New To Investing Thread

[TCUHornedFrog]

If I just send you $100,000, how quickly will you turn it into a million, after your cut?

3 months (provided I can find other "investors" to fund your returns). 

[slobber]

If I just send you $100,000, how quickly will you turn it into a million, after your cut?

3 months (provided I can find other "investors" to fund your returns).

   wait.......
  (but like a pyramid and not lynchmob)

[Emo EMAW]

The market always takes a dip when they announce rate hikes. I'm not quite sure why, though.

Interest rate sensitive securities drive that.

For example, let's look at a perpetual preferred 6% ($100 par) share.  The theoretical value is the dividend divided by your discount rate.  Given that a preferred isn't a riskless security like a Treasury, we need to add a spread to the risk free rate.  So the 10 Year US Treasury currently yields 1.85%.  Let's add an arbitrary 300 basis point spread for a risk premium.  So 6/0.0485=$123.71 (theoretical value, not what it is actually trading at).  Now, let's imagine that the Fed hikes rates by 1% and the 10 year goes to 2.85%.  Keeping the same spread, that preferred's theoretical value is now 6/0.0585=$102.56.

REITs, preferreds, some dividend payers are extremely sensitive to interest rate changes.

Fixed income buyers also get hit as yields and prices are inversely related.

this is nardfrog in damage control mode

[TCUHornedFrog]

this is nardfrog in damage control mode

Hardly, volatility is good.  It allows you to buy things "on sale".

[star seed 7]

invest 10-15% of your salary every year and no more. if you have leftover money, do not invest it but instead immediately spend it on life experience types of things and not things like super nice cars and new couches.

Gets delivered on Monday 

[KITNfury]

I don't have the knowledge to invest wisely in the stock market. I'm just getting into real estate investment. Under contract right now as a matter of fact, so hopefully all goes well. If my numbers are correct, my ROI will be better than anything else I can do.

Plus, for now it's the only way I know how to make other people's money work for me.

[catastrophe]

You are nervous about the market, but you are currently purchasing real estate with other investors' money?

[wetwillie]

In a real estate bubble too

[KITNfury]

You are nervous about the market, but you are currently purchasing real estate with other investors' money?

I didn't say nervous about the market, I said I don't know enough about it to get the returns I want.

I have a much better idea of what to look for in real estate.

[KITNfury]

In a real estate bubble too

There's speculation that agrees with you, but real estate is often local. And if the property cash flows, what is the concern if the value drops? The only concern then is if jobs are leaving the area, thus reducing renters. Flippers can get burned in a fast crash though.

[catastrophe]

You are nervous about the market, but you are currently purchasing real estate with other investors' money?

I didn't say nervous about the market, I said I don't know enough about it to get the returns I want.

I have a much better idea of what to look for in real estate.

That's probably fair, I guess I'm just thinking your venture actually sounds way more complex. If you just buy a few good ETFs on Vanguard that generally track the market, then you can  just sit back and expect it to grow somewhere around 7% annually.

If you're talking about learning to pick stocks , though, then at best you probably have about as good of odds as you'd get at the craps tables.

[KITNfury]

You are nervous about the market, but you are currently purchasing real estate with other investors' money?

I didn't say nervous about the market, I said I don't know enough about it to get the returns I want.

I have a much better idea of what to look for in real estate.

That's probably fair, I guess I'm just thinking your venture actually sounds way more complex. If you just buy a few good ETFs on Vanguard that generally track the market, then you can  just sit back and expect it to grow somewhere around 7% annually.

If you're talking about learning to pick stocks , though, then at best you probably have about as good of odds as you'd get at the craps tables.

Keep in mind I've been casually reading about real estate for several years and more recently reading more extensively. I have a very detailed analysis I've built and I expect over 20% ROI (based upon my down payment) on the property I'm in the process of buying. I could let a property manager take care of it and get 15%.

Properties like that aren't available everywhere all the time, but they are there. Some better than that. But to me, that's far more enticing than what the stock market can offer, particularly since I neglected equity entirely.

[KITNfury]

I should also mention that the tax benefits on real estate are sick. Essentially I will pay almost nothing on my profits. If my projections are accurate of course. If I'm paying taxes on it, then I'm doing better than I expect

[Kat Kid]

I should also mention that the tax benefits on real estate are sick. Essentially I will pay almost nothing on my profits. If my projections are accurate of course. If I'm paying taxes on it, then I'm doing better than I expect

can you explain this?  I thought you paid capital gains on investment properties, but I know almost nothing about tax law.

[Emo EMAW]

this is nardfrog in damage control mode

Hardly, volatility is good.  It allows you to buy things "on sale".

I meant damage control from the whole smashing thing.

[KITNfury]

I should also mention that the tax benefits on real estate are sick. Essentially I will pay almost nothing on my profits. If my projections are accurate of course. If I'm paying taxes on it, then I'm doing better than I expect

can you explain this?  I thought you paid capital gains on investment properties, but I know almost nothing about tax law.

You pay capital gains on the sale. Unless you do a 1031 exchange, but that's another story.

If you have a rental, you get to deduct depreciation, expenses, and mortgage interest. Even though it will most likely appreciate over the long term. Depreciation on non commercial property is the nice round number of 1/27.5 of the property. I can't say for certain if that is purchase cost or appraised cost, but it's substantial either way,

In the end, the cash flow you have is usually offset by the deductions, thus very low (if any) taxes on the profits.

[TCUHornedFrog]

I meant damage control from the whole smashing thing.

No.  I might have some updates for that thread after this weekend tho.

[The Big Train]

Bitcoin is down $33 today and falling fast, get out those pocket books guys

Exchange rate when I posted this was 1 Bitcoin = $408.

Right now it's 1 Bitcoin = $729.   

[catastrophe]

I've read quite a bit about bitcoin, and it still makes absolutely no sense to me.

[KITNfury]

I've read quite a bit about bitcoin, and it still makes absolutely no sense to me.

It has value because people say it has value. Exact same thing as the American dollar. That's the bottom line

[catastrophe]

I've read quite a bit about bitcoin, and it still makes absolutely no sense to me.

It has value because people say it has value. Exact same thing as the American dollar. That's the bottom line

Yea, but the American dollar is backed by a government worth Trillions and Trillions. That seems a significant difference to me.

[yoga-like_abana]

I'd like some advice on saving/investing a little more money compared to paying more towards my mortgage.
We currently do both of these things but I'm wondering if it makes more sense to put more $ towards one or the other.

[Emo EMAW]

What's your interest rate? 

What's your effective tax rate?

[yoga-like_abana]

What's your interest rate? 

What's your effective tax rate?

3.5% and I think 25%

[Emo EMAW]

What's your interest rate? 

What's your effective tax rate?

3.5% and I think 25%

We're in the highest tax bracket and I still think we only paid like ~12% effective tax rate.  You should max out your 401k contribution first ($18k/yr I think).  That should, IMO, be you and your wife's first priority.  At 3.5% you will always have a better idea than paying down your house.  Good job on that interest rate, BTW.     Probably max out 401k's, then max out a Roth IRA after that (no tax benefits today though), then really it's kinda no man's land and you could play the stock market if you're risk averse or pay down the house or buy a rental property or something.