Official Investing Thread

Discussion in 'The Mainboard' started by Joe Louis, Jul 12, 2010.

  1. Name P. Redacted

    Name P. Redacted I have no money and I'm also gay
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    Kansas State WildcatsSeattle Kraken

    Dave Ramsay's target audience isn't a person who is paying off their credit cards every month, saving/investing a sizable chunk of their income, and makes more than the median US household income. I would argue TMB has a disproportionately high amount of these type of people as compared to the national average, and probably even higher in this thread.

    Vilifying him is pretty fucking stupid when it's obvious his advice is geared toward the more financially illiterate and/or insolvent, and he's made a mint doing it.
     
  2. Name P. Redacted

    Name P. Redacted I have no money and I'm also gay
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    Kansas State WildcatsSeattle Kraken

    That's kinda clever and I've never thought of that. Are there limitations to the number of yearly disbursements one can take? Obviously in theory that wouldn't be an issue.
     
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  3. dahldennsull

    dahldennsull Living in the best state
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    You have to understand his audience. People who are savvy investors with good investments spread everywhere, don't have mountains of debt. These are people who have a serious addiction to spending, and build debt at rapid pace. You have to also include the mental gains for people in serious debt. The point of the debt snowball in starting with the smallest, is actually seeing a debt disappear. Don't have the facts, but for people with multiple debts across many platforms, I believe they have proven a much higher chance of paying off all debts when doing the snowball, over attacking the highest rates first, as it usually takes longer to get the first one gone.

    For those of us that can do the math, and understand why paying off the highest rate first is advantageous, we don't have all the debts. It's an apples and oranges comparison that we can't always understand, cause we aren't anywhere near their shoes.

    Lastly, wtf at keeping a mortgage forever. Just because you can outgain it in the stock market, you are still taking a bite out of your gains. If you are paying a home at 3.5% and making 5% in the market, you're only netting 1.5%, and not putting extra money in each month. But paying off your loan faster, and dumping your mortgage payment into an investment account still netting 5% and you're going to grow faster by a clean 5% + $x of mortgage funds adding every month.
     
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  4. pennstate2012

    pennstate2012 Well-Known Whore
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    I would take to be more aggressive in the Roth because of the tax free growth and limited contribution amount (plus the future exclusion if you make too much). JMO though.
     
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  5. DollarBillHokie

    DollarBillHokie Usher is the worst
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    I have no idea, but due to the nature of my industry, I also have far more than 6 months of living expenses liquid, so if I have to hit the Roth, I would likely do so all at once or in a limited number of instances.
     
  6. dahldennsull

    dahldennsull Living in the best state
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    can someone in here tell me about 'back door roths'? married filing jointly, not able to do a traditional roth
     
  7. Name P. Redacted

    Name P. Redacted I have no money and I'm also gay
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    Kansas State WildcatsSeattle Kraken

    For a given tax year...
    • Contribute money to a traditional ira account, of which there are no income limits, up to yearly contribution limit
    • Convert that traditional ira to a roth
    • Pay taxes on the conversion
    • ???
    • Tax free profits on growth
     
    #7657 Name P. Redacted, Feb 20, 2017
    Last edited: Feb 20, 2017
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  8. Rabid

    Rabid Fan of: DQ Treats
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    Minnesota Golden Gophers

    Re: bullet 3. If you can't contribute to a Roth, you're not going to get a deduction on the IRA contribution so there is no tax on the conversion. Where you will have to pay taxes on the conversion to a Roth is if you have previously contributed to an IRA (or done a rollover IRA) and those contributions had a tax-deduction on them. Then it gets more complicated and you have to differentiate between the contributions that received tax-deductions and those that did not in figuring out what your tax-liability is on the conversion.
     
  9. je ne suis pas ici

    je ne suis pas ici Well-Known Member
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    yeah this is what i have to do, i pay going in but get no deduction, hence, no cost to convert
     
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  10. Joystick Izzy

    Joystick Izzy Well-Known Member
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  11. je ne suis pas ici

    je ne suis pas ici Well-Known Member
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    #7661 je ne suis pas ici, Feb 20, 2017
    Last edited: Feb 20, 2017
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  12. leroi

    leroi -
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    South Carolina GamecocksGrateful Dead

    https://www.bloomberg.com/news/arti...americans-aren-t-putting-money-in-their-401-k

     
  13. Lyrtch

    Lyrtch My second favorite meat is hamburger
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  14. leroi

    leroi -
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    yeah, i'm not blaming anyone. workers are pouring all their wages into health, education and housing.

    i knew that most people would have small 401k contributions, what i didn't realize was how many have zero 401k contributions.
     
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  15. Shock Linwood

    Shock Linwood Well-Known Member
    Texas AandM Aggies alt

    You guys are both idiots.

    Just because people are stupid and most of the people that take Ramsey's advice are idiots doesn't mean he gets a pass on giving shitty advice.

    They are in their predicament because they have made shitty decisions and have a fucked up thought process. That's what needs to change.

    No intelligent person in the financial world would ever recommend a strategy of paying off the smallest debts first. You always pay the highest interest rate first. Period. If you codify the individual with regards to this topic you aren't changing their behavior or mindset.

    It's the equivalent of me congratulating my 300 lb patient on avoiding a shitty meal for last Sunday's dinner. Fuck that one meal. They are called lifestyle modifications for a reason.

    And with regards to this idiotic retort:

    Pick up a calculator and do the math princess.

    If you pay off a $250,000 house and then pocket the $1500/month mortgage (I used 4% apr) while investing $100,000/year at 7.5% in the stock market (lol at your 5% number) you come out $2 million behind at the end of your 30 year mortgage.

    $8 million vs $10 million

    2 fucking million dollars asshole.

    Imgur not linking...

    https://i.imgur.com/spvcKWB.jpg
     
    #7666 Shock Linwood, Feb 21, 2017
    Last edited: Feb 21, 2017
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  16. leroi

    leroi -
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    Why is it terrible advice? Surely at some point it makes sense to taper off retirement savings and start saving for ... idk.. a house? A small business?
     
  17. Name P. Redacted

    Name P. Redacted I have no money and I'm also gay
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    Kansas State WildcatsSeattle Kraken

  18. Name P. Redacted

    Name P. Redacted I have no money and I'm also gay
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    Kansas State WildcatsSeattle Kraken

    I think you mean coddle, champ.

    Drew was asking for generic beginner personal finance/investing question. Skoolie coming in and advocating for real estate investment is a niche thing and not really applicable to most people.

    The list I posted is a very conservative, retirement-investment-vehicle approach. Most people don't get past the emergency fund/max IRA stage, and it's certainly up to the individual as to what is best for them.

    You could take out a loan against your 401k for a house downpayment. The prudence of that would be up to the individual, however it's not like the money is completely inaccessible.
     
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  19. Shock Linwood

    Shock Linwood Well-Known Member
    Texas AandM Aggies alt

    You can still save for retirement just don't lock it all into vehicles that handcuff the money for the next 30 years.
     
  20. Shock Linwood

    Shock Linwood Well-Known Member
    Texas AandM Aggies alt

    Luckily you and Dave R. Will be there to give them bad advice for their "simple" minds.
     
  21. leroi

    leroi -
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    yeah that's what i mean. It is possible to over-invest for retirement.

    But Name P. Redacted provided some context that I apparently missed before, namely that the person was looking for beginner investing advice.
     
  22. Shock Linwood

    Shock Linwood Well-Known Member
    Texas AandM Aggies alt

    you can if you go 100% into a 401k but if you've balanced between a 401k and a personalized fund that can be tapped into whenever you choose, like I advocate, not at all.
     
    #7673 Shock Linwood, Feb 21, 2017
    Last edited: Feb 21, 2017
  23. Name P. Redacted

    Name P. Redacted I have no money and I'm also gay
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    Kansas State WildcatsSeattle Kraken

  24. Shock Linwood

    Shock Linwood Well-Known Member
    Texas AandM Aggies alt

    Making money.
     
  25. Name P. Redacted

    Name P. Redacted I have no money and I'm also gay
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    Kansas State WildcatsSeattle Kraken

    What board score is required for that
     
  26. Shock Linwood

    Shock Linwood Well-Known Member
    Texas AandM Aggies alt

    MCAT: 33+
    Step 1-3: 240+
     
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  27. Shock Linwood

    Shock Linwood Well-Known Member
    Texas AandM Aggies alt

    I just realized I only did 28 years instead of 30 on my excel sheet. It's defintely more than a $2 million difference. It's funny you don't even need a fancy excel spread sheet to prove this. A six year old knows 7.5%>4%.
     
  28. Name P. Redacted

    Name P. Redacted I have no money and I'm also gay
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    Kansas State WildcatsSeattle Kraken

    Upload the spreadsheet so we can check the math.
     
  29. dahldennsull

    dahldennsull Living in the best state
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    ok 'asshole', you did the math wrong. People can't invest $100,000 a year if they are paying off a mortgage. Or lets say they can, and they drop the mortgage, now they are investing say $125,000 at the same rate, because you aren't paying a mortgage. So you are saying they invest the same amount each year, when in reality they can't, because they are paying off a mortgage. You're opening up new funds to add to your investment

    edit with math
    $100M/year investment at 7.5% after 30 years = $11.115MM (this doesn't even take out the interest on your mortgage that you are losing)
    $118M/year investment at 7.5% after 30 years = $13.116MM
    ($1500 mortgage x 12)
     
    #7680 dahldennsull, Feb 21, 2017
    Last edited: Feb 21, 2017
  30. Name P. Redacted

    Name P. Redacted I have no money and I'm also gay
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    Kansas State WildcatsSeattle Kraken

    Dammit Dahl he's a doctor not a faggy mathmatics
     
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  31. Shock Linwood

    Shock Linwood Well-Known Member
    Texas AandM Aggies alt

    Wrong.

    I had the person who paid off their mortgage with a hypothetical $100,000 to invest annually, which is the money they have left over after all bills are paid including the $1500 mortgage that they don't have to pay.

    ALTERNATIVELY, I subtracted $1500 from the $100,000 for the person who did not pay off their mortgage (column c in the excel spreadsheet). So in year 1 you see they finish with ($250,000+$100,000)*1.075-1500=$367,250.

    As you can see over time subtracting the $1500 they are still paying on their mortgage is peanuts compared to the interest from the stock market they are making by not doing so.

    Fucking math, how does it work.
     
  32. Rabid

    Rabid Fan of: DQ Treats
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    Who has a mortgage that costs $1500 annually?
     
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  33. Shock Linwood

    Shock Linwood Well-Known Member
    Texas AandM Aggies alt

    People that have a $25,000 house obviously.

    Changed the formula to subtract $18000 annually instead of the erroneous $1500. Difference has shrunk but still sizable at $1.2 million:

    http://i.imgur.com/guv7GlW.jpg
     
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  34. Name P. Redacted

    Name P. Redacted I have no money and I'm also gay
    Donor
    Kansas State WildcatsSeattle Kraken

    Upload the spreadsheet.
     
  35. Shock Linwood

    Shock Linwood Well-Known Member
    Texas AandM Aggies alt

    You've screwed up by not giving the first person their $250,000 to invest on day 1 by not paying off their house.

    Also if you are going to sneak entire paragraphs in old posts via edit give us a heads up or make a new post. Otherwise you are just being disingenuous.
     
  36. Shock Linwood

    Shock Linwood Well-Known Member
    Texas AandM Aggies alt

    What are you confused about mothfucker?

    The math is pure and eloquent.

    http://i.imgur.com/guv7GlW.jpg

    You guys are just mad because you are wrong.
     
  37. Bo Pelinis

    Donor TMB OG
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  38. Bo Pelinis

    Donor TMB OG
    Nebraska CornhuskersKansas City RoyalsKansas City ChiefsBig 8 Conference

    WHY AREN'T GIFS WORKING
     
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  39. Name P. Redacted

    Name P. Redacted I have no money and I'm also gay
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    Kansas State WildcatsSeattle Kraken

    Farva is inside of the computer
     
  40. Bo Pelinis

    Donor TMB OG
    Nebraska CornhuskersKansas City RoyalsKansas City ChiefsBig 8 Conference

    [​IMG]
     
  41. Ty Webb

    Ty Webb Living rent free in Jigga's head
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    Keep a lookout for username "@Lawnmower Man"
     
  42. Rabid

    Rabid Fan of: DQ Treats
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    Minnesota Golden Gophers

    :idk: I had a picture fail on me earlier despite it showing up when I inserted it.
     
  43. Shock Linwood

    Shock Linwood Well-Known Member
    Texas AandM Aggies alt

  44. Name P. Redacted

    Name P. Redacted I have no money and I'm also gay
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    Kansas State WildcatsSeattle Kraken

    I want the long form birth certificate spreadsheet Shock Linwood
     
  45. Shock Linwood

    Shock Linwood Well-Known Member
    Texas AandM Aggies alt

    Why? What's unclear?
     
  46. mal630

    mal630 Well-Known Member
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    Can someone recommend a good Roth IRA to go with? E trade, or whatever. I am currently just investing in my company's 401... 6 percent and they will put in 4. I am a few years away from making the big bucks, but I do have 2-3k a year I could throw at something else so it isn't just in my savings account. I also do not want to have to manage this daily/weekly and have to make trades all the time.

    The roth is appealing because if something crazy happened and I needed the money I could get it out without huge penalties.
     
  47. Lyrtch

    Lyrtch My second favorite meat is hamburger
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    wealthfront or betterment have low fees and give you a broad investment strategy with basically zero work
     
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  48. Arkadin

    Arkadin inefficiently efficent and unclearly clear
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    Vanguard target retirement funds are great