Investing megathread extravaganza

[DaFace]

A place to talk about investing stuff.

[kepp]

Originally Posted by ndws

I'm looking to start dabbling with penny stocks to get my feet wet. I figure in the first couple of years while I learn, its the equivalent of going to the casino. Most likely I'll come out with empty pockets, but its fun...and in this case, hopefully a learning experience. And if a penny hits along the way, bonus.

That's what I'm doing. I started with $100 a few months ago and now have....uh, $27

But it isn't money I'm worried about...just learning.

[kepp]

Originally Posted by ndws

Yep, I'm on the boring bandwagon already. I just looked at the math on my last pay stub, and between my retirement (pension), 401k, and personal Roth (with company matching totaled in) i'm putting right at 28% of my income into retirement. So unless there is a massive market correction in the handful of years before I retire (I'm 39 now, and my rule 85 doesn't go into effect until I'm 57 at the earliest, I should be ok without needing to rely on any day trading/penny stock nonsense I may try to do on my own.

My wife and I are on track to pay off our 30 year mortgage about 19 years early, hopefully right in time to retire at 55...fingers crossed.

[Discuss Thrower]

Penny stocks are an awful idea.

[Amnorix]

Originally Posted by kepp

My wife and I are on track to pay off our 30 year mortgage about 19 years early, hopefully right in time to retire at 55...fingers crossed.

Depending on your rate, you may not have the right goal in mind. But hey, if it gives you peace of mind or you vastly prefer it to anything else, I definitely understand.

[kepp]

Originally Posted by Amnorix

Depending on your rate, you may not have the right goal in mind. But hey, if it gives you peace of mind or you vastly prefer it to anything else, I definitely understand.

Not sure I understand.

[Demonpenz]

i will be back later to show what i bought in vanguard should I move that to another etf.

[Demonpenz]

Originally Posted by kepp

Not sure I understand.

it feels great to have it paid off but you could invest money monthly to have a better overall profit. Like I have 0 interest in my car. Would love to pay it off but using my money now to pay off the car instead of using money to make money isn't a good play.

[DaFace]

Originally Posted by kepp

Not sure I understand.

If your interest rate on your mortgage is particularly good (say, less than 5%, and especially if you're below 4%), you could likely come out more positive by just paying the minimums on your mortgage and investing the money elsewhere. This is particularly true since mortgage interest is deductible, so your effective interest rate is probably even a little lower.

So as an example, if you've got a 4.0% APR on your mortgage, your effective interest rate is probably closer to 3.0% (assuming you're in the 25% tax bracket). Compare that with the rule-of-thumb rate of 7% that you could get in a typical set of investments, and you're actually leaving money on the table by paying off your mortgage early.

That said, there are benefits to knocking out a payment to give you more flexibility too. All personal finance is a bunch of rules that just depend on your situation and priorities.

[Unsmooth-Moment]

I have been using the betterment app on my android and I put about $125 a week into it. I'm happy with how it has been doing. I'm basically using that instead of a savings account at my bank.

[ndws]

Originally Posted by kepp

That's what I'm doing. I started with $100 a few months ago and now have....uh, $27

But it isn't money I'm worried about...just learning.

Yeah, I'm only looking at maybe doing 100 or 200 just to get a feel for it. Heck a coworker of my wife's paid off her house doing this. Not that I even expect to break even dabbling around with it, but its fun to daydream about the success stories.

[lewdog]

Originally Posted by DaFace

If your interest rate on your mortgage is particularly good (say, less than 5%, and especially if you're below 4%), you could likely come out more positive by just paying the minimums on your mortgage and investing the money elsewhere. This is particularly true since mortgage interest is deductible, so your effective interest rate is probably even a little lower.

So as an example, if you've got a 4.0% APR on your mortgage, your effective interest rate is probably closer to 3.2% (assuming you're in the 25% tax bracket). Compare that with the rule-of-thumb rate of 7% that you could get in a typical set of investments, and you're actually leaving money on the table by paying off your mortgage early.

That said, there are benefits to knocking out a payment to give you more flexibility too. All personal finance is a bunch of rules that just depend on your situation and priorities.

Agreed and I'll add too it. They say in order to make more in investment returns compared to saving on mortgage interest payments, your stocks need to generally average 2-3% more growth than your mortgage interest rate.

We refinanced last year into a 3.6% rate. I need to roughly have my investments gain 6% to come out ahead for putting more money towards investing, rather than paying off the mortgage early. So far, we are definitely coming about ahead by paying the minimum mortgage payment and dumping extra cash into investments.

[lewdog]

Originally Posted by ndws

Yeah, I'm only looking at maybe doing 100 or 200 just to get a feel for it. Heck a coworker of my wife's paid off her house doing this. Not that I even expect to break even dabbling around with it, but its fun to daydream about the success stories.

I'd love to know what her investment was that allowed that?

I find many individuals stock buyers are similar to fisherman in their stories and successes.

[DaFace]

Originally Posted by Unsmooth-Moment

I have been using the betterment app on my android and I put about $125 a week into it. I'm happy with how it has been doing. I'm basically using that instead of a savings account at my bank.

Just be careful not to go TOO far with that. Betterment is doing well right now because the stock market is doing well. It's not out of the question that you could lose half of what you've got in there if the shit hits the fan.

So just make sure you keep some back for an emergency fund in cash.

[ndws]

Originally Posted by lewdog

I'd love to know what her investment was that allowed that?

I find many individuals stock buyers are similar to fisherman in their stories and successes.

I couldn't tell you. I'll have my wife ask her about it. She's one of those insanely high IQ people, so of the people that would claim it, she would be one of the few that I would believe.

I know my old man dabbled in day trading for a few years not long ago. It worked well for him, he bought things he ordinarily wouldn't have and then rerolled the rest into additional savings plans that helped him retire early.

[Unsmooth-Moment]

Originally Posted by DaFace

Just be careful not to go TOO far with that. Betterment is doing well right now because the stock market is doing well. It's not out of the question that you could lose half of what you've got in there if the shit hits the fan.

So just make sure you keep some back for an emergency fund in cash.

I should have worded that better. It's more of a savings/investment account that will not be needed for several years. If an emergency came up tomorrow it would not be the first account I tapped into. it does let you set your portfolio preference on stock to bond % based on your risk level.