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All you financial wizards care to answer my question?
I tried that a few times. Unfortunately, the answer I get is that we could put $5K on your card and I have to pay cash (check) or finance the rest. Card companies charge 2-3%, I think for the business.
Unless the investment sank. There are precedents where a $100K position drops 30% or more overnight.
Also, you paid monthly payments for 4 years.
Most people forget about tax liabilities on earnings and also the fact that loans are paid back with money after inflation (from future earnings). So all these calculations should include taxes and the rate of inflation.
You guys should really try options, that's where the real money is made! Why have 7% return when you could make 70%?
I have utilized options on a few occasions. I am happy with my overall portfolio and even though I have no pension, I will never work another day in my life. I utilized others money where I deem it valuable. Everyones idea and strategy is different. I prefer making the payments but now that I have retired I will pay it out of the investment, slowly, over time, so I am still ahead. Many armchair financial genius's here, but I know my situation as does my CPA. It works perfectly for me. I know people who can buy a new vette every year, toss the last one and never blink an eye............and they always use other peoples money. Again, its your financial position, everyone has different bank. As for my investments, I only put that one out there as an example of a decent return. I never give out the ones I have worked so hard to cultivate. The problem with these forums is there are people afraid of their own shadow and will lock their money in Chase at .001%. Will my investments drop 30% overnight, nah, its a nice line that you typed but I do not see it. And, if it did, like 09, I stay in and have literally tripled my original, pre crash investments.
Having said all that, I still have not found that 2% loan I read about, but a cu I utilize, is close to 3%
If you're going to buy the depreciating asset anyway, why not maximize the situation by doing what was suggested, borrow at 2% while your cash earns 7%
Everyone always says this but where are the monthly payments coming from? Lets says you have $80K cash in some account.... Use the $80K to pay cash or take a loan out for $80K @ 2%. Where's the monthly payment coming from.
A. You take the monthly for the $80K you have stashed in an account. Ooops sorry, your drawing down the $80K. So no, your $80K isnt doubling over 60 months. I don't know the math but probably a formula somewhere.
B. Your making monthly payments from your pay checks or wherever. Do you have free cash $1,500 to make the payments?
C. If you pay cash $80K is that cash free and clear? Any taxes owed on this money your withdrawing?
I have utilized options on a few occasions. I am happy with my overall portfolio and even though I have no pension, I will never work another day in my life. I utilized others money where I deem it valuable. Everyones idea and strategy is different. I prefer making the payments but now that I have retired I will pay it out of the investment, slowly, over time, so I am still ahead. Many armchair financial genius's here, but I know my situation as does my CPA. It works perfectly for me. I know people who can buy a new vette every year, toss the last one and never blink an eye............and they always use other peoples money. Again, its your financial position, everyone has different bank. As for my investments, I only put that one out there as an example of a decent return. I never give out the ones I have worked so hard to cultivate. The problem with these forums is there are people afraid of their own shadow and will lock their money in Chase at .001%. Will my investments drop 30% overnight, nah, its a nice line that you typed but I do not see it. And, if it did, like 09, I stay in and have literally tripled my original, pre crash investments.
Having said all that, I still have not found that 2% loan I read about, but a cu I utilize, is close to 3%
I could easily show you examples of 30% drop in a day, so you diversify. Than you scramble for the high dividends, then some of those goes sour, then you go scramble a little more. The bottom line, during growing economy anyone can make money in the market, during recession only the very shrewd will with big cojones. I have made big money and lost big money, overall, I came out ahead...
Everyone always says this but where are the monthly payments coming from? Lets says you have $80K cash in some account.... Use the $80K to pay cash or take a loan out for $80K @ 2%. Where's the monthly payment coming from.
A. You take the monthly for the $80K you have stashed in an account. Ooops sorry, your drawing down the $80K. So no, your $80K isnt doubling over 60 months. I don't know the math but probably a formula somewhere.
B. Your making monthly payments from your pay checks or wherever. Do you have free cash $1,500 to make the payments?
C. If you pay cash $80K is that cash free and clear? Any taxes owed on this money your withdrawing?
Exactly what I was thinking. Our local bank have CDs at 1 percent
In order to generate 7% income, you have to have your money invested in the stock market. Some retired people invest in income producing instruments such as an Equity Income Fund. The Fidelity Equity Income fund averaged over 7% for the past 5 years.These funds invest in stocks that pay high dividends. This strategy, known as equity income investing, can be an alternative to bond investing as it seeks to offer greater protection against inflation as well as potential for capital appreciation. On the downside you can still lose money in a market downturn.
As far as CDs are concerned you can get 2.5% FDIC protected CDs through your financial advisor. They have data bases of companies offering the highest CD rates, Here's a list of banks paying over 2%: https://www.bankrate.com/banking/cds...e-environment/
I was a finance major and Managing Director at a large bank. The one thing that this does not take into account is the volatility of the time horizon. If you take a loan to effectively make an incremental investment (or keep it) it is a leveraged investment. Say you borrow for five years at 3% for the car. If you look at equity returns over five-year horizons there is large distribution of outcomes. Using the S&P 500 (with reinvested dividends), the last twenty five-year time slices have nine of twenty times where the investment did not earn its 3% cost of capital. For example, if you invested $100 close of trading on 12/31/13, you would have $151.42 at 12/31/18 or a 8.5% compound average annual return. It sure feels a lot more like 1999 or 2006 right now, and look how that turned out.
Last edited by Michael T*; Oct 26, 2019 at 12:17 PM.
Been invested in FSMEX since 09. I invested some more in 2016 right around the election results. I believe the life return of the fund is around 13-14% that is including the 08 crash. Fund started in 95 if I recall.
for kicks i bought 20k of fbalx a year and and half and just cashed it at 25117. Cost basis was 25200. If I understand that will show a 100$ and change loss on my taxes (sold price - cost basis).
I could easily show you examples of 30% drop in a day, so you diversify. Than you scramble for the high dividends, then some of those goes sour, then you go scramble a little more. The bottom line, during growing economy anyone can make money in the market, during recession only the very shrewd will with big cojones. I have made big money and lost big money, overall, I came out ahead...
Again, you keep speaking for me. You and I are not on the same wavelength when investing. I never panic, I never "scramble". I stay the course, always have always will. According to your description, I have big cojones. In 30 years I have never once "panic sold or scrambled" I continue on my path and diversify according to my read on the market. The market always cycles and ALWAYS cycles higher. Stick with that money market account. Me, any loan under 3.5% I will take 365 days a year. You make money using other peoples money.
Once I get a date, I will research loans or cash. But, although its not comfortable for you, they are the way to go with me.
How are you guys paying for your new c8. Cash, loan, mortgage, send lien on house or what?
I own a C7 Z06 that is my 3rd car and have decided I will wait on the up engine C8 models (Z06, et al) to make a buy or no buy decision, but if I buy it will be a 3LZ Spider and I will be a cash buyer.
I own a C7 Z06 that is my 3rd car and have decided I will wait on the up engine C8 models (Z06, et al) to make a buy or no buy decision, but if I buy it will be a 3LZ Spider and I will be a cash buyer.
I might be a Z06 buyer if it returns to its roots with a normally aspirated engine. If it's a ZR1-Jr (Turbo) I will likely stay with the base car.
Something is fishy with the C8 LT2 Z51 anyway.
100 lb heavier than the C7 Z06 with 150 less horsepower and runs within 1 mph in the 1/4?
Somebody is Sandbagging! DCT and Midengine can cut a lot of ET but you can't trap without horsepower.
I still have not found that 2% loan I read about, but a cu I utilize, is close to 3%
Originally Posted by frankjr
$$$ unless GM has 0% interest rate at the time.
The few I looked into and the one I'm with will only give me 3.4-3.2%.. Dont know if the feds will drop the rate again by the time my c8 rolls out. Has anyone or can you contact your dealer a month or before the car shows up and have their finance guys run numbers and see if they can find a bank with a better deal? Hell, I was even thinking about calling Ford Credit(my last loan) and see if they will give a cheap loan for a chebby. lol
I may go back to my original thought and just do half n' half again. (pay half/loan half)
From: Philadelphia PA (Birthplace of the USA, UNESCO World Heritage City)
Originally Posted by Michael T*
I was a finance major and Managing Director at a large bank. The one thing that this does not take into account is the volatility of the time horizon. If you take a loan to effectively make an incremental investment (or keep it) it is a leveraged investment. Say you borrow for five years at 3% for the car. If you look at equity returns over five-year horizons there is large distribution of outcomes. Using the S&P 500 (with reinvested dividends), the last twenty five-year time slices have nine of twenty times where the investment did not earn its 3% cost of capital. For example, if you invested $100 close of trading on 12/31/13, you would have $151.42 at 12/31/18 or a 8.5% compound average annual return. It sure feels a lot more like 1999 or 2006 right now, and look how that turned out.
Bingo! Same thing I was saying in my earlier post. I'm a CPA and business owner, btw.
The 7% equity market returns are only reliable if investing for a very long-term period where downturns are smoothed out. Reduce that period to the life of a car loan (~5 years) and the outcomes are very unreliable, especially with the current day volatility and uncertainty in the markets.
Last edited by ArmchairArchitect; Oct 26, 2019 at 02:01 PM.
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