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Ahh poo poo then yeah im bwm! Or at least bad with reading. Still a more interesting question based this way.
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Jun 25, 2015 20:42
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Desuwa posted:The 7% is after adjusting for risk. Real returns without a default would be 42.6% or so. Yep. Insane fantasyland investment. If you have the ability to hold onto this thing and let the interest compound, you get an expected return of 287% over 20 years... except that "expected return" is a 99.68% chance of losing all your money and a 0.32% chance of $12 million dollars. Gross. Undergrads have incredibly high risk tolerance, I don't get it. Somebody I know bragged about his returns from maxing out his student loans and investing them in unhedged US Vanguard ETFs (we're Canadian and this is illegal). They were crazy good, during a period where the loonie crashed... He didn't understand why I reacted like that was a nutty thing to do.  : What if the loonie rose or you got audited? : Well, it didn't!And I mean, he made a bunch of $$$ so who am I to talk. Him and my friends who invested in Magic and Bitcoins.
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Jun 25, 2015 20:51
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For what it's worth I wouldn't buy the 5/1 investment in reality either. Compared to an index fund, even ignoring the expected returns, the risk of coming out with nothing is too high. Think of the last time any competent mutual fund, index or otherwise, hit 0, even when "good"companies were dropping like flies.
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Jun 25, 2015 20:56
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http://www.elledecor.com/life-culture/a7367/i-made-a-huge-sacrifice-to-buy-my-home/ When being 'good with money' is actually bad with money and bad with life: quote:There is a certain sense of pride that comes with saving up, living off canned food for an entire year, buying consignment instead of new, and then making your dreams a reality without any handouts. By our early thirties, we were able to sell our first starter home, to build the fully-loaded luxury home of our dreams. Well, we want three kids, but then we won't live in the DREAM HOUSE dammit, it's all about DREAM HOUSE. It has a yard, don't make me leave the yard.
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Jun 25, 2015 21:08
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oh if the percentage is risk adjusted than the 7% is the better choice, as long as it's not a significant portion of your wealth (they're still both bad)
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Jun 25, 2015 21:26
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"My uterus aches for a third child" What utter privilidged schlock
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Jun 25, 2015 21:28
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I'd rather raise 2 kids in a great house with a big yard than 3 kids in a mediocre house that doesn't quite fit all our needs but "it'll do". But I'm one of those shmucks who daydreams about dream houses and stuff. I live on Pinterest and constantly make remodeling/decorating plans for my home (possibly nesting but without the pregnancy??).
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Jun 25, 2015 21:37
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Dave Ramsey had a young couple on his show today. This young couple was there to do their debt-free scream. How much debt had they cleared? Two-point-seven million dollars. Holy poo poo. On what kind of income? Well, he started at $90k, and is now up over $200k. She started at $50k, and is now around $100k. That's great money, but something still isn't adding up. Oh, well, he paid off some of it by selling some property. How much property? $2.4 million worth. Dave and the couple spent fifteen minutes yammering smugly about sacrifice and driving a 1995 Honda Civic while making $350,000 per year. Obviously, it was the Civic that did that trick, and not the two-and-a-half million dollars in property someone gave you. I guess he could have just made amazing real estate investments that turned into thirty times his annual income overnight, but I have my doubts. Not a Children posted:"My uterus aches for a third child" This is creepy and insane, right? It's not just me, is it?
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Jun 25, 2015 23:35
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pathetic little tramp posted:http://www.elledecor.com/life-culture/a7367/i-made-a-huge-sacrifice-to-buy-my-home/ That's so bizarre, I can't really understand how the incremental cost of raising a third child would force them to sell their loving house
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Jun 25, 2015 23:56
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BEHOLD: MY CAPE posted:That's so bizarre, I can't really understand how the incremental cost of raising a third child would force them to sell their loving house Not only the house! They would have to give up their  timeshareIn all likelihood we are only seeing the tip of the bad with money iceberg.
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Jun 26, 2015 00:04
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BEHOLD: MY CAPE posted:That's so bizarre, I can't really understand how the incremental cost of raising a third child would force them to sell their loving house They probably have a gigantic mortgage that they can barely make the payments on.
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Jun 26, 2015 00:06
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Oh my god yes I forgot the timeshare, their way to have a guaranteed vacation every year. They'll be forced to sell it, i.e. pawn it off on some poor sucker dumber than them.
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Jun 26, 2015 00:23
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Centripetal Horse posted:This is creepy and insane, right? It's not just me, is it? She just sounds like she's being poetic about being baby-crazy to me. Not actually crazy.
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Jun 26, 2015 00:38
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Centripetal Horse posted:This is creepy and insane, right? It's not just me, is it? What about it?
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Jun 26, 2015 00:41
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If it's such a nice house in a nice area, why do they need a generator?
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Jun 26, 2015 00:56
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Centripetal Horse posted:Dave Ramsey had a young couple on his show today. This young couple was there to do their debt-free scream. How much debt had they cleared? Two-point-seven million dollars. Holy poo poo. On what kind of income? Well, he started at $90k, and is now up over $200k. She started at $50k, and is now around $100k. That's great money, but something still isn't adding up. Oh, well, he paid off some of it by selling some property. How much property? $2.4 million worth. It would be beautiful if they were in debt 2.7m from buying that property they sold for 2.4m.
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Jun 26, 2015 01:19
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Rudager posted:If it's such a nice house in a nice area, why do they need a generator? Well, how else are you going to watch TV when power goes out? e: Just look at Long Island. Back before PSE&G took over, it wasn't a matter of if, but rather when your power would go out during a storm. Nice area but the utilities sucked balls. During sandy, I think something like 90% of the island lost power, and the response for getting services restored was absolutely atrocious. All the rich, snobby people out east own generators so they could have something while power was out. e: I shouldn't call them snobby since my own cousin is one of them. I crashed at her place during Sandy and I was very, very thankful for her generator that allowed me to have a hot shower every morning. Renegret fucked around with this message at 01:35 on Jun 26, 2015 |
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Jun 26, 2015 01:28
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Renegret posted:Well, how else are you going to watch TV when power goes out? If I ever move into a house, in the top 10 of things I'm getting a generator is pretty far up there. Doesn't need to be a huge one, but during a long power outage being able to charge a phone and have a hot meal is pretty nice. Probably having a wood stove isn't a bad idea either depending on house setup, those are still common here in Montana.
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Jun 26, 2015 06:34
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Sorry for going back to the derail, but I thought a bit more about why I'd buy the 5/1 instead of the 7/25 even when it's "better," since I don't think I articulated it well. If you make it more extreme, like a 100/99 investment with a high expected return but overwhelming risk, it becomes more obvious. Your goal isn't to necessarily make the most money in the long run (long being longer than you can expect to live by an order of magnitude or two), it's to have adequate investments for when you need them or retire. That's a much more binary thing; you either have enough or you don't. Your projected/expected value goes up faster with the risky investment but your chance at having a safe retirement in 30 years is reduced to a tiny amount extremely quickly. If the 5/1 (still riskier than I'd bet on, but it's the example given) is enough to meet your retirement goals there's no reason to look at something riskier until your retirement is already secure.
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Jun 26, 2015 07:48
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pathetic little tramp posted:Oh my god yes I forgot the timeshare, their way to have a guaranteed vacation every year. They'll be forced to sell it, i.e. pawn it off on some poor sucker dumber than them. My wife worked collections for a Mexico-based set of timeshares... Of course you go on vacation every year since you're already paying maintenance fees. It's pissing money in the wind if you don't go. It's more of a forced vacation than anything. The stories she would tell me back in those days 
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Jun 26, 2015 11:06
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Desuwa posted:Sorry for going back to the derail, but I thought a bit more about why I'd buy the 5/1 instead of the 7/25 even when it's "better," since I don't think I articulated it well. But in that case you would use Kelly ratios instead of just choosing one.
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Jun 26, 2015 11:12
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RE: the stock risk story. Currently studying for my series 7. My manager mentioned in one of our weekly group study sessions when discussing suitability and risk tolerance that when you ask people if they're conservative, moderate, or aggressive, people almost always say aggressive. His follow up question to them was always something along the lines of "If you put 10k in the account today, and tomorrow it was only worth $7,500, how would you feel?" The answer to that determines how aggressive the investor really is. If they say they get that's a risk and are completely OK with it, then they're pretty aggressive. If they say they'd slit their wrists, they're actually conservative. The question was asked in a college finance class, so I'm guessing most are pretty young, don't have much money, and are confident they'll have good earning power in the future. Of course they'll pick the aggressive option: if they have 10k to put in one equity in the first place, it's blow money. And if it doesn't work out, well, they'll be making 6 figures a year soon, so who cares? Not that it's the RIGHT way to think, it's just how they'll think.
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Jun 26, 2015 12:42
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blackmet posted:His follow up question to them was always something along the lines of "If you put 10k in the account today, and tomorrow it was only worth $7,500, how would you feel?" That's a horrible question. Tomorrow is meaningless. Investment is a long-term game. He should be asking how they would feel if they put in 100k today and it is down to 50k in ten years.
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Jun 26, 2015 15:22
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enraged_camel posted:That's a horrible question. Tomorrow is meaningless. Investment is a long-term game. Investment is a long term game, but that doesn't mean individual investors understand that. It's a great question for separating out the chaff, at least if you can get honest answers.
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Jun 26, 2015 15:32
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Desuwa posted:Sorry for going back to the derail, but I thought a bit more about why I'd buy the 5/1 instead of the 7/25 even when it's "better," since I don't think I articulated it well. It's wrong to look at it in a vacuum as well - if you could make a hundred such investments in your lifetime, each with a (independent!!!) 99% chance of default and 100% average return, it looks a lot better, and if you can make a thousand of those bets, it's a no-brainer. One out of 100 investments paying off 200-fold while the rest go to zero is a pretty drat good bet if you actually have the opportunity to make 100 of them.
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Jun 26, 2015 16:07
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Jeffrey of YOSPOS posted:One out of 100 investments paying off 200-fold while the rest go to zero is a pretty drat good bet if you actually have the opportunity to make 100 of them. .99^100 = 37% chance of going broke if my high school math is right.
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Jun 26, 2015 16:28
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Yeah, 37 is right. 99% chance of each investment failing, and you make a hundred investments = 37% chance of them all failing, and you go broke. You hit 50% overall chance of failure at 99.31%. The margins get really thin when you start multiplying like this. Of course, in reality they're never independent.
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Jun 26, 2015 16:47
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Yeah 100 is a bad threshold, sorry for not sanity-checking. It's the point where the expected number of wins becomes 1 but that's not good enough.
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Jun 26, 2015 16:55
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blackmet posted:RE: the stock risk story. My broker-dealer has a really lovely risk tolerance questionnaire, so we supplement it with third party software that shows hypothetical scenarios with their actual account balance over a six month time frame to determine a risk profile.
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Jun 26, 2015 20:17
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enraged_camel posted:That's a horrible question. Tomorrow is meaningless. Investment is a long-term game. It's not meaningless for all clients. We had someone lose $40K out of $500K over the course of three months, or something like that, because every time the market dipped they would call us and tell us to sell everything. Then they would call a week or two later and tell us to buy it all back. He was sort of crazy though. Eventually his account exec got sick of talking him off the ledge and stopped taking his calls. Then he kept calling and asking us questions when he wasn't even a client any more. This guy apparently had something like $20 million in commercial real estate, but had to "get out of the market" every time there was a dip.
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Jun 26, 2015 22:24
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Cockmaster posted:The local newspaper here just had an interesting advice column. Some guy wrote in complaining about his girlfriend routinely asking him for help paying for things like groceries and car repairs after spending all her money on fancy pants beauty services (hair extensions and the like).
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Jun 27, 2015 07:35
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blackmet posted:
Depends on how that would compare with everyone else, because "robbed" would be my first reaction if the S&P looked fine.
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Jun 27, 2015 08:00
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I think I did a good with money. I went for a run and was thinking about the status of my transportation. I have a miata and would like something larger and more comfortable/quiet/economical. I was thinking of a focus or fiesta hatchback. I almost went and got financing on one, but thought better of having more debt. Since I was running I had plenty of time to think about it and came up with this: Estimate how much a payment would be. Difference in prices +TT&L and then a term like 3 years or so, and a date. I'll calculate out what the payment would be, then set up my checking to auto transfer into savings on that date. That way I can experience the pain of having that money leave my account, but it's still mine. I'd get a great idea of what I would feel comfortable parting with, or possibly just save up the difference entirely! Beats the hell out of 'just do it' and then getting stuck with a payment. Just my luck I'd get laid off right away too.
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Jun 27, 2015 19:27
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CapitalOne just sent me a letter informing me of the termination of their rewards program for checking accounts. The account is around three years old with probably two thousand or more transactions and point-earning opportunities. Out of curiosity , I checked to see how much my points were worth online: $50.30. Gonna miss this revenue stream.
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Jun 27, 2015 19:57
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Aliquid posted:CapitalOne just sent me a letter informing me of the termination of their rewards program for checking accounts. The account is around three years old with probably two thousand or more transactions and point-earning opportunities. Out of curiosity , I checked to see how much my points were worth online: $50.30. Gonna miss this revenue stream. USAA got rid of those right after that credit card transaction cost limit thing went into effect. I want to say at least 3 years ago. I miss that revenue stream too 
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Jun 27, 2015 20:39
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BloodBag posted:USAA got rid of those right after that credit card transaction cost limit thing went into effect. I want to say at least 3 years ago. I miss that revenue stream too Still rocking my USAA rewards credit card, though I did the math converting points to cash back makes it a 1% cash back card. I've been trying to convince my wife that we need to get some better rewards credit cards, but it took me years to convince her to stop using debit cards for everything so I feel this may be an uphill battle.
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Jun 28, 2015 05:22
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I miss the 0.5% on USAA debit but now I've made the Citi Doublecash my standard card so really I should thank USAA for helping me save money.
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Jun 28, 2015 05:42
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Ornamented Death posted:Still rocking my USAA rewards credit card, though I did the math converting points to cash back makes it a 1% cash back card. I've been trying to convince my wife that we need to get some better rewards credit cards, but it took me years to convince her to stop using debit cards for everything so I feel this may be an uphill battle. I get a kick out of min-maxing my cards so I have a fair number of them, but the credit card recommendations thread has a few options for cards that are worth a flat 2% on everything if you want to keep it simple.
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Jun 28, 2015 07:15
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Ornamented Death posted:Still rocking my USAA rewards credit card, though I did the math converting points to cash back makes it a 1% cash back card. I've been trying to convince my wife that we need to get some better rewards credit cards, but it took me years to convince her to stop using debit cards for everything so I feel this may be an uphill battle. USAA has a cashback card that's 1.5%, might be easier to talk to her about upgrading from the same place, or seeing if they'll change your account.
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Jun 28, 2015 17:37
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| # ? May 15, 2024 17:19 |
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Fidelity Amex is the best I've found. 2% unlimited cash back on everything. No fees.
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Jun 28, 2015 18:04
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