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

This is why I just buy dividend stocks whenever I can, reinvest when I can, and never plan to sell them. If anyone does that for their whole working years, they’ll be fine when it comes to income.

 

I mean I never said I didn't pay cash....It was just still a dumb purchase After purchase and trade in, 10k over 4 years in "usage" costs.

Yeah I definitely, when we bought our house, was at the max I'm comfortable with (which is well below what a lot of people could do), but that was knowing that we could grow into it over the next few years. We have, and it's great.

Fortunately I like fast cars, but not that fast cars. WRX, sure, gimme. Mazdaspeed, bring it on. No desire for a muscle car or anything like that though.

As noted my mazda was 10k/4 years, daily driver and was in a non-repaired rear end accident (whatever), I beat the absolute shit out of that car. Once I reached the point I knew I was trading it in, I gave zero shits. There was also a snapped bolt on the serp belt tensioner. 2 out of 3 were still there though so. Like. Whatever.

Yeah, 10k/4 years was not a bad deal for that thing. Traded it in for the tacoma I only asked for 3.6k, I knew what it was worth. Some cars hold value, so many people my age have been taught never buy a new car, go a few years used, and the WRX and Tacoma are trendy, so they have a wicked demand on the used market. Keeps the resale high. I'll probably never buy another new car, unless it's another tacoma and we'll see what gen 4 looks like for that.

I love the CNBC homepage. Rally of like 4% and the main headline "BILLIONAIRE PREDICTS DOOOOOOOM"

 

I made $15 in dividends just last week

I was not expecting that last week.

 

The one good thing about the trans am is it is slowly appreciating. I have in it practically what it's worth. Newly rebuilt 400, new paint being put on, new vinyl seats. Just needs a new set of wheels or I need to get the ones on it refurbed. Once it is back from the paint shop, it would be a mean daily driver with gas prices being so cheap.

 

Oh man, I am enjoying the tacoma while gas is cheap. Truck has been caked in mud every day for the past few weeks and well worth it.

 

All great points... I didn't come here to gloat. I came to try to wake people up like some very wise old men did for me. Einstein has a quote... "those who understand compounding interest earn it, those who don't understand pay it"... Debt is the most powerful tool you will ever have. Use it wisely and you advance, use it foolishly and you dig a hole that you will never emerge from. I use debt, and until recently carried debt... It was on my personal home and my trip-plex. I paid them both off in less than 10 years. I started off down the same slippery slope of wanting shiny and cool stuff. The old timers slapped the shit out of me and kept me focused. Two of them helped me re-model the first duplex where I lived in half and let the tenant make the payments. The first 4 years were HARD!!! PB&J, dinner at the parents, laundry at the parents, beat up truck, no money for luxury. I fished from a pier for fun. After I met my wife and we teamed up together it was easier. It is by no means easy street, but it is the hardest times that I remember the best, and it is times like this that makes me miss my old friends who are no longer with us. Had it not been for them I would never have gotten here.

 

I own boats and still fish from the piers.

 

Just realize that in this thread you're far more likely to find the folks who're already financially literate and disciplined.

The group who likely needs the message is probably over in the
What Have You Done To Your 3rd Gen Today? thread...

 

Looks like you had fun, though! I see entertainment value.

 

Here is an example of financial literacy, and some seem to strongly disagree with my take. We had huge arguments about this a long time ago on this thread. I hope I don't spark that again

If someone has $500k in stocks paying a stable 4.5% dividend ($1,875/month in dividends), and wants to buy a house for $500k, I would suggest taking out a mortgage. You do of course have to crunch the numbers, but with today's interest rates around 3-4% (and can get it lower), you'll end up better off with the mortgage.

This caused a HUGE disagreement in this thread a while back, but that's how I see it. Debt can be good if used right.

 

It's all about cost-of-capital. Factoring in all the aspects - including tax effects of any interest deduction as well as any capital gains taxes on the investment sales - to see what makes the most sense for a specific situation.

This is why I dislike absolute claims like "all debt is bad" or "throw away all your credit cards". Debt and credit can be very useful tools when used appropriately and wisely. Some folks can do that. Some folks have trouble with the needed discipline. Where discipline is lacking, then yes perhaps an absolute is the best way to avoid misuse.

 

That is really my point whenever I argue this. I am against the "all debt is bad" thing too. Take out a piece of paper, crunch the numbers, debt may be bad or it may be good, every situation is different. Cost of capital is definitely a simple way to understand it.

 

Drain 500K to have a paid off house and zero investments that make 0 dollars and now you have to put, let's say, 1600/mo back into it to get to 500K to make those dividends again. That's 26 years to be able to make 1875/mo again, where you are paying 1600/mo in a mortgage.

Honestly, flip a coin. Me, I'd leave it invested, especially with the lower interest rates nowadays. That way I can use it to pay off my house each month and then after 30 years, with no effort, my house is paid off, and my income stream comes back. Or, sell everything, pay off the house, but start from scratch to get back to my invested potential.

However, if someone wants to live debt free and pays off the house, that's 1600/mo they are not paying, and not paying any interest, which means all money paid goes to the value of the house and their own pockets, not to a bank at all.

Long of the short: There's no right or wrong answer in all this. There's what you want, and what works for you. There are very, very few absolutes.

 

Just like buying and selling stocks , there is always 2 sides to a trade (a buy and a sell ) Each participant believes they are right and only time can tell who was .
Edit , I am old and comfortable with a paid off home and no mortgage or other debt because it is a sure thing , But if I were young I would think differently .

 

Yea, the example I gave could go either way if you just assume: sell stocks, pay off house, and nothing more (like you said, very few absolutes).

I think the difference is that if you kept the stocks, you would find a way to pay that mortgage (job). You could reinvest those dividends, and in 30 years, that $500k should be well into the 7 figures with an income you'll then enjoy.

That's my theory at least. If you have managed to invest, leave it alone. It's hard to do, and if you managed it, you're doing ok.

 

This is maybe the best investment advice in this whole thread

Until now, that is. I think I can top it.
I managed to find a stock for each of my first, middle, and last names (ticker or company name).
I bought a single share of each to keep for "portfolio luck".

Working out well so far

 

Now you guys are just playing roulette.

 

Or, they're both right, but they'll continue to argue because the other person must be wrong!!!!

I am 2.5 years into a 30 year mortgage, and my truck loan, otherwise debt free, at 26 (27 soon D I'll take it. I have a house I can see ourselves in for 50+ years, in a location I can see us in for 50+ years (unless we move south....there's that potential....), with a truck that will last 15+ years. From here on out, it's pretty much replace it if it dies.

You're right. I'm right. Everyone is right!

But I do agree with you. 500k sitting there generating passive income like that, I would use the passive income rather than clear house the investment. Live off the interest, leave the principal.

 

Okay yeah I'm doing that when I can

 

How in the world is a $500k mortgage only $1600 a month....