|
Kylaer posted:^^^ I will respectfully disagree with the above. While H110Hawk is absolutely correct in saying that you'll likely end up with more money in the long term by investing it rather than paying off the house early, I would say the psychological benefit of being debt-free can certainly be worth it compared to those percentage points of gains, and if your happiness and sense of security is sufficiently increased by paying off the house, then that's the correct option. It is very personality dependent, of course. I agree with this as well. It's a personal decision at this point. All, some, or none are correct answers. We did all of our extra money for a year, then none, next year might see us splitting the difference.
|
#
?
Jan 1, 2020 20:09
|
|
|
|
| # ? May 16, 2024 06:19 |
|
|
Astro7x posted:I also think that when people have the "invest vs. pay off the house" debate, people never factor in that freed up income from not having a mortgage payment. Not paying 11K per year towards the mortgage is another 11K I could invest each year. That's 253K over 23 years.
|
|
#
?
Jan 1, 2020 20:14
|
|
|
Hoodwinker posted:Psychological components aside, this is incorrect. They do, and the calculation does factor in the freed up income. $160k invested right now at an average 7% return is ~$758k over 23 years. But if you take my mortgage payment of 11K per year, invest at a 7% return each year, add 11K each year over 23 years (since I'm no longer paying a mortgage and have freed up money)... that's $681,089 If you take 160K an invest it today at 7% per year and don't add any money to it (since you're still paying a mortgage), then that's $758K. But I also paid 75K of interest on my mortgage over that period of time, so that takes it down to $683. Am I missing something here? Edit: I see my old post was confusing. I mean that I'd have freed up 253K over 23 years, not made that as a return on the investment. Astro7x fucked around with this message at 20:57 on Jan 1, 2020 |
|
#
?
Jan 1, 2020 20:49
|
|
|
Astro7x posted:But if you take my mortgage payment of 11K per year, invest at a 7% return each year, add 11K each year over 23 years (since I'm no longer paying a mortgage and have freed up money)... that's $681,089
|
|
#
?
Jan 1, 2020 21:16
|
|
|
I'm going to carry over short term losses into 2020 that I'd like to use to offset my income, but I also want to sell some long term ETFs and convert them to VTWAX. Can I do that? Or am I forced to use the carry over losses on capital gains if I have them, before income?
|
|
#
?
Jan 1, 2020 22:06
|
|
|
Astro7x posted:But if you take my mortgage payment of 11K per year, invest at a 7% return each year, add 11K each year over 23 years (since I'm no longer paying a mortgage and have freed up money)... that's $681,089 I think your calculation for growth in scenario 2 (payoff) is wrong. I see a number about 100k less. Think about it this way: In scenario 1, in year 1, your 160k grows by 11,200 per year (plus compounding). That means that it’s always 160k ahead and grows that gap by the compounding on those extra $200 per year. Additionally, you double count interest (it’s included in your mortgage payment of 11k/yr) and aren’t factoring for taxes and insurance (also in that 11k/yr).
|
|
#
?
Jan 2, 2020 00:06
|
|
|
Day 1 of 2020 and my IRA is fully funded. Question for the thread: I plan on saving 2021's IRA money over the course of the year, should I: do small ($100-300 biweekly) deposits into an investment account with the goal of investing in conservative funds, or should I instead just let it gather interest in a money market fund/CD? This year I made about $22 in interest on the 6k I parked in my Vanguard fund, which seems low, and am wondering if anyone knows how best to evaluate potential earnings and opportunity cost of investing vs keeping somewhere safe
|
|
#
?
Jan 2, 2020 02:22
|
|
|
Zauper posted:
My taxes and insurance are not part of my mortgage payment. Oh well. Thanks for the insight everyone.
|
|
#
?
Jan 2, 2020 03:03
|
|
|
Astro7x posted:My taxes and insurance are not part of my mortgage payment. Let us know what you decide! You can use a portfolio simulator to compare the options.
|
|
#
?
Jan 2, 2020 03:21
|
|
|
zaurg posted:I'm 41 and way behind on retirement savings. Is this a good plan to "set it and forget it" for a while? Is it diversified enough? Get back in your cage
|
|
#
?
Jan 2, 2020 06:44
|
|
|
I ended up accepting a PhD position and am now only saving a quarter of what I used to every month due to living in a new city and all, but I think it's going to be worth it (both financially and personally, though only because the optimal financial paths to take are absolutely soul-crushing paper pusher jobs which I wouldn't last in). Still sticking with the ETFs I've been buying into for over a year now, mainly blackrock's s&p though I have some of vanguard's all-world too. My broker just offers ETFs and these had low expense ratios, that's why. I wish we had something like the US 401k over here, though I suppose we have socialism, so that's good.
|
|
#
?
Jan 2, 2020 10:51
|
|
|
please knock Mom! posted:I ended up accepting a PhD position and am now only saving a quarter of what I used to every month due to living in a new city and all, but I think it's going to be worth it (both financially and personally, though only because the optimal financial paths to take are absolutely soul-crushing paper pusher jobs which I wouldn't last in). Still sticking with the ETFs I've been buying into for over a year now, mainly blackrock's s&p though I have some of vanguard's all-world too. My broker just offers ETFs and these had low expense ratios, that's why. I wish we had something like the US 401k over here, though I suppose we have socialism, so that's good. There's also a 401k-like tax advantaged system but it's more regulated and the plans you can buy into return like 1%  I did eventually find a company that offered a more aggressive strategy but it was still underperforming the markets. I'm making a minimum payments to get the full employer contributions but not enough for full tax advantage. That would've been a smart thing if I immediately also started buying ETFs but it took me a while... better late than never I guess.Never mind, after loving around with this I had t open a ticket because Equatex won't do FOP apparently so who the hell knows. mobby_6kl fucked around with this message at 16:01 on Jan 2, 2020 |
|
#
?
Jan 2, 2020 13:55
|
|
|
Astro7x posted:My taxes and insurance are not part of my mortgage payment. Odd, the vast majority of mortgages include PITI. In that case, your numbers don't add up. 75k in interest, 160k in principal over 23 years is 235k. Yet paying 11k/month is 253. So then you either have a lower monthly payment (in which case paying it off is less appealing), or you pay more total in interest (which doesn't change the math). At the end of the day paying off the house vs investing the money is a question of risk and feelings. Because your loan is at such a low rate relative to expected return, investing the money will always pay back more... assuming that it hits expected returns. But then you take on the risk of it collapsing and you having the mortgage still with nothing to show for the investment. That's ultimately what the decision is about.
|
|
#
?
Jan 2, 2020 14:10
|
|
|
Yes, sometimes the market pays more, but there is also piece of mind in security, as has been mentioned. And your mortgage rate payoff cannot drop 40% in a year. With a paid off home, you will always have shelter, so long as you can pay a few thousand in taxes. And the 3-4% saved is risk free, which is frankly better than government securities (or pretty much any fixed income/bond/low risk stuff) right now. Not paying off the mortgage to invest is essentially using margin, which is fine, but make sure you're comfortable with doing that. Your $160k mortage payoff isn't going to make you 7%, but it's also not going to hit a "OMG Warren got elected now it's worth $100k and I still owe $160k on the mortgage" event either. I feel like a lot of people didn't necessarily go through 2000 and 2008 both. It sucks losing a poo poo ton of cash and your job, when the bank doesn't stop asking for mortgage payments. Just something to consider.
|
|
#
?
Jan 2, 2020 17:38
|
|
|
i would also raise a different example from 2008. some people lost their houses and had very bad situations but the vast majority did not have that happen, and instead they cashed out their 401ks because the number went down and hosed themselves for retirement by not continuing to invest.
|
|
#
?
Jan 2, 2020 18:09
|
|
|
I think I posted this before, but I don't recall and it's 2020, SO: Does anyone know how to "build" VTSAX from the other Vanguard mutual funds? In setting up our corporate 401(k), since financial advisors are basically all scum, we went with a 3(38) lineup that takes on all the fiduciary obligations in fund selection. For whatever reason, there is no VTSAX, but we have (I'm pretty sure) all the Vanguard funds that combined in some ratio, probably make up VTSAX. So, given:
It provides VTIAX (International Index) and VBTLX (Total Bond Index), so at least those are covered. What's the "rough" allocation to get as close to VTSAX's weighting, or where I can go to determine that? Look at the holdings reports and relative percentages and calculate it?
|
|
#
?
Jan 2, 2020 19:04
|
|
|
You're missing mid cap, but that's like 4% of a total stock market index so meh. You could probably do 82% VFIAX and 18% VSMAX and call it a day. Source: https://www.bogleheads.org/wiki/Approximating_total_stock_market
|
|
#
?
Jan 2, 2020 19:23
|
|
|
SlyFrog posted:Your $160k mortage payoff isn't going to make you 7%, but it's also not going to hit a "OMG Warren got elected now it's worth $100k and I still owe $160k on the mortgage" event either. I really want to mock you for buying into Warren’s transparent attempts to ape leftist positions, but a lot of ostensibly sensible people have also been fooled. A Warren presidency wouldn’t change a thing.
|
|
#
?
Jan 2, 2020 19:24
|
|
|
Not sure if this is the right place for this, but I just need to tell this to somebody. My wife is a bank manager and a guy walked in today with 18, $1,000 1990 series EE savings bonds to redeem. Paid 500 a piece in 1990, walked out with about 2,070 for each one. That same 9K invested in the S&P 500 in 1990 would have yielded almost 120K after taxes for the same 30 year investment period. Hurts to think about, but I guess the guaranteed 6% at the time seemed like a good move. I don't think they kept paying 6% the entire 30 years though.
|
|
#
?
Jan 2, 2020 19:25
|
|
|
skipdogg posted:Not sure if this is the right place for this, but I just need to tell this to somebody. My wife is a bank manager and a guy walked in today with 18, $1,000 1990 series EE savings bonds to redeem. Paid 500 a piece in 1990, walked out with about 2,070 for each one. I should probably cash in all my EE bonds that aunts and uncles bought me when I was a child. It's definitely thousand of dollars worth at this point.
|
|
#
?
Jan 2, 2020 19:50
|
|
|
Loucks posted:I really want to mock you for buying into Warren’s transparent attempts to ape leftist positions, but a lot of ostensibly sensible people have also been fooled. A Warren presidency wouldn’t change a thing. It doesn't matter in the slightest what I think. It matters what the market thinks.
|
|
#
?
Jan 2, 2020 20:07
|
|
|
KYOON GRIFFEY JR posted:i would also raise a different example from 2008. some people lost their houses and had very bad situations but the vast majority did not have that happen, and instead they cashed out their 401ks because the number went down and hosed themselves for retirement by not continuing to invest. Yes. And it's less likely you have to cash out your 401k if you literally have no mortgage/rent to pay. Not having to make $20k or more on debt service goes a long way when things are hard. Of course, people who cash out after the fall has happened are always going to be there.
|
|
#
?
Jan 2, 2020 20:11
|
|
|
SlyFrog posted:It doesn't matter in the slightest what I think. It matters what the market thinks. Have you actually looked at the data? Elections don't matter, like, at all. Ever.
|
|
#
?
Jan 3, 2020 01:58
|
|
|
moana posted:Have you actually looked at the data? Elections don't matter, like, at all. Ever. Not if you actually get full communism 
|
|
#
?
Jan 3, 2020 13:30
|
|
|
When the People's Republic of California decides to break away, the market will be the least of your worries. Your worries, not my worries. I'll be living in a.socialist utopia. Found the DFA charts I remembered about election returns:
|
|
#
?
Jan 3, 2020 15:35
|
|
|
moana voted for Trump? Wow. Never would have guessed.
|
|
#
?
Jan 3, 2020 15:49
|
|
|
zaurg posted:moana voted for Trump? Wow. Never would have guessed.
|
|
#
?
Jan 3, 2020 15:57
|
|
|
paternity suitor posted:I'm going to carry over short term losses into 2020 that I'd like to use to offset my income, but I also want to sell some long term ETFs and convert them to VTWAX. Can I do that? Or am I forced to use the carry over losses on capital gains if I have them, before income?
|
|
#
?
Jan 3, 2020 15:58
|
|
|
Losses have to be used to cancel gains before they can be used to offset income.
|
|
#
?
Jan 3, 2020 17:19
|
|
|
I have my Vanguard auto-payments set up to withdraw from my bank account the necessary biweekly amount to max out my IRA for the year. Last year it did $250 every two weeks. This year it started with a $272.88 withdrawal. Any idea why?
|
|
#
?
Jan 3, 2020 17:32
|
|
|
Are you only getting paid 22 times a year? $250.00 × 22 = $5,500 (2018's max) x24 gets you to $6,000 the 2019 max $272.88 × 22 = $6,003.36 (This year's max is $6,000) doingitwrong fucked around with this message at 17:48 on Jan 3, 2020 |
|
#
?
Jan 3, 2020 17:45
|
|
|
doingitwrong posted:Are you only getting paid 22 times a year? I get paid twice a month. Last year’s max was $6,000 and I maxed it out with automatic biweekly $250 contributions. I have it set to let Vanguard automatically decide the amount so it’s kinda weird it switched to $272.88 to pay it off on a 10 month schedule (I assume.)
|
|
#
?
Jan 3, 2020 17:47
|
|
|
I am bad at reading. No idea, then sorry.
|
|
#
?
Jan 3, 2020 17:48
|
|
|
Maxed out my Roth today and my 401k is allocated to be maxed out by the end of the year. I don't recall if I posted this question here or in another forum but... A majority of my liquid cash is sitting in a savings account, which is separate from my emergency fund. I would like to have a larger down payment to buy a house in roughly 5 years, although it's not set in stone; I can move the timeline up or down depending on how much money we currently have. Would it make sense to place some of that money into a mutual fund like VTSAX for a few years and withdraw when needed? I'm aware of the inherent risk of placed the money into the market, but I figured I would just push the timeline out a few more years if needed. Overall I'm hoping for the market to beat 1.6% (the APR for my savings account) in the next five years. Any thoughts?
|
|
#
?
Jan 3, 2020 19:52
|
|
|
Animal posted:I have my Vanguard auto-payments set up to withdraw from my bank account the necessary biweekly amount to max out my IRA for the year. Last year it did $250 every two weeks. This year it started with a $272.88 withdrawal. Any idea why? Animal posted:I get paid twice a month. Twice a month and bi-weekly are not the same. Semi-monthly = Two times per month (i.e., 24 pay-periods) Bi-Weekly = Every two weeks (i.e., 26 pay-periods) Still, unsure.
|
|
#
?
Jan 3, 2020 20:00
|
|
|
zaurg posted:moana voted for Trump? Wow. Never would have guessed. 
|
|
#
?
Jan 3, 2020 21:03
|
|
|
I see people post about hating California but when we split off they are going to miss eating affordable avocados and almonds and garlic. They'll see. They'll all see!
|
|
#
?
Jan 3, 2020 21:10
|
|
|
obi_ant posted:Overall I'm hoping for the market to beat 1.6% (the APR for my savings account) in the next five years. Any thoughts? If you just wanna beat 1.6%, there are CDs and bonds that will beat that. So the question is: by how much do you want to beat it and at how much risk? I have been wondering a similar thing and looking at some of the lower risk bond ETFs or the ETFs that track various high dividend stocks, or preferred shares portfolios. PGX is a well-regarded example of the latter which offers a 5.31 yield. Smaller swings than the overall stock market. TLT tracks long term treasury bonds with a 2.27 yield and even smaller swings. As some examples.
|
|
#
?
Jan 3, 2020 21:22
|
|
|
skipdogg posted:Not sure if this is the right place for this, but I just need to tell this to somebody. My wife is a bank manager and a guy walked in today with 18, $1,000 1990 series EE savings bonds to redeem. Paid 500 a piece in 1990, walked out with about 2,070 for each one. That was essentially a zero-risk investment on his part, and it's not appropriate to compare investment returns across different risk profiles as if they're the same. For all we know, those bonds consisted of 2% of that guy's portfolio and therefore an entirely reasonable low-risk component of an overall asset allocation.
|
|
#
?
Jan 3, 2020 22:51
|
|
|
|
| # ? May 16, 2024 06:19 |
|
|
Mu Zeta posted:I see people post about hating California but when we split off they are going to miss eating affordable avocados and almonds and garlic. They'll see. They'll all see!
|
|
#
?
Jan 3, 2020 22:54
|
|
