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

My fear is that tech along with a few other stocks have just gone parabolic. Idk how long this is sustainable so
I’m trying to pick stocks that are good companies, but aren’t parabolic.. idk of that will work out in my favor or not.
And XOM is making me nervous. They make up 20% of my portfolio.. I know that’s probably not good.

 

Yea pretty much. If you buy into a 5% yield now, and continually buy for 30 years, you will probably get paid less in the end than if you do the same with a good company yielding 3%. I do a mix of it all, with an overall yield of about 4% with an average annual growth rate of about 8%. There’s no right or wrong, just study it and pick what you like.

 

I think your math must be wrong because there's no way mattress money would net more than paying down a loan with interest.
Regardless, my advice on invest vs mortgage would depend largely on where you're at with the mortgage. If you look at an amortization schedule, you'll see that early payments are mostly interest. Paying down principle early in the loan is much more valuable than doing it later in the loan.
Also, I like to set myself up for SHTF scenarios. You don't want to lose your house because the market took a crap, you lose your job, have to move and sell but your underwater, etc.
If I were at greater than say 70% LTV, I'd be more concerned with the mortgage than investing. If I were under 50% LTV, with a comfortable emergency fund set up, then I'd start looking at a realistic ROI investing vs interest cost on a mortgage.

 

I used a mortgage calculator to find the interest both with and without the $500 extra principal payment every month. Math was right.

 

I agree, Tech feels due for a correction at some point. The s&p is back, but it’s driven by those stocks and the majority haven’t recovered. So it should balance itself back out at some point or the s&p will just skyrocket when the sectors that are lagging get back near where they were pre covid. So it’s possible investors start to move away from tech a little to grab the upside that exists elsewhere with a true recovery. Maybe that means a little tech dip, or a bigger dip and reset, or just flattening out. And yes, 20% on XOM is too much, but just means you don’t need to worry about adding to it for a good while

 

There are some tech companies that are good for this strategy, I’d suggest AAPL, AVGO, and CSCO. I’d also suggest Blue Chip consumer staples, those will provide perpetual income because people gotta eat. Look at TGT, WMT, GIS, PG, KO, PEP, MO, etc.

 

Let’s not forget Hollywood has desensitize us to what our future entails..if I’ve learned anything from game of thrones it’s...”winter is coming”...I see a drop coming when the temps drop (disregard my gibberish if you are a true investor and not a speculator)

 

No I’m with you. I think we’re going to see a W type market. We’re at the first peak now. I think this winter it’s going to draw back, probably not as sharply and as far as March though. And then come back l, but probably slower this time as people aren’t as quick to think it’s over after a resurgence in the winters.

 

Any guesses at the major therapeutic breakthrough that will be discussed today? Is it real or a desperation play to get some good news out there?

 

Are you just looking at 13 1/2 years worth of interest using the current amortization schedule?
If so, that's where the error is. You only pay interest on the pricipal owed so each payment to principal would decrease the interest owed as well.

 

google sheets is free

most mortgage calculators factor that into amortization when you put it as “extra payments”. That is then taken into account in the interest as well not just the principal over time. An average joe doing it by hand would be a pain in the arse to do it let alone do it multiple times for different scenarios.

 

No, what’s he’s showing is if he makes the regular payment, he pays 125k in interest over 30 years. If he pays 500 extra monthly, it’s paid off in 13 years, and he pays 50k in interest over 13 years. So he saves himself 75k in interest. The best way to do the math is to do the 500/month invested, figure return over 30, be conservative with 6%, you get roughly 490k. On the other hand you take the monthly mortgage payment plus the 500, and invest that after it’s paid off after the 13 years, so you get roughly 1500/month?(no idea what actual payment is) invested for 16 years, 6% that’s roughly 475k. Both scenarios the house is paid off, and 490 vs 475k are basically the same. If your return goes from my conservative 6% to more widely accepted 8%, the difference is greater, about 700k to 570k. And the gap gets bigger the better your returns. Life changes over 30 years though, might not have that extra 500 after 10, might rather put money towards a vacation home after 15, so it’s all speculation. Might get 3% for the first 15 years and 15% for the last 15, certainly changes the math.

 

well the point is amortization tables are based on remaining principal. So if there’s an extra 500 knocked off, the interest actually goes down so you aren’t paying the same amount of interest next month as if you didn’t pay the extra 500. So your interest actually reduces over time.

 

I like that explanation above.

We were ones to pay off the house earlier and increase our investments heavily after a 13 years. It was nice to see we did not lose out on a huge amount of gains. The psychological comfort of a paid off house outweighs the extra money we could have made.

Even with the small losses, we are not going to be worrying about money in our retirement years.

 

Looks like the announcement about the announcement is as big as the news will get.

 

No news is good news.

2 hurricanes coming into the Gulf should cause WTI to go back up a bit. Having 15% of US crude offline for the storm will draw down supplies in 2 weeks. That might help you guys still holding NRGU.

 

Thank god

 

Watching with interest.

I love this thread. Even though I learn so much, but never act on it, I'm still in.

 

^ This is correct

 

Ok. Well then we're not taking in to account that one scenario leaves the mortgage gone while the other leaves a balance owed that's greater than the amount saved.
Point is, no way does mattress money beat paying down a loan with any kind of interest rate.
Now investing in the other hand, all you have to do is earn a higher percentage than you pay in interest and you're mathematically ahead.