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

I need to learn about options some day. I literally have zero clue about how they work, what they do, ect.

 

I’m in the same boat. I know how they work, but not what works. e.g. - would an AAPL call at $500 make sense right now...

 

I would honestly go to YouTube and watch some videos on options. That’s how I learned enough to be dangerous. I started with lower priced stocks like GE and some smaller banks. Their premiums are lower than stocks like Apple, Facebook, Nvidia, etc.

I have lost a decent amount in options it’s just legalized gambling on it a stock is going to go up or down by a certain date. You have to learn about the Greeks and IV as well for that option.

Watch some videos on YouTube it took me a couple times to understand. If you have some questions, post them. I will do my best on answering. If I can’t I’m sure others will be able to. I have only been doing this since COVID started.

 

I understand how they operate, it’s gaining the knowledge not to bet against the sun rising in the morning (i.e. - spending more time in the market and studying trends).

 

That's cute


AND the options contracts..

 

I am on the Apple and Tesla train don’t understand either but riding it until I can’t no more.

 

What’s the 4,900 in?

 

That wasn't real and I couldn't figure it out. I had an option that was worth one cent ($1 to close, basically worthless and way out of the money) and then somehow someone had a Single contract that sold for $0.98 ($98)... I don't know if they sold it themselves or something to try to get other contracts to sell but it didn't seem legit.

 

Guys my wife and I bought a house last year and we’ve been crushing the house payments. We managed to pay off three years of house payments in 11 months. The purpose of this was, of course, to save on interest. However, what I found today was very surprising.
Paying an extra $500 a month on the principal of the house would, over a period of 13 years and 4 months (the time that it would take to pay the house off), save us $75,206.50 in interest.
Alternatively, setting $500 a month aside in a savings account gaining 0% interest would accumulate 80,000 over a period of 13 years and 4 months.
I think I’m going to take that extra $500 a month principal payment and throw it into dividend stocks instead of putting it into the house. I am still undecided and will talk with the wife about it today and see what she thinks. For me, I think the only downside is that I would like to have financial freedom and no debt, even if I am saving more $ by putting it into the market.
Thoughts?

 

there’s no wrong answer here ultimately. You do what works for you. Some people that is getting rid of debt, others are fine with debt as long as it’s managed properly you’re good.

I have a 30 year fixed 4.25%. I’m in no rush to pay it off early opposed to investing instead.

 

In my opinion, you’ll get closer to financial freedom investing. Think about it, if you pay the house off early, cool no house payment, but no passive income either. If you invest over the course of the loan, loan gets paid off eventually, and you probably created a nice passive income stream over that time period. That scenario would be financial freedom.

If you invested $500 a month for 30 years, and assumed no capital appreciation (very unlikely), and got 4% in dividends (easy to do), you’d end up with about $350,000. Your monthly dividend payment would be over $1,100 (assuming no dividend increases, also very unlikely). More realistically, you’d be a millionaire at the end of the loan, making a few thousand a month in dividends.

 

Invest it. Then you have the option down the line of pulling that money out to pay off the mortgage early. Once you stuff money into a house that money is gone until you sell. Whatever the house appreciates in x amount of years is not compounding and never will be. The market gains are compounding. You can read for days online about making a choice between these two strategies. Neither choice is wrong but one will net you more cash for retiring.

 

As others have said, the math says to invest. I understand people feeling good about having no mortgage, but you’ll never get those 13 years back to invest that 500 a month. But doing either is better than doing neither

 

Thanks guys. This just confirmed what I was already thinking. Better to start compounding interest sooner!

I’m a bit afraid about my investment choices though. I kind of just picked high dividend yield stocks... so a bunch of reits, oil, gas, energy, and banks..
I have no tech because I think it’s too high and dividends suck. And no consumer staples or blue chips really because their dividends pale in comparison to other stocks I’ve chosen.

 

It’s ok to spread it around. If you want to go for the dividends, there are plenty of good options. Don’t be afraid to grab tech at some point for future growth. They might be expensive now, but if you are looking 10 years or more down the road, you got to believe they are cheap now. So if there’s a dip, think about 15 years out and not about today. And that applies to the dividends also. Shares you buy now will probably be yielding pretty good in the future.

 

Remember, low yield companies usually grow their dividend faster than high yield companies. In 30 years, AAPL may be paying more than XOM, even though it’s hard to imagine. You can do the math though and see. I found this chart on a Seeking Alpha article:

 

until I drop pmi I’ll be strong paying but after that. Meh.




Another comment. I’d invest it and maybe say “I will take the dividends toward the house”. Or something like that. That way at the end of the mortgage you have a house AND a decent passive income just plop into your lap. That’s why I like the invest now strategy, let the 30 years play its role in gains and earnings and use some of it if you want, then at the end of the mortgage, car loan, whatever it may be...that income stream is now freed up.


Edit forgot why I came in here to post anything.

https://www.cnn.com/2020/08/20/business/boeing-737-max-enter-air/index.html


It’s small but it’s a step in the right direction in several fronts. BA might tick up Monday on this, but who knows anymore.

 

I completely agree with what everyone has said previously. One thing that hasn’t been mentioned is (depending on what rate you have)), I would try to refinance the home with a lower rate. this could even lower your Monthly payment and lower the total of your cash payments. So now instead of having $500 a month you could probably have $700 a month to invest. This all depends on cost of refinancing and the rate you get.

 

So your saying a low dividend yield now could and probably will translate to higher dividend growth and thus a high dividend yield later?