Investment BS Thread - Stocks/Futures/Mutual Funds/Bonds/Commodities/Options/ETFs/401ks/Etc

I got 0% interest on a 2019 Tacoma in November.

 

I always wondered about this. It seems like a horrible business decision by the lender. All I can think of is they expect enough people to default and pay interest and fees that it makes it worth it.

 

It was from Toyota. They were going to give me a rebate or zero interest financing. I think they model the economics of increasing volume versus getting a little profit on the loan and the money they make by selling more units is greater than what they can make off the interest on the loan. You and I can make more than 3 or 4 % by investing and so can they. By the way, I think they only really approve 0% if you have a very good to excellent credit rating so they aren't making a lot of cash the way you suggested. I think it's all a volume game.

 

Yeah you are right. On a tacoma that is rare though! Nice!

Toyota Financial and Toyota Motors are actually separate companies that work together though so they have different metrics they are hitting. Volume only impacts motors and loans impact financial.

@Boyk1182 most of the time they try to make up the net present value of the potential loan in the base price. Sometimes you get lucky and find a deal though.

 

I agree, Wounds of a friend is better than the kiss of an enemy.

 

My dealer gave me a really good deal on the truck and a buddy just got a great deal on a 2020 Rav. I think the real profit on these vehicles is ridiculously high which makes the volume focus work.

 

Off topic maybe.. but anyone know any tricks to raising credit scores "faster"? Besides making payments on time, keeping you credit/debt ratio on the lower side, etc. Kinda screwed myself in my younger days and it killed my credit. Its coming back, but painfully slow. Any info would be appreciated. Not trying to find an overnight fix just wondering if there something else that I could be doing. Thanks in advance TW.

 

I've been "cracking out" on this cats' vids. I think he has some very, very good info.

Anyone else chech him out?

 

Increasing your credit limit can help. Here is the Capital One Creditwise scale of available credit:

$0 - $2,500 Below average
$2,500 - $15,000 Average
$15,000 - $50,000 Good
$50,000+ Excellent

It may be a small impact but it’s something. It also lowers your credit used ratio if there’s more available. I’ve been doing this for a while.

 

Good to know. Asking for credit line increase hurts credit? or am I making that up? Also, there is the potential problem that might score might not be high enough to qualify for one? 602 currently according to Experian. Sad, I know

 

more credit but usage remaining the same means your utilization ratio is lower. I occasionally fill out the request on my various credit card websites to see if they allow it.

 

I use Bank of America, and if you ask for an increase on an existing card with them they do a soft pull, so no effect on your score. If you do too many hard pulls, that will hurt it. If you do it I’d find out before by asking if it’s a soft or hard pull.

 

Appreciate the feedback

 

So it sounds like you won't have another 401k?

If you did though, I still think it would be a mistake to withdraw it all, pay taxes on it as income and pay an additional penalty for early withdrawal only to reinvest it.
That's one reason I was so interested in Webull offering a qualified IRA. I was able to transfer my last 401k to Webull without incurring taxes or penalties (to be verified when I've completed my 2019 taxes ). It is now in a completely self-directed and fee free account. Should I need to withdraw any of that money prior to retirement age, I would only be taxed on and penalized for the portion I withdraw and not the full amount.

Am I misunderstanding what you're saying?

 

Not all 401K's are $1 for $1 that you put into it. I think mine was $.25 on the $1 but I still put as much in as I could. I also paid an extra $100 a month towards the mortgage which will save you a lot of interest over time. I never let a credit card accrue past 1 month, always paid them off the next month. This is basic stuff that everyone should do regardless of extra money for retirement. When it comes to investing/retirement, you need to look at the options regarding risk/return and if you're looking for something to go up in value or pay returns in dividends. If you're younger, you can go with higher risk/higher return funds and not worry as much. If you're older, you want to look for more stable funds and ones that pay dividends (I like monthly dividends over quarterly or yearly). When I was younger, I had my 401K spread between large cap, mid cap and small cap funds. That worked out well. But now that I'm not working, I moved most of my 401K to Roth IRA and IRA accounts and put the money into monthly dividend funds. I'm averaging around 6% a year, but I just reinvest it since I'm still younger than 59-1/2 and would pay the extra 10% penalty if I took it as cash. I'm still trying to figure this investing/retirement stuff out before I take any money out of it and it's not easy. It looks like the Roth IRA is the best place to put your post tax money since you won't be taxed on it (unless you withdraw before 59-1/2 years old) and there is no minimum required distribution to take once you reach 70. But the 401K is the place to start to get the free money match from your employer and then you can roll that into an IRA tax free or a Roth IRA paying the normal income tax rate. Just don't let your credit card build up, pay it off each month or you're wasting a ton of money. I watch the younger crowd pay for beers at the bar/restaurant on the credit card and that's the worst thing you could do. Pay for your daily expenses with cash so you know where you stand and save the credit card for big or possibly risky purchases.

 

I do have a 401k where I work now, and it is starting to get to a decent size. I think my biggest problem with it is that I have very limited options in what to invest in. I think it returned 16% last year, while my brokerage account was close to 30%. If I could put it in SPY I’d probably consider leaving it there and just letting it go but not with the options I have.

 

If you're paying off the card every month there's zero reason to pay for the beers with cash. That's turning down free money just for the hell of it.

 

Open an IRA and you can roll your 401K into it and that will give you better options for investing. My 401K was with Fidelity so I was able to open an IRA and a Roth IRA under my account and roll the 401K money into it. You have pay income taxes on the money going into the Roth so try the IRA first.

 

Very good post, but one thing. I put everything on credit cards, and pay them immediately. I net about 3% returned in cash back rewards. If you see me at the bar, you’ll know what I’m doing.

 

I'm not sure where you're coming up with free money in this situation. Cash back on your card can't be used everywhere so don't fall for that sales pitch.