Ace/economic peoples: What would you do now with $5000 in cash (no, im not buyinggold

[Thorgrim]

Originally Posted by A_C_E

Hardly worth it given the interest rate and the lack of monetary velocity.

Yet money markets at 1.1% is better?

"if you're not taking our advice" you guys aren't even agreeing....6speed just recommended a CD...christ turn down the arrogance dial

[nbiggershaft]

wedding present for nbiggershaft

[Thorgrim]

I know many of you are still handling student debt, does anyone know how banks/stafford/perkins are going to handle it in 2011 when any student loan taken out is 3.4%?

The was designed to lower rates for people getting student loans, not hand out new regulations...so in 2011 will we be able to change over a significant if not all of our debt, along with new loans...all to 3.4%?

Again, if so, i still have undergrad loans were debt is NOT accruing, so paying off 6.75 loans wouldn't make any sense when they will not start charging me interest for another few years...if I can get <3.5%...I should look into that...and that is what I was looking for

1) Is that a significant possibility (the banks changing)
2) Is there somewhere to put your money for over 3.5% that doesn't have realistic risk...yes i know everything has risks but over the long term people have permanently lost money on NASDAQ but not on more secure things like bonds

[nbiggershaft]

Originally Posted by 6SpeedTA95

Time the market all you want, statistics and study after study show that timing the market is foolish because NO ONE can consistently time the market.

obviously you have seen

Pi (1998)

[nbiggershaft]

hookers and blow

[nbiggershaft]

while we are on the topic though, what is the financial tradeoff of a house loan. I know approximately zero about the stuff, but I know there are tax writeoffs with house loans. So which is financially better off,
renting an apartment (1k a month) for 5 years with a combined income of 110-150k
then buying a house straightup for 250 k or so
or renting for a year then taking a loan and paying off over 10 yrs or so

[6SpeedTA95]

Originally Posted by nbiggershaft

obviously you have seen

Pi (1998)

what?

[6SpeedTA95]

Originally Posted by nbiggershaft

while we are on the topic though, what is the financial tradeoff of a house loan. I know approximately zero about the stuff, but I know there are tax writeoffs with house loans. So which is financially better off,
renting an apartment (1k a month) for 5 years with a combined income of 110-150k
then buying a house straightup for 250 k or so
or renting for a year then taking a loan and paying off over 10 yrs or so

you can ONLY write off your mortgage interest if it exceeds the normal deduction of roughly 10,400/yr. So basically dont get a loan because of the tax savings.

Having said that I would recommend buying as soon as you're stable financially. If you make 110 to 120k/yr then a 200 to 250k loan should be fine.

[WickedLou9]

Originally Posted by Thorgrim

Yet money markets at 1.1% is better?

"if you're not taking our advice" you guys aren't even agreeing....6speed just recommended a CD...christ turn down the arrogance dial

Capital one has a Money Market paying 3.85%, ING pays 3%.

[Ardentfrost]

Originally Posted by WickedLou9

Capital one has a Money Market paying 3.85%, ING pays 3%.

I was about to say that. I think Etrade has one paying around there too, but they've been kinda rocky lately so I'd hold off on them until they get bought up by someone a bit more responsible.

[Ardentfrost]

And I say again, you can take the money to the stock market all you want, but if you're ONLY putting it in for 5 years, you're not making a long term investment (although, it's a lot better than just a year or so). If you're not going long term, your exposure to risk is far greater. If you want to drop some money into the market and not pay attention to it, a mutual fund based on decent growth stocks over a long period of time is killer. Put in, get an average of 10% over 30 years, you're gold.

I would say that 5k would be a great start for a portfolio (as in, fuck the service charge of mutual funds, and make your own diversified portfolio). Most of us have to start in mutual funds and roll out down the road when we've built some wealth. But I think $5k is workable. Twice that would be way better

[WickedLou9]

Originally Posted by Ardentfrost

And I say again, you can take the money to the stock market all you want, but if you're ONLY putting it in for 5 years, you're not making a long term investment (although, it's a lot better than just a year or so). If you're not going long term, your exposure to risk is far greater. If you want to drop some money into the market and not pay attention to it, a mutual fund based on decent growth stocks over a long period of time is killer. Put in, get an average of 10% over 30 years, you're gold.

I would say that 5k would be a great start for a portfolio (as in, fuck the service charge of mutual funds, and make your own diversified portfolio). Most of us have to start in mutual funds and roll out down the road when we've built some wealth. But I think $5k is workable. Twice that would be way better

The only barrier for me atleast, with going the self directed route is that those brokerage accounts have fees for every trade, they have yearly maintenance fees and sometimes inactivity fees. These fees are flat $ amount fees so the more money you have, the more insignificant they are. Conversely if you don't have much, the fees can easily kill your RoR. If you just want to buy and hold, those fees will eat up a percentage of your holdings greater than if you just had a mutual fund. If you want to trade alot, the transaction fees will add up as well and again outweigh mutual fund fees... for relatively small amounts like 5 grand anyway. And by small I mean small in terms of the investment world. You need more like 15-20k for it to be worthwhile to invest directly through a brokerage. Plus with only 5k it makes it hard to properly diversify if you are investing directly in stocks.

[Ardentfrost]

Originally Posted by WickedLou9

The only barrier for me atleast, with going the self directed route is that those brokerage accounts have fees for every trade, they have yearly maintenance fees and sometimes inactivity fees. These fees are flat $ amount fees so the more money you have, the more insignificant they are. Conversely if you don't have much, the fees can easily kill your RoR. If you just want to buy and hold, those fees will eat up a percentage of your holdings greater than if you just had a mutual fund. If you want to trade alot, the transaction fees will add up as well and again outweigh mutual fund fees... for relatively small amounts like 5 grand anyway. And by small I mean small in terms of the investment world. You need more like 15-20k for it to be worthwhile to invest directly through a brokerage. Plus with only 5k it makes it hard to properly diversify if you are investing directly in stocks.

You just gotta shop around for low fare firms. Depending on how much you move around, mutual funds will eat into your RoR just as much.

[Thorgrim]

Can't you get:
A) better rates for mostly secure bonds
B) a better situation with a CD...i mean MM give you more freedom, so why would you get better rates than a CD?

THE MOST IMPORTANT QUESTION: Does anyone know ANYTHING about what's going to happen in 2011 when student loan rates for NEW loans hit 3.4%? What will people with tens of thousands of debt in stafford/perkins be able to do with their loans? Are they stuck with 6.75% for life? Will banks care about interest rate cuts/3.4% from the government for new loans...etc etc?

I mean, if it's stuck at 6.75 for everyone, then I agree, I should just pay off my debt (again)

But if it's 3.4...jees I'll take the capital one MM at least, if I can't find something better

[WickedLou9]

Originally Posted by Thorgrim

Can't you get:
A) better rates for mostly secure bonds
B) a better situation with a CD...i mean MM give you more freedom, so why would you get better rates than a CD?

THE MOST IMPORTANT QUESTION: Does anyone know ANYTHING about what's going to happen in 2011 when student loan rates for NEW loans hit 3.4%? What will people with tens of thousands of debt in stafford/perkins be able to do with their loans? Are they stuck with 6.75% for life? Will banks care about interest rate cuts/3.4% from the government for new loans...etc etc?

I mean, if it's stuck at 6.75 for everyone, then I agree, I should just pay off my debt (again)

But if it's 3.4...jees I'll take the capital one MM at least, if I can't find something better

The market is strange right now. long term CD rates aren't that good because of the uncertainty in the markets.

Check out
CD Rates | Compare High Yield Certificate of Deposit Best Highest Certificates Laddering CD Rate Ladder

You could also look into REIT's ( Real Estate Investment Trust ) , I know real-estate is shitty but REITs are largely invested in Commercial properties which haven't been subject to the same sort of problems that the personal housing market has.

Places like
CNL Income Properties, Inc.
Welcome to Wells Real Estate Funds
Inland Real Estate Corporation
Piedmont REIT



I don't really know much about the loan issue you are asking about though

[Thorgrim]

I thought the majority of people here are dealing with some university debt...and would know something about 2011 when it hits 3.4%...very frustrating

but thanks lou

[Ardentfrost]

I have like $7k left in my student loan. I plan to have it paid off in the next year and it's at less than 5.5%.

Can you wait til 2011 and possibly refinance? Sure, but for every 10k in debt you owe, you'll pay nearly $2200 extra in that amount of time ($10,000 * 1.0675^3 years)... minus, of course, what you pay off in principle between now and then. So you gotta do a cost benefit analysis here. Is the amount you'll pay in that amount of time worth the amount you'll save AFTER til maturation. If you pay minimums and will pay it off in 5 years, that only gives you 2 years after refinance. What can you make over the 3.4% + inflation after 2011? You'd still need to put the excess money in long term stocks to see any notable benefit.

I don't know how much of a loan you have left dude. For me, it's beneficial to just pay it off quick and get it over with. The time value of money is a very powerful thing, and the less debt you have, the less you have working against you. It doesn't matter if it's 300k or 10k, 5k less on principle is either money saved in interest in the long term, or money gained through investments in the long term. Either way, you win.

You just have to figure out which one will work better for you now (and you HAVE to calculate in inflation with that).

[Thorgrim]

Originally Posted by Ardentfrost

I have like $7k left in my student loan. I plan to have it paid off in the next year and it's at less than 5.5%.

Can you wait til 2011 and possibly refinance? Sure, but for every 10k in debt you owe, you'll pay nearly $2200 extra in that amount of time ($10,000 * 1.0675^3 years)... minus, of course, what you pay off in principle between now and then. So you gotta do a cost benefit analysis here. Is the amount you'll pay in that amount of time worth the amount you'll save AFTER til maturation. If you pay minimums and will pay it off in 5 years, that only gives you 2 years after refinance. What can you make over the 3.4% + inflation after 2011? You'd still need to put the excess money in long term stocks to see any notable benefit.

I don't know how much of a loan you have left dude. For me, it's beneficial to just pay it off quick and get it over with. The time value of money is a very powerful thing, and the less debt you have, the less you have working against you. It doesn't matter if it's 300k or 10k, 5k less on principle is either money saved in interest in the long term, or money gained through investments in the long term. Either way, you win.

You just have to figure out which one will work better for you now (and you HAVE to calculate in inflation with that).

I remember back years ago when interest rates were very low, I had an econ professor who talked about the students loans for his undergrad and PhD, before the 70s clusterfuck of inflation...he said during the late 1980s he felt so bad paying off the last of his loans, because inflation had absolutely destroyed what he owed, and the rates were so low, he made much by putting into his 401k

I guess just part of me thinking inflation will hit and that big huge loan even my fiance owes will be not that much...

but im more interested in how loans will be restructed

[6SpeedTA95]

Originally Posted by Thorgrim

I remember back years ago when interest rates were very low, I had an econ professor who talked about the students loans for his undergrad and PhD, before the 70s clusterfuck of inflation...he said during the late 1980s he felt so bad paying off the last of his loans, because inflation had absolutely destroyed what he owed, and the rates were so low, he made much by putting into his 401k

I guess just part of me thinking inflation will hit and that big huge loan even my fiance owes will be not that much...

but im more interested in how loans will be restructed

I think 2009 could be an inflationary year, but I doubt very seriously we'll see inflation like the 70s. We could easily see a few years of 5, 6 or even 7% inflation though