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With the yield curve's recent inversion, coupled with the recent dip in the market, I'm curious what everyone's portfolio currently looks like. I'm thinking of dropping everything and running to bonds. Talk me out of / into it, please.
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Last edited by WichitaStateGuy; May 29, 2019, 01:20 PM. -
Originally posted by WichitaStateGuy View Post
Unless you're retirement age, I recommend staying the course... don't leave your 'wing man'."You Just Want to Slap The #### Outta Some People" -
How far are you from retirement?
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Originally posted by C0|dB|00ded View Post
Depending on the quality of investment advice you give me, anywhere from 1 day to 35 years... the latter being most likely.Comment
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Then WstateU's advice is the way to go. Stay the course and pay the market no nevermind.
That being said... if the SPX drops below the 200 MA and you were planning on making a big stock purchase... you could hold off for a bit and few would be critical. Even better would be to convert your large purchase into smaller ones over the next couple months.
But as a general rule, expect the very second you react to what everybody else sees, to get burned. The markets are a (mind) game. Your best chance of holding onto the majority of the gains you've earned in this very protracted and generous bull market is to not muck with your account.
THE winning play is to just keep being steady and chipping away at the old retirement block. Today's advice is to be saving 10% of every pay check. If you have a matching program with your employer you can reduce your portion accordingly.
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WstateU C0|dB|00ded Very sage-esque advice for a young whipper-snapper like myself.
How about this -- wife has about $8k in student loans that have an interest rate of around 3%. We currently have about $10k in a savings account and $2k in our checking account- both making 0%- and $10k in a brokerage account making around 12% (thank you President Trump). This is in addition to our 401k, which we are contributing 10% and getting the company match of 6% dollar-for-dollar. I've always viewed the savings account as our emergency fund, so we hardly touch it. Everything is paid out of our checking. We are adding about $1k to our savings each month.
Should I just cut a check for my wife's student loan? I don't want to forego the money St. Donald Trump is making me in the stock market. Should I start throwing the $1k toward her loans and pay it off in 10 months? Her student loans are our only debt.
Nothing like getting financial advice from two veteran posters like yourselves. Cheers.Last edited by WichitaStateGuy; May 30, 2019, 10:41 AM.Comment
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Hold the phone, let me call Dave Ramsey! :)
“Compound interest is the eighth wonder of the world. He who understands it, earns it ... he who doesn't ... pays it.
Compound interest is the most powerful force in the universe.
Compound interest is the greatest mathematical discovery of all time.
- Albert Einstein”
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How much are the monthly payments on the student loan debt?
Last edited by Kung Wu; May 30, 2019, 10:41 AM.Kung Wu say, man who read woman like book, prefer braille!Comment
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tldr; Most likely just pay the debt off, and increase your cash flow.Originally posted by WichitaStateGuy View Post
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IMHO: Debt is one area where the mathematically purely correct answer, is not necessarily the best option.
If you pay the debt off, you have increased your cash flow by $1440 per year.
On paper you would probably come out ahead by not paying off the debt and instead investing the money, however there are lots of pitfalls and caveats in that simple concept.
* Do you have the discipline to keep 100% of the $10k that you have available in an investment account for the next 8 years? It's already NOT in an investment account, so you can almost already tick the "No" box, right?
* Two years down the road when you see that shiney new home, and you realize you have $8k of non-retirement jack to use as part of the down payment, will you use it? Because if you use any portion of it, you can throw your initial calculations of paying off debt vs investing the money right out the window. And suddenly what was the right decision on paper, is now a poor choice.
* Will the market really kick ass for the next 8 years?
* By paying off all debt, your income-to-debt ratio will kick serious butt, affording you some opportunities.
Kung Wu say, man who read woman like book, prefer braille!Comment
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Baby step 1... pay off the student loan.
Nevermind me... just havin' some fun...
https://media.giphy.com/media/3oeSAL...Nt8Q/giphy.gif
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Don't forget the fact that if a Libtard is elected in 2020 you'll likely have your student loans wiped away simultaneously making you jump for joy while marking the beginning of the end of the Republic.
Maybe wait a year... *sigh*
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"You Just Want to Slap The #### Outta Some People"Comment
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Appreciate all the advice, gents. I think I’ll cut a check tomorrow. Like Kung Wu said, I doubt I’d have the disciple to never touch the $10k throughout the 8 years anyway... It will be nice to owe nothing to anyone, also. We are currently living out of state and renting. I’d like to purchase a home AFTER the market dips... doesn’t seem to make much sense purchasing a home in the 11th year of a recovery, in my mind. Also, I’m unsure if we want to stay here long term...
Which leads me to my next question directed at you misers...
What’s the best profit generating business you could run exclusively on the weekends? Say you had $10k you were willing to invest. I’d thought about flipping cars (know my way around a shop thanks to the Corps), starting a popcorn stand, and cutting grass, but always get trigger shy. Also, the lazy part of me enjoys the weekends with my wife and son too much... thoughts?
Young, motivated and willing to work to put my family ahead.Comment
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@KungWu makes a good point, but let me offer this alternative. I don't think you should touch the retirement, period. Don't start down that path. It's likely you'll find it's too easy and do it again, and again. My suggestions would be to drop down your contribution to 6% so that you get the maximum match, then take the difference and split between your student loan and INCREASING your checking. Buy some 6 month CDs but you should have 3 months expenses very liquid for all those unexpecteds that come up. If you have to fix the car, it comes out of that savings, then you build it up again until it's 3 months of expenses. And paying off the student loans will reinforce the value of NOT getting into debt. I might also suggest maybe a 2nd job, UBER perhaps, 1 day a week with every dollar going to the student loans. You'd be amazed how quickly something like that will pay off a debt. Cold's comment about those student loans being wiped off the books is a valid concern. I don't know what to say about that. I think the chance is enough to certainly not pay it off, at least not today. The correct dollar decision is to pay them off, but my suggestion stands, for the betterment of your future.
I dipped into a profit sharing account at a very young age to pay off some debt and I have regretted it ever since. What that money would be worth today SMH.
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If you like growing stuff and have access to a nice selection of upscale restaurants as well as time to participate in farmer's markets, this might be your gig. I thought it was an interesting idea when I heard of it. Of course it will take just as much effort as other "side businesses", but this has a low startup cost and it's kind of in tune with environment/health trends.Using a four rack system, many growers are producing an average of 50 pounds of microgreens in a 60 square foot growing area per 2-week crop cycle. At $25 per pound, that's a return that beats just about any other legal crop.
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At the end of the day, this is obviously the correct answer and it sounds like WichitaStateGuy knows he doesn't have the discipline to do the mathematically correct option. But, without a doubt, if I had student loan debt sitting at 3% interest, I'd let that hang out for as long as possible making the minimum payments. So long as you're under the income limit and you can write off interest payments, you're functionally knocking down the 3% rate even lower. Nothing wrong with being debt averse, but that money can make money for you elsewhere.Originally posted by Kung Wu View Post
More importantly, get rid of your 0% savings account. Open up an Ally or Citi online savings account and get 2.0% to 2.3%. $200 probably isn't going to change your life at the end of the year, but it's free money.
Edit to add: I hadn't realized the savings account was the emergency fund. Not using your emergency fund is a good thing, but it doesn't mean you don't need those funds there. Anything can happen, particularly if you think we're headed toward a recession. People can lose jobs, unexpected medical bills, etc. An emergency fund is absolutely necessary. If you are really opposed to a traditional emergency fund in a savings account, you can put it in a Roth IRA and get the contributions back if you need to.
If you pay off the student loans in whole, you're left with $4k as everything available to you in a worst case scenario, which gives you a lot less wiggle room than $10k+.Last edited by jdshock; June 3, 2019, 01:13 PM.Comment
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I was with you until the edit...
We have (had) $8k in debt, $10k in savings, $2k in checkings and an additional $10k in a brokerage account (currently sitting in a S&P 500 ETF), netting us at $13k liquid cash. I went ahead and paid off the student loan so I stop thinking about it. Will look into other banks, but money doesn't transfer freely these days... -
WichitaStateGuy - Fair enough, as KW pointed out, the "correct" answer is always going to depend on how averse to risk and debt a person is. Either way, congrats on paying off the student loans!
If that brokerage account is just a regular brokerage account, consider putting those funds into a Roth IRA instead. No up front tax benefits, but you can access the contributions freely, and you get tax free growth down the road. Since you're talking about 30+ years to retirement, that could be some pretty huge savings if you play your cards right. -
Yes, debt is your friend... particularly low-interest debt.
Leveraging your assets correctly IS the secret...
P.S. If you have any financial disciplinary issues at all you'll want to square those away before you embark on your journey. You must be an unemotional machine and resolute till the end. Most millionaires do not live like "millionaires".
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All solid advice. I like to see that none of my Shockernet confidants adhere to modern monetary theory and can balance their finances, unlike the Federal Government.
I feel like I'm keeping this topic afloat, gents. What money saving schemes do you all participate in? Any credit card point believers (we won't bite)? Any, "I have 12 rentals and I own none of them," people? Any closet millionaires out there that want to impart their wisdom to a younger, dumber generation?Comment
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Fatwallet used to be a great repository of financial hacks. Back in the day I made thousands following all the hilarious schemes that were available via credit cards, the U.S. Mint, etc. After 17 years the site has been absorbed. I don't read the new site but give it a shot. If some of the old Fatwallet posters are on there you'll be able learn a ton.
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