Author Topic: New To Investing Thread  (Read 157589 times)

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Offline Emo EMAW

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Re: New To Investing Thread
« Reply #75 on: April 16, 2013, 12:35:46 PM »
RE: pulling from retirement account for a house

I generally agree that it's a bad idea, but with interest rates as low as they are, I'm starting to see the house as a real form of investment (savings account).  I'd rather pull money from a Roth now to buy a house that I could live in until the kids are gone (20 years), as opposed to skimping now and then having to upgrade later (at a higher interest rate).

Unless you have 9 dollars in your retirement account this is a terrible idea

Well let's say I pull $10k from it on the basis it will put me in a house I'd want to live in for 20 years, the other side being that if I didn't I'd want to move again in 5 years.  I think that's worth it.  :dunno:   We can make up that $10k pretty quickly.

I guess the alternative would be to get a second mortgage, which I dunno seems like a bad idea.

If you already own a home, pulling out $10k for a payment on a new home is an even worse idea. Just get a second mortgage, and you will be paying a much lower rate on that than the $10k in your 401k will be earning.

It's a Roth, but whatevs.  Don't really see how the current home comes into play. 

Online Rage Against the McKee

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Re: New To Investing Thread
« Reply #76 on: April 16, 2013, 12:43:41 PM »
RE: pulling from retirement account for a house

I generally agree that it's a bad idea, but with interest rates as low as they are, I'm starting to see the house as a real form of investment (savings account).  I'd rather pull money from a Roth now to buy a house that I could live in until the kids are gone (20 years), as opposed to skimping now and then having to upgrade later (at a higher interest rate).

Unless you have 9 dollars in your retirement account this is a terrible idea

Well let's say I pull $10k from it on the basis it will put me in a house I'd want to live in for 20 years, the other side being that if I didn't I'd want to move again in 5 years.  I think that's worth it.  :dunno:   We can make up that $10k pretty quickly.

I guess the alternative would be to get a second mortgage, which I dunno seems like a bad idea.

If you already own a home, pulling out $10k for a payment on a new home is an even worse idea. Just get a second mortgage, and you will be paying a much lower rate on that than the $10k in your 401k will be earning.

It's a Roth, but whatevs.  Don't really see how the current home comes into play.

It only comes into play because you have an asset that you can sell and use as a down payment for your new home. You don't need additional cash, and interest rates are less than 4%, so there really isn't much incentive to put extra down. It looks like you are losing your ass on mortgage interest every month, but you need to be building a base on your retirement account so that by the time you retire, your account will be earning more interest than you are currently paying on your mortgage. In the long run, the Roth IRA should completely demolish any short term gains you achieve by paying extra up front on the house.

Online Brock Landers

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Re: New To Investing Thread
« Reply #77 on: April 16, 2013, 12:44:16 PM »
Can't you pull from your Roth IRA for your first house or something of that nature?

You never want to pull any money out of your retirement fund, bad habit....but yes.

Say your have a Roth IRA and you have 20k in it. 15k of that is principal that you put in....You could pull out all 15k if you wanted and use that to pay for a house or any other emergency that may pop up.

Well I thought it was no penalty. I understand that you can always pull it out but you get taxed like crazy. Just thought there was an exception for your first home.

You are confusing a 401k and a roth IRA...there is some way to pull money out of a 401k for your first home but I dont know much about that.

With a roth IRA you can pull out your principal at any time with no penalty because you have already paid taxes on this money.


Withdrawal from 401k for first home purchase is considered to be a "hardship" condition.  You're still taxed, penalized, and can't contribute for 6 months.  Forget it.

Offline Pete

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Re: New To Investing Thread
« Reply #78 on: April 16, 2013, 12:45:24 PM »
Haven't read a single post in this thread.  Index funds.  Enjoy your retirement!  go cats

Online steve dave

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Re: New To Investing Thread
« Reply #79 on: April 16, 2013, 12:54:16 PM »
Can't you pull from your Roth IRA for your first house or something of that nature?

You never want to pull any money out of your retirement fund, bad habit....but yes.

Say your have a Roth IRA and you have 20k in it. 15k of that is principal that you put in....You could pull out all 15k if you wanted and use that to pay for a house or any other emergency that may pop up.

Well I thought it was no penalty. I understand that you can always pull it out but you get taxed like crazy. Just thought there was an exception for your first home.

You are confusing a 401k and a roth IRA...there is some way to pull money out of a 401k for your first home but I dont know much about that.

With a roth IRA you can pull out your principal at any time with no penalty because you have already paid taxes on this money.


Withdrawal from 401k for first home purchase is considered to be a "hardship" condition.  You're still taxed, penalized, and can't contribute for 6 months.  Forget it.

you can take a loan from your 401k without any of that. but, with mortage rates at essentially zero I don't know why you would.

Offline The Tonya Harding of Twitter Users Creep

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Re: New To Investing Thread
« Reply #80 on: April 16, 2013, 01:02:19 PM »
Seems hard to invest a ton of money in retirement from my seat at age 20-something. I have very few monthly expenses... pretty much just student loans and rent, but I feel like watching all that money pile up in my checking account is a bad idea. Guys, what if I have to buy a wedding ring or something in 2 years? Should I be paying my student loans off at a higher rate? Seems silly, they are ridiculously high as is. Oh that leads me to another question... wtf is consolidating student loans? Should I do that? Will it lower my payments? GUYS!!!!
I think what my friend Mitch is trying to say is that true love is blind.

Offline puniraptor

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Re: New To Investing Thread
« Reply #81 on: April 16, 2013, 01:03:59 PM »
Seems hard to invest a ton of money in retirement from my seat at age 20-something. I have very few monthly expenses... pretty much just student loans and rent, but I feel like watching all that money pile up in my checking account is a bad idea. Guys, what if I have to buy a wedding ring or something in 2 years? Should I be paying my student loans off at a higher rate? Seems silly, they are ridiculously high as is. Oh that leads me to another question... wtf is consolidating student loans? Should I do that? Will it lower my payments? GUYS!!!!

not federal loans. if you have multiple private loans, you can consolidate them and save money.

Offline mocat

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Re: New To Investing Thread
« Reply #82 on: April 16, 2013, 01:05:58 PM »
I'm not really worried about my student loans. Low interest, low monthly payment, long time to pay it off.
I am paying way over my monthly payment on my car loan since that is a rapidly depreciating asset.

Online Rage Against the McKee

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Re: New To Investing Thread
« Reply #83 on: April 16, 2013, 01:11:09 PM »
Also dont pay extra on your mortgage unless your are paying PMI...If your mortgage rate is 4% and the market returns an average of 7% you are losing money.There is some psychological advantage but no financial advantage.

I generally agree with this, but there is some financial advantage in paying extra on your mortgage if you don't plan on living at your current house for an extended period of time. When rates go back up, you will have to get a new mortgage at the higher rate when you move and having a larger amount of the value of your current home paid off will reduce the amount you have to borrow at the higher rate. There are better investments out there, but paying extra on the mortgage is better than letting your money sit in a savings or checking account.

Offline ben ji

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Re: New To Investing Thread
« Reply #84 on: April 16, 2013, 01:14:40 PM »
Seems hard to invest a ton of money in retirement from my seat at age 20-something. I have very few monthly expenses... pretty much just student loans and rent, but I feel like watching all that money pile up in my checking account is a bad idea. Guys, what if I have to buy a wedding ring or something in 2 years? Should I be paying my student loans off at a higher rate? Seems silly, they are ridiculously high as is. Oh that leads me to another question... wtf is consolidating student loans? Should I do that? Will it lower my payments? GUYS!!!!

Pay off anything greater than 7% interest(Student loans, CC, etc) before you start plowing all your money into retirement savings.

Offline Stupid Fitz

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Re: New To Investing Thread
« Reply #85 on: April 16, 2013, 01:15:40 PM »
Haven't read a single post in this thread.  Index funds.  Enjoy your retirement!  go cats

Makes me laugh when people make it more complicated than this.

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Re: New To Investing Thread
« Reply #86 on: April 16, 2013, 01:39:37 PM »
I always invest about $10 in lottery tickets when the jackpot gets in the 100's of millions, seems like a pretty good investment.

Offline slobber

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Re: New To Investing Thread
« Reply #87 on: April 16, 2013, 01:41:18 PM »
I always invest about $10 in lottery tickets when the jackpot gets in the 100's of millions, seems like a pretty good investment.
Very sound advice. Anyone that buys lottery tickets when it is only at $30 or $40 million is a fool. :cheers:

Offline Emo EMAW

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Re: New To Investing Thread
« Reply #88 on: April 16, 2013, 01:51:46 PM »
I think it's gotta be over $450M for it to make mathematical sense. 

Offline 8manpick

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Re: Re: New To Investing Thread
« Reply #89 on: April 16, 2013, 01:58:53 PM »
I think it's gotta be over $450M for it to make mathematical sense.
There is a point where the expected rate of return becomes higher than the cost of a ticket. There was some study, maybe posted on here, about that a couple years ago. That was when it was only $1 a ticket though and your number was about right.
:adios:

Offline bubbles4ksu

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Re: Re: New To Investing Thread
« Reply #90 on: April 16, 2013, 02:04:16 PM »
I think it's gotta be over $450M for it to make mathematical sense.
There is a point where the expected rate of return becomes higher than the cost of a ticket. There was some study, maybe posted on here, about that a couple years ago. That was when it was only $1 a ticket though and your number was about right.

it's a different number for every lottery game, of course. an australian investment firm once bought something like 5 million of 7 million possible numbers for the virginia state lottery because the odds were great. they won and pocketed a few million.

Offline lopakman

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Re: New To Investing Thread
« Reply #91 on: April 16, 2013, 02:07:46 PM »
you can take principal out of the roth whenever you want? how have they not put savings accounts right out of business?

I really don't understand why anybody would have a savings account.

I dont think you understand investing

Savings accounts pay less than 1% interest. Why would you put your money into a savings account when you could just make extra contributions to your 401k, pay extra on the mortgage, buy stocks, etc? Really just about anything you do with your money will be better than just letting it sit in a savings account.

Let me ask you this, what will you do if you lose your job?  That's why you have savings.  You don't have to put it in a "savings account"  There are short term CD's, money markets that pay more than 1%
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Re: New To Investing Thread
« Reply #92 on: April 16, 2013, 02:08:30 PM »
if you put money in a cd I'll punch you in the face

Online Rage Against the McKee

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Re: New To Investing Thread
« Reply #93 on: April 16, 2013, 02:11:08 PM »
you can take principal out of the roth whenever you want? how have they not put savings accounts right out of business?

I really don't understand why anybody would have a savings account.

I dont think you understand investing

Savings accounts pay less than 1% interest. Why would you put your money into a savings account when you could just make extra contributions to your 401k, pay extra on the mortgage, buy stocks, etc? Really just about anything you do with your money will be better than just letting it sit in a savings account.

Let me ask you this, what will you do if you lose your job?  That's why you have savings.  You don't have to put it in a "savings account"  There are short term CD's, money markets that pay more than 1%

I keep extra money in my checking account, which earns more than 2% interest. Also, if I lose my job, I just find a new one. It's not that hard.

Offline lopakman

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Re: New To Investing Thread
« Reply #94 on: April 16, 2013, 02:17:18 PM »
Can't you pull from your Roth IRA for your first house or something of that nature?

You never want to pull any money out of your retirement fund, bad habit....but yes.

Say your have a Roth IRA and you have 20k in it. 15k of that is principal that you put in....You could pull out all 15k if you wanted and use that to pay for a house or any other emergency that may pop up.

Well I thought it was no penalty. I understand that you can always pull it out but you get taxed like crazy. Just thought there was an exception for your first home.

You are confusing a 401k and a roth IRA...there is some way to pull money out of a 401k for your first home but I dont know much about that.

With a roth IRA you can pull out your principal at any time with no penalty because you have already paid taxes on this money.


Withdrawal from 401k for first home purchase is considered to be a "hardship" condition.  You're still taxed, penalized, and can't contribute for 6 months.  Forget it.

you can take a loan from your 401k without any of that. but, with mortage rates at essentially zero I don't know why you would.

No you can't.  If you take money from your 401k you are penalized.  You can roll your 401k over to an IRA to avoid the penalties but you'd be paying a higher interest rate.  Mortgage rates are not near zero, they're slightly below 4% for those with excellent credit who would never need to do this in the first place.  If you need to borrow against your 401k for a house then do it but it's going to cost you more in the long run.
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Offline lopakman

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Re: New To Investing Thread
« Reply #95 on: April 16, 2013, 02:20:47 PM »
if you put money in a cd I'll punch you in the face

I've been laddering 40k in CD's for 10 years.  It's our six months living expenses.  I don't see the problem with this. 
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Re: New To Investing Thread
« Reply #96 on: April 16, 2013, 02:21:45 PM »
Can't you pull from your Roth IRA for your first house or something of that nature?

You never want to pull any money out of your retirement fund, bad habit....but yes.

Say your have a Roth IRA and you have 20k in it. 15k of that is principal that you put in....You could pull out all 15k if you wanted and use that to pay for a house or any other emergency that may pop up.

Well I thought it was no penalty. I understand that you can always pull it out but you get taxed like crazy. Just thought there was an exception for your first home.

You are confusing a 401k and a roth IRA...there is some way to pull money out of a 401k for your first home but I dont know much about that.

With a roth IRA you can pull out your principal at any time with no penalty because you have already paid taxes on this money.


Withdrawal from 401k for first home purchase is considered to be a "hardship" condition.  You're still taxed, penalized, and can't contribute for 6 months.  Forget it.

you can take a loan from your 401k without any of that. but, with mortage rates at essentially zero I don't know why you would.

No you can't.  If you take money from your 401k you are penalized.  You can roll your 401k over to an IRA to avoid the penalties but you'd be paying a higher interest rate.  Mortgage rates are not near zero, they're slightly below 4% for those with excellent credit who would never need to do this in the first place.  If you need to borrow against your 401k for a house then do it but it's going to cost you more in the long run.

you are wrong, dumbass.

http://www.forbes.com/2008/09/02/401k-loan-borrowing-pf-education-in_rw_0902investopedia_inl.html

Offline mocat

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Re: New To Investing Thread
« Reply #97 on: April 16, 2013, 02:22:40 PM »
if you put money in a cd I'll punch you in the face

SD tell me if this is an accurate description of a typical CD:

I could put $2000 into a 2-year 1.8% CD right now and walk away after 2 years of not touching that money with a cool $2036  :gocho:

Online steve dave

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Re: New To Investing Thread
« Reply #98 on: April 16, 2013, 02:23:17 PM »
if you put money in a cd I'll punch you in the face

I've been laddering 40k in CD's for 10 years.  It's our six months living expenses.  I don't see the problem with this.

not surprised by this at all

Online Rage Against the McKee

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Re: New To Investing Thread
« Reply #99 on: April 16, 2013, 02:24:20 PM »
if you put money in a cd I'll punch you in the face

SD tell me if this is an accurate description of a typical CD:

I could put $2000 into a 2-year 1.8% CD right now and walk away after 2 years of not touching that money with a cool $2036  :gocho:

You would earn more than $36. It would be closer to $100.