42
votes
Accepted
Which mortgage should I pay off first? Same interest rate and mortgage length
You haven't accounted for what happens when the small loan is completely paid off.
Seven years into the aggressive payoff schedule you need to shift all original principal and interest payment and the ...
- 136k
37
votes
I have to pay back my student loan. When is the best time to do it?
That mortgage would be lowered by twice the amount of my student loan.
doesn't sound too bad, since the other place you can put the money is into "down payment" and that has between 1:1.5 ...
- 6,788
31
votes
Accepted
Is there any advantage to a longer term CD that has a lower interest rate than a shorter term CD?
Taking a longer-term CD with a lower interest rate could make sense if you expect CD interest rates to drop in the near future. Suppose you could get a 6-month CD with a 5.1% interest rate, or a 12-...
- 4,596
28
votes
I have to pay back my student loan. When is the best time to do it?
Anytime you can borrow money for less than 1% APR interest, the perfect time to pay that off is "upon your death". You will never be able to borrow money more cheaply in your whole life.
...
28
votes
Accepted
If US Treasuries at yielding 4-5% right now, why can't I find an ETF that yields that amount?
Over the last 12 months, SGOV yielded 1.84%, but the current SEC yield (30 days ending on the last day of last month) is 4.41%. If you want to know what a fund or ETF yielded most recently, look at ...
- 6,428
20
votes
"full balance due" vs "statement balance" vs "pay in full"
You might want to wait for a confirmation from your bank, but my experience with a couple of credit unions was this:
STATEMENT BALANCE ($9,340.56)
This was the total balance as posted on the last ...
- 166k
14
votes
Accepted
How to compare loan interest rate to savings account interest rate?
The question boils down to the taxes. If your loan is tax deductible (e.g.: mortgage loan or investment interest, and you're itemizing the deductions), then the tax benefit reduces the loan cost. Your ...
- 166k
12
votes
If US Treasuries at yielding 4-5% right now, why can't I find an ETF that yields that amount?
The average yield to maturity of SGOV is 4.41%. The 2% is the 12-month trailing yield. From https://www.ishares.com/us/products/314116/ishares-0-3-month-treasury-bond-etf:
Note that the average yield ...
- 11.2k
12
votes
Accepted
Why did the composite rate for I bonds issued drop to 6.89% from 9.62% when the Fed has been increasing interest rate?
I Bond rates are linked to current inflation (which has been falling since June), while the Fed increases interest rates in the hope that inflation decreases more in the future*.
https://www....
- 50.6k
11
votes
I have to pay back my student loan. When is the best time to do it?
OP is using the wrong (outdated) calculation.
The "twice study loan" rule of thumb was based on the old study loans which have to be repaid in 15 years. Since the duration has more than ...
- 2,743
11
votes
Which mortgage should I pay off first? Same interest rate and mortgage length
However, I just started thinking, and because of the nature of
amortized loans, I'm obviously paying quite a lot of interest in the
beginning....
This is a common point of confusion, the portion of ...
- 69.1k
9
votes
Accepted
"full balance due" vs "statement balance" vs "pay in full"
@littleadv was very close, but it's a little more idiosyncratic (I have not made a payment yet, and there were no refunds).
As I anticipated, my bank's first rep who answered my email was clueless and ...
- 421
9
votes
When is it worth taking out a loan for something I could pay in cash?
Theoretically you can make more on average by investing than borrowing. But there are two HUGE caveats:
In practice, most people are not as good at investing as they think they are. Humans are ...
- 130k
8
votes
Why did the composite rate for I bonds issued drop to 6.89% from 9.62% when the Fed has been increasing interest rate?
You can look here for the actual data. The bond pays a fixed rate and adjusts for inflation so that your real return is always exactly equal to the fixed rate. That rate is established by the ...
- 2,451
7
votes
What would be a recommended interest rate for an unsecured loan to individuals with mediocre credit rating and income close to expenses?
From the comments, you're expecting 10% ROI on your current investments.
Someone suggested a 5% loan is a mutually beneficial business arrangement, but it's not; with that assumption, any money loaned ...
- 171
6
votes
Accepted
When is it worth taking out a loan for something I could pay in cash?
In the UK, if you buy something on credit (over £100, under £30,000 if I remember right) then the credit provider is jointly liable with the supplier for the product. If the supplier goes out of ...
- 302
5
votes
I have to pay back my student loan. When is the best time to do it?
Look up Mortgage Rates
It seems likely to me that your current loan rate is well below the current mortgage rate. In the US, a mortgage at 3% was considered historic lows, and in early 2023 Americans ...
- 1,409
5
votes
Accepted
How are the income conversion factors for 3%, 5%, and 7% interest rate calculated for retirement income in the U.S.?
It's basically a 30 year annuity calculation. Find an annuity calculator, enter in $1 principal, 30 year duration, and the desired interest rate, choose monthly withdrawals, and you should get ...
- 740
5
votes
When is it worth taking out a loan for something I could pay in cash?
If you can pay for it in cash, the only reason not to do so is because you are getting better return rates on the money where it is than the loan is charging you -- essentially, a leveraged position.
...
- 42.9k
5
votes
How to compare loan interest rate to savings account interest rate?
Should I put excess income towards the loan or savings?
Depending on tax rates, and if are going to deduct the interest , you can calculate which is better mathematically.
But what is the savings for?...
- 136k
5
votes
How to compare loan interest rate to savings account interest rate?
Loan interest is front-loaded. Savings interest is compounded.
Use an amortization calculator/table and a savings calculator to visualize the interest and decide which one makes more sense.
Loan - ...
- 8,287
5
votes
Is there any advantage to a longer term CD that has a lower interest rate than a shorter term CD?
Note that many high-rate short term CDs are promotional offers, not renewable at that rate, and only available if you deposit "new money" (from another bank) to open them. The goal is to ...
- 42.9k
5
votes
Interest rates effect on bank jobs and junk funds from the book intelligent investor
If I work in a bank and interest rates are rising then how can it put me in a job security risk since banks will have more profits with higher interest rates and there is not need for employee layoff.
...
- 166k
4
votes
Accepted
Structured investment CMS rate
SOFR itself is a Secured Overnight Financing Rate (a rate for one night, resetting daily, that is secured).
For the product, you look at SOFR overnight index swap (OIS) rates. RFR (risk free rate) is ...
- 2,451
4
votes
Does the expected return of a stock ETF depend on the current interest level? At which interest rate are stock ETFs no longer recommended?
One way to measure expected return of any investment is the risk-free rate of interest plus some "premium" in exchange for any additional risk. This goes for bonds, stocks, real estate, and ...
- 130k
4
votes
Is it worth refinancing? Original lender claims they missed getting income documents at time of closing and want to make loan "servisable" at no cost
6%+ is common for 30-year fixed rates currently, so I doubt 3.15% fixed is possible at the moment.
Ignoring the improbable rate offer, they are adding about $5k to your loan principal to drop your ...
- 69.1k
3
votes
Which mortgage rates and how soon get affected by Fed's hikes/drops?
Banks change loan interest rates whenever they decide to change them, driven by two opposing factors: the need to make a reasonable profit, and the need to not lose too many customers to other banks.
...
- 42.9k
3
votes
What would be a recommended interest rate for an unsecured loan to individuals with mediocre credit rating and income close to expenses?
Other answers have discussed the interest rate and "But really, don't loan to friends. If you insist, think of it as a gift that might be paid back." aspects of your question.
However, they ...
- 81
3
votes
What would be a recommended interest rate for an unsecured loan to individuals with mediocre credit rating and income close to expenses?
I have a friend
(...)
I need to figure out what interest rate would be reasonable to charge them.
0.0%¹.
It is not reasonable to ask money for helping a friend.
You wouldn't look up taxi fees if ...
- 3,203
3
votes
Accepted
Calculation for current value of Ibond in TreasuryDirect
You can look here for the data used in the calc.
The actual calculation is straightforward. According to the screenshot, your 01-2022 bond has 3 periods with the following compound rates: 7.12%, 9.62%...
- 2,451
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