Likes: 3,826
From: Bainbridge Island WA
One more thing. I looked up that symbol given for a "7% return" up above. It's for an income mutual fund, not a growth fund. It reached 7% once for a short while, but is now just above 5%. Also, the fellow neglected to point out that the income was fully taxable as ordinary income. So you need to take away about 28% or so from these supposed gains, whatever your marginal tax rate is. So what that tells me is that every time we have this discussion (which is the same damn discussion every time) it affords people the opportunity to brag about how savvy they are. And the best thing to do about these huge "gains" people say they made is to treat them with a large grain of salt. If you follow through and examine what they say, you'll find they exaggerate more than a little. Taking financial advice from all these braggarts on this forum is like putting the Captain of the Titanic in charge of your water safety program. Good luck with that.
Racer
Joined: Aug 2019
Posts: 302
Likes: 232
From: FL
I'm Retired. I figured I would get a new Gig being a Board Member for an Oil Company owned by a Ukrainian Oligarch.
I have vast experience in the Field. I used to work at my Father's Flying A Gas Station back in the 60's.
It pays $82,000 a Month, so I only need to work there one Month to get a well equipped C8.
That being said, do people ask how someone paid to buy a $60,000 GMC Sierra Pickup Truck on their Forum?
I have vast experience in the Field. I used to work at my Father's Flying A Gas Station back in the 60's.
It pays $82,000 a Month, so I only need to work there one Month to get a well equipped C8.
That being said, do people ask how someone paid to buy a $60,000 GMC Sierra Pickup Truck on their Forum?
Le Mans Master
Joined: Aug 2004
Posts: 6,877
Likes: 531
And bankers must have little financial sense, because they lend their deposits at around 4% and aren't smart enough to get the 7% that is quoted here.
Another scenario to consider would be an investor who has $200K invested in stock mutual funds. His investments have grown around 40% in the last 3 years. So he is reluctant to withdraw any of his money to buy a car, especially since he is able to get a car loan at 3.5%. So he borrows a $100K and keeps his $200K invested in stock mutual funds. Unfortunately for the investor, there is a change in political administrations in 2021 and the ultra friendly government business policies are changed. Business taxes are increased to their former levels, taxes are raised substantially on the "rich", and all regulations are restored to their former levels. So the stock market reacts predictably to these unfavorable conditions, and the S&P declines 30% in a year. So instead of growth, this hypothetical investor assets are reduced from $200K to $140K, and to make matters worse he still owes nearly $100K on his car.
This is the risk end of the equation which some choose to ignore: they've made a lot of money in the stock market in the past, so it's likely they'll continue to do so in the future. The stock market has done quite well for the past 20 years with an average annual return of nearly 10%, but that has not always been the case. For example it took an investor 25 years to recoup the losses in the stock market collapse which began in 1929. It wasn't until 1954 that the DOW Jones Industrial average reached the same level that it did in 1929.
I'm not predicting another depression. I'm just suggesting that risk shouldn't be ignored, and someones tolerance for risk should guide how he handles his investments.
Another scenario to consider would be an investor who has $200K invested in stock mutual funds. His investments have grown around 40% in the last 3 years. So he is reluctant to withdraw any of his money to buy a car, especially since he is able to get a car loan at 3.5%. So he borrows a $100K and keeps his $200K invested in stock mutual funds. Unfortunately for the investor, there is a change in political administrations in 2021 and the ultra friendly government business policies are changed. Business taxes are increased to their former levels, taxes are raised substantially on the "rich", and all regulations are restored to their former levels. So the stock market reacts predictably to these unfavorable conditions, and the S&P declines 30% in a year. So instead of growth, this hypothetical investor assets are reduced from $200K to $140K, and to make matters worse he still owes nearly $100K on his car.
This is the risk end of the equation which some choose to ignore: they've made a lot of money in the stock market in the past, so it's likely they'll continue to do so in the future. The stock market has done quite well for the past 20 years with an average annual return of nearly 10%, but that has not always been the case. For example it took an investor 25 years to recoup the losses in the stock market collapse which began in 1929. It wasn't until 1954 that the DOW Jones Industrial average reached the same level that it did in 1929.
I'm not predicting another depression. I'm just suggesting that risk shouldn't be ignored, and someones tolerance for risk should guide how he handles his investments.
Safety Car
Joined: Sep 2015
Posts: 4,785
Likes: 1,417
Would be no different, 5-year comparison vs 30-year comparison. Sounds like you just don't like seeing what appears to be a large interest payment.
Here's another try: $300,000 mortgage
Let's assume $300,000 mortgage, no down payment, 4.5% rate for 30 years. Payments are $1,520.06. After 30 years the total interest paid would be $247,220.13. With that same $300K in a 7% annual return investment, your $300K will be $2,283,676.513 at the end of 30 years, a gain of $1,983,676.51 ... so $1,983,676.51 minus the $247,220.13 = $1,736,456.38
You'd be $1.7M better off leaving your $300K in the 7% investment and borrowing $300K at 4.5% for the house.
Here's another try: $300,000 mortgage
Let's assume $300,000 mortgage, no down payment, 4.5% rate for 30 years. Payments are $1,520.06. After 30 years the total interest paid would be $247,220.13. With that same $300K in a 7% annual return investment, your $300K will be $2,283,676.513 at the end of 30 years, a gain of $1,983,676.51 ... so $1,983,676.51 minus the $247,220.13 = $1,736,456.38
You'd be $1.7M better off leaving your $300K in the 7% investment and borrowing $300K at 4.5% for the house.
my finance guy said I really shouldn’t give a crap, just buy the car. My portfolio will never notice it. Lol
How you ask? I married well...lol. Mom always said it’s just as easy to marry a rich girl as a poor girl, but it’ll be the hardest job you ever had staying with them. 35 years, Mom wasn’t wrong.
Le Mans Master
Joined: Dec 1999
Posts: 6,516
Likes: 4,840
From: One Hour From Boston!
Drifting
Joined: Mar 2006
Posts: 1,578
Likes: 550
From: Florida
Great FICO score. Mine used to be that a few months ago, but it went down a few points. Still above 800, but not at the very top. Now what could I have done to drop my score? I paid off my auto loan. Yup, that sucker is now free and clear, but my score went down because they "could not find an installment loan." Now ain't that a bitch?
One more thing. I looked up that symbol given for a "7% return" up above. It's for an income mutual fund, not a growth fund. It reached 7% once for a short while, but is now just above 5%. Also, the fellow neglected to point out that the income was fully taxable as ordinary income. So you need to take away about 28% or so from these supposed gains, whatever your marginal tax rate is. So what that tells me is that every time we have this discussion (which is the same damn discussion every time) it affords people the opportunity to brag about how savvy they are. And the best thing to do about these huge "gains" people say they made is to treat them with a large grain of salt. If you follow through and examine what they say, you'll find they exaggerate more than a little. Taking financial advice from all these braggarts on this forum is like putting the Captain of the Titanic in charge of your water safety program. Good luck with that.
One more thing. I looked up that symbol given for a "7% return" up above. It's for an income mutual fund, not a growth fund. It reached 7% once for a short while, but is now just above 5%. Also, the fellow neglected to point out that the income was fully taxable as ordinary income. So you need to take away about 28% or so from these supposed gains, whatever your marginal tax rate is. So what that tells me is that every time we have this discussion (which is the same damn discussion every time) it affords people the opportunity to brag about how savvy they are. And the best thing to do about these huge "gains" people say they made is to treat them with a large grain of salt. If you follow through and examine what they say, you'll find they exaggerate more than a little. Taking financial advice from all these braggarts on this forum is like putting the Captain of the Titanic in charge of your water safety program. Good luck with that.
Safety Car
Joined: Sep 2015
Posts: 4,785
Likes: 1,417
And bankers must have little financial sense, because they lend their deposits at around 4% and aren't smart enough to get the 7% that is quoted here.
Another scenario to consider would be an investor who has $200K invested in stock mutual funds. His investments have grown around 40% in the last 3 years. So he is reluctant to withdraw any of his money to buy a car, especially since he is able to get a car loan at 3.5%. So he borrows a $100K and keeps his $200K invested in stock mutual funds. Unfortunately for the investor, there is a change in political administrations in 2021 and the ultra friendly government business policies are changed. Business taxes are increased to their former levels, taxes are raised substantially on the "rich", and all regulations are restored to their former levels. So the stock market reacts predictably to these unfavorable conditions, and the S&P declines 30% in a year. So instead of growth, this hypothetical investor assets are reduced from $200K to $140K, and to make matters worse he still owes nearly $100K on his car.
This is the risk end of the equation which some choose to ignore: they've made a lot of money in the stock market in the past, so it's likely they'll continue to do so in the future. The stock market has done quite well for the past 20 years with an average annual return of nearly 10%, but that has not always been the case. For example it took an investor 25 years to recoup the losses in the stock market collapse which began in 1929. It wasn't until 1954 that the DOW Jones Industrial average reached the same level that it did in 1929.
I'm not predicting another depression. I'm just suggesting that risk shouldn't be ignored, and someones tolerance for risk should guide how he handles his investments.
Another scenario to consider would be an investor who has $200K invested in stock mutual funds. His investments have grown around 40% in the last 3 years. So he is reluctant to withdraw any of his money to buy a car, especially since he is able to get a car loan at 3.5%. So he borrows a $100K and keeps his $200K invested in stock mutual funds. Unfortunately for the investor, there is a change in political administrations in 2021 and the ultra friendly government business policies are changed. Business taxes are increased to their former levels, taxes are raised substantially on the "rich", and all regulations are restored to their former levels. So the stock market reacts predictably to these unfavorable conditions, and the S&P declines 30% in a year. So instead of growth, this hypothetical investor assets are reduced from $200K to $140K, and to make matters worse he still owes nearly $100K on his car.
This is the risk end of the equation which some choose to ignore: they've made a lot of money in the stock market in the past, so it's likely they'll continue to do so in the future. The stock market has done quite well for the past 20 years with an average annual return of nearly 10%, but that has not always been the case. For example it took an investor 25 years to recoup the losses in the stock market collapse which began in 1929. It wasn't until 1954 that the DOW Jones Industrial average reached the same level that it did in 1929.
I'm not predicting another depression. I'm just suggesting that risk shouldn't be ignored, and someones tolerance for risk should guide how he handles his investments.
Race Director
Joined: Apr 2014
Posts: 13,004
Likes: 773
From: "Shitcago"
Great FICO score. Mine used to be that a few months ago, but it went down a few points. Still above 800, but not at the very top. Now what could I have done to drop my score? I paid off my auto loan. Yup, that sucker is now free and clear, but my score went down because they "could not find an installment loan." Now ain't that a bitch?
One more thing. I looked up that symbol given for a "7% return" up above. It's for an income mutual fund, not a growth fund. It reached 7% once for a short while, but is now just above 5%. Also, the fellow neglected to point out that the income was fully taxable as ordinary income. So you need to take away about 28% or so from these supposed gains, whatever your marginal tax rate is. So what that tells me is that every time we have this discussion (which is the same damn discussion every time) it affords people the opportunity to brag about how savvy they are. And the best thing to do about these huge "gains" people say they made is to treat them with a large grain of salt. If you follow through and examine what they say, you'll find they exaggerate more than a little. Taking financial advice from all these braggarts on this forum is like putting the Captain of the Titanic in charge of your water safety program. Good luck with that.
One more thing. I looked up that symbol given for a "7% return" up above. It's for an income mutual fund, not a growth fund. It reached 7% once for a short while, but is now just above 5%. Also, the fellow neglected to point out that the income was fully taxable as ordinary income. So you need to take away about 28% or so from these supposed gains, whatever your marginal tax rate is. So what that tells me is that every time we have this discussion (which is the same damn discussion every time) it affords people the opportunity to brag about how savvy they are. And the best thing to do about these huge "gains" people say they made is to treat them with a large grain of salt. If you follow through and examine what they say, you'll find they exaggerate more than a little. Taking financial advice from all these braggarts on this forum is like putting the Captain of the Titanic in charge of your water safety program. Good luck with that.
I know of No lender that has a more favorable interest rate above a 780 FICO score (the REAL score).
Not some BS Credit Karma score, all scams.
FICO is the only score that counts.
Race Director
Joined: Apr 2014
Posts: 13,004
Likes: 773
From: "Shitcago"
It didn't cost me one penny.
If you can do it, that's a nice way to get Free perks.
Le Mans Master
Joined: Aug 2004
Posts: 6,877
Likes: 531
hummmmm so, you are asserting that the market gained 30% because of Trump’s steal from the everybody but the 1% policies? And just reverting to before Trump levels would result in a 30% drop? Lol.. well, if that’s what it takes to get rid of the grifter in Chief, I’d be ok with that... It’ll rebound quickly.
