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Maybe they just make bad investment decisions.
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May 20, 2021 02:08
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| # ? Jun 9, 2024 15:20 |
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^^^ Yeah, I think it's that. You can learn a lot about people by hearing their approach to/understanding of Bitcoin and he definitely was very pro-Bitcoin not just as an investment but in principle too. Terrible at golf though.
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May 20, 2021 02:09
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Yes in case there was confusion what "real" means, it's when you subtract the expected inflation from the expected nominal returns. 7% nominal - 3% inflation = 4% real It's a way of calculating future value in a way that lets $1 today = $1 at the end of the forecast period
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May 20, 2021 02:21
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I just assume that I'll need a minimum $1M to pay the fee for my cot at the homeless shelter and aim for higher so that I get a luxury market-rate blanket too. 
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May 20, 2021 03:02
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Isn’t it usually 10%-3%=7% when talking long term diversified stocks?
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May 20, 2021 04:50
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It's 8-2=6.
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May 20, 2021 09:05
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Loan Dusty Road posted:Isn’t it usually 10%-3%=7% when talking long term diversified stocks? Looking it up the S&P500 had a nominal return of 9.85% and a real return of 6.75% since 1900 which aligns with those standard values. The difference a 1% makes is pretty large and the difference between 4% and 7% is likely close to doubling along a normal timeline.
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May 20, 2021 09:11
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No one knows what the real rate of return is going to be over the next 30 years. If you go too conservative (i.e. assume real returns of 3-4% and it's actually 6-7%) then the risk is you save too much/don't spend as much now. If you go too optimistic, then you risk not having enough saved for your expected timeframe and either have to work longer or accept a lower spending rate in retirement. Which of those two scenarios you're more willing to risk is up to you, but I do think it's helpful to run the numbers for both ends of the spectrum and see how much that changes your required saving rate over your preferred timeline to get to your goal. You can always adjust along the way as you see what your returns are actually like/as life circumstances change. I personally err toward assuming a conservative return estimate, but my circumstances mean that doing so still allows pretty free spending and so the risk of not feeling like I can spend enough now is very low. But again, it depends on your own circumstances.
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May 20, 2021 13:21
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It's an example to fill in the formula, put in whatever you think is correct. We can all reconvene in 0-60 years and discuss which cat food tastes the best. I think it's neat, I always suck at those exotic formulas. Speaking of exotic formulas, I know I've seen people here? home buying thread? talk about when you should refi. Now that we're vaccinated and feel comfortable being around "other people" (aka a notary public) I'm thinking about a refi but can't remember how to figure out if it makes sense. We're currently at 3.75% 30yr fixed on a $390k mortgage with ~$250k left on it, Principle+Interest is ~$1804. We've paid a bunch extra into it but have stopped. So far I'm seeing offers around 2.75% 30yr fixed for ~$1600 (Box A+B+C, includes $476 in points / 0.187%). New P+I is $1040. How do I figure out if this makes sense?
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May 20, 2021 15:15
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H110Hawk posted:It's an example to fill in the formula, put in whatever you think is correct. We can all reconvene in 0-60 years and discuss which cat food tastes the best. I think it's neat, I always suck at those exotic formulas. Do it. You should have 6 months ago. 1% is a big reduction. We just sat outside with the notary, I read all the docs before she showed up, took 5 min.
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May 20, 2021 15:47
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spwrozek posted:Do it. You should have 6 months ago. 1% is a big reduction. Reasons meant we wouldn't 6 months ago. Can you remind me of the math outside of the raw 1% reduction? (Better.com is showing me paying $40k more in raw interest compared to my current rate but I know that isn't the whole picture.)
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May 20, 2021 16:03
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H110Hawk posted:Reasons meant we wouldn't 6 months ago. Look at how much it reduces your payment (say, $69 a month) Consider the costs associated with the refinance (say $4,200) $4,200 / $69 = 61. You'll break even after 61 months. Thus, selling your house in the next 5 years would make the refinance a net loss while remaining in there for at least 5 years would make the refinance a net gain.
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May 20, 2021 16:13
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H110Hawk posted:Reasons meant we wouldn't 6 months ago. 1% is a huge reduction. I got an unsolicited no cost refi from Chase and I'm hemming and hawing about saving .375% EDIT: Just a quick example from Nerdwallet's Refi Calculator 
Chiasmus fucked around with this message at 16:21 on May 20, 2021 |
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May 20, 2021 16:14
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H110Hawk posted:It's an example to fill in the formula, put in whatever you think is correct. We can all reconvene in 0-60 years and discuss which cat food tastes the best. I think it's neat, I always suck at those exotic formulas. There are mortgage refi calculators online to find out when you'll break even, do a quick search. You most likely will benefit spectacularly from refinancing.
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May 20, 2021 16:15
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Yes I understand the basic / naive formulas, what I'm wondering is how to calculate the expected value here and why it saves me money: Current 3.75% / $250k total interest: $78,124.86 New 2.75% / $250k total interest: $117,417.65 Interest savings: -$40k Why doesn't this cost me $40k? I know I have to factor in inflation, earnings, etc. I've seen people here mention a formula but I don't remember where to find it.
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May 20, 2021 17:30
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Residency Evil posted:Maybe I’m too nice, but personal capital has called me three times in the past three-four months. I’ve told them “I don’t invest in anything with an AUM.” Yesterday they offered me 6 months free. Still said no. Not sure what else I can tell them. lmfao 12 loving days edit for content: H110Hawk posted:Yes I understand the basic / naive formulas, what I'm wondering is how to calculate the expected value here and why it saves me money: Are they recasting the loan? You're probably looking at a new 30 year loan for your principal, rather than refinancing the current balance over the 20 years you have remaining or whatever. Residency Evil fucked around with this message at 18:00 on May 20, 2021 |
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May 20, 2021 17:37
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H110Hawk posted:Yes I understand the basic / naive formulas, what I'm wondering is how to calculate the expected value here and why it saves me money: Two reasons, one, the present value of $40k for 20y at 3% is about $20k. So that's what they'd charge if that was the only option, like only one bank around to loan you money. The other is there's a lot of companies out to write you a new loan for a small percentage of the value. The competition drives the cost down and they still make money on just trading money.
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May 20, 2021 17:52
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H110Hawk posted:Yes I understand the basic / naive formulas, what I'm wondering is how to calculate the expected value here and why it saves me money: Edit: ah wait I misread what you're saying my coffee hasn't kicked in yet, you mean that you have 250k principal Guinness fucked around with this message at 17:56 on May 20, 2021 |
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May 20, 2021 17:53
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H110Hawk posted:Yes I understand the basic / naive formulas, what I'm wondering is how to calculate the expected value here and why it saves me money: Why would lenders worry about $40k in interest (with much lower PV) over 30 years when they can collect ~$5000 in fees right now? Americans typically stay in a home for 5-10 years anyway, and are effectively refinancing every time they move. You're paying a smaller proportion monthly into principal if you reset, so selling in 5-10 years will yield lower seller proceeds (not an issue for everyone, but should be a consideration). Consider also what you plan to do with your monthly savings. Taking the savings and investing it elsewhere is generally a good idea, vs blowing it on something dumb.
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May 20, 2021 18:03
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Residency Evil posted:Are they recasting the loan? You're probably looking at a new 30 year loan for your principal, rather than refinancing the current balance over the 20 years you have remaining or whatever. No it's a new 30yr fixed. Guinness posted:
 Always more coffee.Magicaljesus posted:Consider also what you plan to do with your monthly savings. Taking the savings and investing it elsewhere is generally a good idea, vs blowing it on something dumb. This is why I'm asking about "the formula."
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May 20, 2021 18:11
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H110Hawk posted:No it's a new 30yr fixed. There are some great Excel templates that will show you where you stand on principal and interest by year. That's how I made one of my first refinancing decisions. In a few years time I could see how much more principal I'd have paid off in 2-3 years time while making the same or slightly more payments with a lower rate and period, and it was like 18 MO before I had paid enough less in interest to match the outlay for refinancing.
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May 20, 2021 18:38
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H110Hawk posted:No it's a new 30yr fixed. You're severely overthinking it to the point where I think maybe you're misunderstanding something, but if you post your amortization schedule for the loan I can calculate the present value of your potential beneficial financing!
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May 20, 2021 18:51
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GoGoGadgetChris posted:You're severely overthinking it to the point where I think maybe you're misunderstanding something, but if you post your amortization schedule for the loan I can calculate the present value of your potential beneficial financing! He has an HP12c and is not afraid to use it!
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May 20, 2021 19:06
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There are two major ways to look at a refinance. The first is "how will this affect my month-to-month finances?" In this case you're probably wanting to go with the lowest initial costs on any loan that also lowers your APR. You're taking the now-smaller loan amount and stretching it back out to 30 years, AND paying a little less interest on that loan amount. Depending on your existing loan terms, it could even end up costing you more money in the long run due to extending the loan by some years, but it will save you money every month as soon as the lowered payments pay back the closing costs. If that saved money goes into investments you will likely come out ahead. The second is "how much money will this cost me in total?" In this case you'll look at buying points and getting the APR as low as you can go. You will trade some money now for saving in the very long term. The higher upfront costs mean the payoff will take longer but once you cross that point you're both paying less per month AND less total. Where those payoff points are depends a lot on your current rate and how long you have left on your current loan. There's a pretty good Google Sheets amortization template that I used to plot out my current mortgage and all my options. I ended up taking the lower upfront cost option because I need reduced expenses now more than I need to save $100 a month in 2040, but I also realize that this option will cost me if I'm not putting those extra funds into something that earns me more than 3% in real returns.
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May 20, 2021 19:27
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H110Hawk posted:It's an example to fill in the formula, put in whatever you think is correct. We can all reconvene in 0-60 years and discuss which cat food tastes the best. I think it's neat, I always suck at those exotic formulas. Could you look at a shorter loan period that would drop your rate even more and keep your payments close to what you're paying now (or more since you've paid extra into it)? We did that when we refinanced in 2012 from 5.5/30 to 2.75/15, and we still actually had lower payments. Paid it off last year 13 years early (from original loan) and felt like  .
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May 20, 2021 21:49
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I refinanced from a 30-year loan with 25 years left on it at around 4% to a 15 year loan at 2.625% last march or april I think, and the up-front cost was very cheap, IIRC around $2500, loan was just under $200k. The notary process was very safe, fully masked, outdoors, distanced, gloves & sanitizer, the works. What actually matters really is just the number of months it takes to pay back the up-front costs. It is always better to pay less interest on a loan! Given the interest rate reduction you're likely to see, especially if you go for a 20 or 15 year loan, will likely make your payoff period something around 1 to 3 years, and if you're not planning to sell in that period, you should definitely refinance, irrespective of what sort of calculated return you might get on the money you saved by paying less interest. The advantage to a shorter term is a lower rate, and each of your minimum payments has a larger percentage of that payment going to principle rather than interest because of the shorter amortization schedule. The disadvantage of a shorter term is a higher minimum monthly payment, which reduces your budget flexibility: e.g., with a 30-year refi you could in theory choose to pay more each month, reducing to a 20 year payoff period - but due to the amortization, you'd still pay a bit more in interest over that period - but during a time of, say, unemployment or other budgetary pressure, choose to temporarily drop to your actual minimum payment. So you pay for that flexibility because of the difference in interest between a shorter and longer-termed loan. That's a choice where looking at a calculator that lets you play with accelerated payment/payoffs can help you explore the different scenarios. What is almost definitely the case though is that you should refinance. $1600 to drop a point on a $250k loan is going to pay off pretty quickly.
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May 20, 2021 22:09
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Silly Burrito posted:Could you look at a shorter loan period that would drop your rate even more and keep your payments close to what you're paying now (or more since you've paid extra into it)? We did that when we refinanced in 2012 from 5.5/30 to 2.75/15, and we still actually had lower payments. Paid it off last year 13 years early (from original loan) and felt like This is a good strategy, you can do something similar that will give you more flexibility depending on how comfortable you are with your emergency fund/job/kid/etc situation. Which is to refinance into another 30 year loan, with a lower minimum payment but make an actual payment based on a 15 or 20 year amortization. This will let you reap some of the benefits of a shorter amortization (lower total interest paid) but retain a lower minimum payment going forward. You would also sacrifice the lower rate that is associated with a 15 or 20 year term though.
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May 20, 2021 22:13
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Working through a refinance exercise myself. Plan is to pay off the loan in the next 2 years, currently paying PMI on my current FHA loan. Re-fi will lower the rate a little but given my short payoff period I'm actually taking credits to go with a higher rate since the breakeven on a 0.125% rate change is like 7ish years.
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May 20, 2021 22:25
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FYI if you or your company uses Guideline they are removing some fees but basically increasing your ER from .07 to .15. It is still called a fee though so I am not sure how well they are disclosing this. They also are increasing the fees on employers (my partners went from $40 to $120/mo).
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May 20, 2021 22:35
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drat. Wasn't that the place suggested for SIMPLE IRAs?
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May 21, 2021 04:38
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Piggybacking on the earlier discussion about financial advisors, we have a family friend ("FF") who owns a business. They have been approached by an international firm to be bought out. FF's share (as there are other co-owners) is anticipated to be about $1.7m. FF has some passive retirement funds set up but their retirement strategy has largely been based on the assumption that some day the business would be sold. That timeline is being accelerated due to the better than anticipated buyout offer. A) Is this a good contenders for a paid financial advisor? Vanguard offers this service for an annual fee of 0.30%. B) Can someone point me to good general resources on retirement planning for 60+ year-olds? Any other advice welcome.
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May 21, 2021 18:27
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Tortilla Maker posted:Piggybacking on the earlier discussion about financial advisors, we have a family friend ("FF") who owns a business. They have been approached by an international firm to be bought out. FF's share (as there are other co-owners) is anticipated to be about $1.7m. Yes, your friend should hit up a fiduciary fee-for-service financial planner to help them out with their windfall if they aren't sure how it changes their life. They will also need a CPA to ensure the taxes are handled, and a lawyer to handle the transaction. (The CPA could be the financial planner, I assume some offices do both.)
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May 21, 2021 18:41
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H110Hawk posted:Yes, your friend should hit up a fiduciary fee-for-service financial planner to help them out with their windfall if they aren't sure how it changes their life. They will also need a CPA to ensure the taxes are handled, and a lawyer to handle the transaction. Vanguard is good for plain investment management but won't do taxes or tax planning. Ideally you want someone who will coordinate early retirement portfolio withdrawals and Roth conversions to optimize for taxes.
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May 21, 2021 19:33
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I'm reconfiguring my finances due to refinancing my mortgage and I'm curious what the best plan for extra funds would be. Here's what it breaks down to: I just got a new 30yr fixed mortgage, APR will work out to something like 2.78% (down from 4.875%, amazing). I have a SEP-IRA that's funded by my employer, my wife and I both have Roth IRAs that we fully fund each year, plus an HSA that I either fully fund or get pretty close every year, and a good portion of what's in there is invested. Investments in everything (SEP, Roth, HSA) is in target date funds because I find it's healthier for me to not have to think about rebalancing since when I had my own mix I obsessed about ratios and rebalanced probably more often than was useful. My wife and I are both in our thirties, so I'd expect we'd retire somewhere in the 2050-2055 range. No kids nor plans to have any. I've got a fully-funded emergency fund that I'm comfortable with, and thankfully, luckily, didn't have to dip into during the pandemic. So with all that in mind, I've generally always put any extra investment money into a taxable brokerage account. Is there any better place I could be putting it? Is there a compelling reason for me to put extra money towards the mortgage every month vs. putting that money in a brokerage account? I only ask because I've seen some articles and discussions online where people recommend, when refinancing down to a lower rate, to basically just continue paying your "original" monthly payment, so that you kind of automatically pay the difference towards the loan principle and pay off the mortgage sooner. With a mortgage APR that's likely to be lower than inflation it seems silly to do that vs. putting that same "difference" in the taxable account, but I'm curious if there's factors I'm not considering (or over- or under-valuing).
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May 21, 2021 19:52
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MockingQuantum posted:
Buy drugs and cocaine ? I joke, but mostly wanted to say sounds like you got your poo poo together , kudos ! I don’t know much on mortgages, however I would bet , given your standard emergency funds and retirement investing is doing well / not behind, it probably just comes down to this: “what makes you happier, paying off debt or putting more in the bank?”
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May 21, 2021 20:04
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Your brokerage account, even after accounting for taxes, is likely to beat the returns of paying down your mortgage at 2.75%, even if you invest pretty conservatively. Over the long run. Probably. Paying down your debt faster may be important to you psychologically, and is a "guaranteed return" compared to the non-risk-free investments. Increasing your equity in your house vs. increasing your other investments alters the balance of your investment portfolio by overweighting "investment in one piece of real estate" as balanced vs. all other asset categories. Only you can really decide which of these factors is more important to you.
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May 21, 2021 20:13
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Regardless of what you decide to do with leftover money wrt mortgage, it's generally not a good idea to keep target date funds in taxable brokerage accounts.
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May 21, 2021 20:20
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Yeah I may have to ponder the "what makes me happier/less anxious" aspect of paying off the house vs. investing, I hadn't really considered the guaranteed "return" aspect of paying off the house. And yeah, I like to think I have things sort of put together, though we're both technically behind where we should be in terms of retirement savings, depending on what formulas you want to use. And only having Roth IRAs as tax-advantaged accounts is somewhat limiting, neither of our jobs offer 401ks of any sort. I think we're making it work though.KYOON GRIFFEY JR posted:Regardless of what you decide to do with leftover money wrt mortgage, it's generally not a good idea to keep target date funds in taxable brokerage accounts. Oh yeah I forgot to say, the taxable account right now is just a Total Stock index iirc, I didn't want the extra tax burden of a target date fund and I haven't figured out yet what good options there are for bond funds. I'm not crazy about it being 100% stocks, though there isn't a huge amount of money in it compared to the IRAs.
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May 21, 2021 20:32
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Rock and roll. You may consider following along with the goon I Bond craze, bond fund options are very underwhelming now and also at many other times.
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May 21, 2021 20:34
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| # ? Jun 9, 2024 15:20 |
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KYOON GRIFFEY JR posted:Rock and roll. You may consider following along with the goon I Bond craze, bond fund options are very underwhelming now and also at many other times. I know nothing about I Bonds, I'd have to do some reading. Are we talking just standard Treasury I Series bonds, or something else?
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May 21, 2021 20:38
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