New answers tagged investing
7
Being pre-approved for a $300k mortgage does not mean you can borrow that much regardless of what house you buy!
The reason the interest rate is so low is that the loan is secured by the house (and often backstopped by the government). The lender will require an appraisal to ensure the house is worth more than the loan amount (i.e., you have positive equity),...
2
You are correct in that short-term/long-term capital gains issues don't affect the tax treatment of the money coming out of the SEP account, and gains issues don't affect anything since you are trading between mutual funds held inside the SEP. But when you redeem some of the shares in a mutual fund, you can specify whether you want to redeem the most ...
1
The lender will have an appraisal done on the home and will only approve a mortgage that is in line with the value determined by that appraisal. Assuming you are paying market value for the home, the lender is not likely to approve a mortgage that is significantly higher than that.
From Can you get a mortgage loan larger than the house amount and buy a car ...
1
If there are no taxes because these are retirement accounts, and there are no fees.; then there is no difference between the options..
Doubling $400 gives you $800 as does doubling two piles of $200 each. The same thing is true iif it drops 50%. $400 becomes $200 no matter how many piles it is divided into.
Taxes and fees will change the math.
1
Typically, variance of an investment is correlated with expected return in practice. However, correlation is not causation. There is the idea of a mean-preserving spread. In other words, you can increase the variance without affecting the expected return. An investment that has the same expected return as another but has higher variance is said to be "...
-3
You can't " ' time ' " the market.
("Timing" the market is just, another, utterly pointless/meaningless word made-up by the financial press to try to pretend there is rationalism in trading.)
Every single fund does worse than a simple index fund - end of story. That's all there is to "stock picking".
3
When a global pandemic causes the markets to crash. You might not get in on the bottom but you can do pretty well by having cash ready to invest during rapid downturns like that. In general though, it's a poor idea to try and time the market and time in the market is more useful.
0
Why is it so hard to time the market?
The problems of timing the market are manyfold. First there is the taxation and transaction cost problem. Moving in and out of the market is costing you some money every time. Granted, if you manage to sell at the top and buy back everything one year later for half the price, you will still make a reasonable profit. The ...
2
It is very easy to time the market, no expertise is really needed. Those that bought at the worst possible time, during the last major crash in 2007, are enjoying healthy profits now.
For example, if you look at SSO, a S&P500 ETF and bought a bunch in Oct of 2007, you would have paid 23.87/share. On 1/9/2009 your investment would have been worth less ...
0
Anyone that can outperform the market by timing is not going to reveal their secret formula, unless they are feeling really generous. Gurus like Tim Sykes are very expensive and hit or miss in terms of how much money you can make from their lessons.
9
For most people, never. You may think the market is on a long bull run now but no one knows whether it is going to hit the peak tomorrow or next week or next month or 3 years from now. If you wait on the sidelines, you could miss out on a lot of growth between now and then. And, of course, you have the same problem in a bear market where you can miss out ...
1
Your question uses the term "safe-ish" and says you're currently putting all your money in a 401(k). You don't say how much safety you mean by this, and you don't say what the money in the 401(k) is in. You contrast the 401(k) with an index fund as if the index fund were some other option. Actually, an index fund is a common thing to have your 401(...
5
Here's the thing, I'm a bit of a heretic when it comes to personal finance. However, what I will say is option 1 and option 3 aren't horrible, though I think you will be disappointed if you do this. The problem is that over the last 10 years the market has absolutely crushed every expectation that I've had. There is a lot of reason to think that in real ...
1
You seem to be in a wonderful situation, it almost seems too good to be true.
If you're already financially comfortable, you don't have any large expenses to save for (you already own a home, that's usually the biggest hurdle), and you're decades away from retirement, you can afford to invest this extra money aggressively. I understand that you're just ...
1
Based on the general advice I've seen on here, investopedia, and from
friends, my best options are
Funnel a bunch more money into 401k even if it exceeds the tax-free limit. Is this a dumb idea? My 401k has a 20% return over the last 3
years so I kind of just want to put a bunch in there and twiddle the
riskiness knobs
Based on the line "my 401k ...
5
A cheap S&P 500 index fund such as Vanguard (symbol VOO). Not as aggressive as some. But for that to go broke, the top 500 companies in the US would have to go broke.
1
Ask your university how they invest their endowment.
(well, ask a smaller university. You can't do what the biggest ones do).
Really, financial investment isn't that hard. The only problem is, you have a lot of salespeople trying to divert you into overly complex "products" whose complexity is basically an obfuscation, to hide expensive overhead ...
answered Oct 4 at 2:58
Harper - Reinstate Monica
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16
Anyone who tells you the best way to invest is merely projecting their own circumstances on you so I'll only offer generic advice.
Determine your timeline, your investment goals, and how much risk is acceptable. Make sure that you understand each type of security (stocks, bonds, ETFs).
You need to become financially literate. That takes time and effort. ...
24
Your best bet is probably to open a regular brokerage account with a low-fee provider (such as Vanguard) and buy some ETFs (Exchange Traded Funds).
ETFs are useful since they have very low fees, track whatever index you want to track and you can buy & sell them immediately (if you need to).
It's probably best to diversify across volatility (stocks vs ...
-1
If you want to obtain DCF valuation for multiple companies without manually inputing data into Excel and building models manually, you can check out ValueInvesting.io. Here is the example of Google
4
Yes, cash flow will be reduced, assuming at least some of that salary is in cash (i.e. not all stock or options), since it is a cash outflow with no corresponding cash inflow to offset it.
But does it apply to all definitions of Cash Flow?
There's only one definition of "cash flow" (net cash in/out of the company) but different ways to calculate ...
1
As a Southern California Realtor, I can definitely say if you can buy a house on your own, do it. For no other reason than to keep your finances separate, but also because you lose the ability to use some programs if you have already purchased a home.
If you have a good credit score and can cover 5% closing, why not go conventional? The only reason would be ...
3
As a Brazilian I understand your concerns.
To protect against inflation you only have two main strategies:
You can invest in fixed income that fluctuates with inflation (e.g IPCA)
You can invest in assets that do not follow the real (R$)
First one is the more safe approach as you have a guarantee appreciation above the inflation. Usually you can buy ...
4
Usually at times when inflation rate is high, the interest rates are high too (as it's the real interest rate that affects the supply and demand of money). So investing in a money market fund could very well protect you against inflation. However, do note most jurisdictions tax all returns no matter whether they are over inflation or not. So if your money ...
2
It depends on a lot of factors. In addition to the taxes & maintenance expenses already mentioned, you have to deal with the fact that house prices are driven by supply and demand. Looking at this century, buying a house in say Detroit would give you far different results than buying one in San Francisco. So can you reliably predict your local real ...
0
A stop (limit) sell order means "execute this order if the price goes below X". For a sell, that price is the bid. So your stop at 0.35 would be executed. That would then create a limit sell which means sell at any price higher than Y. So your stop order would create a limit sell at 0.35 which would likely be filled since that's the current ask.
...
7
Home prices peaked in 2007 and then started to decline because of the 2008 Global Financial Crisis. In 2008 the Fed began Quantitative Easing. Median home value lost about 30% of their value over the next 3 years and it took another 6-7 years to surpass the 2007 high.
That period demonstrates that it's not true that:
When the government starts to do "...
0
The bid is the lower price and the ask is the higher price so someone has made a typo.
A sell stop-limit order combines a stop order and a limit order. If the stop price is reached, a limit order is triggered to execute at a specified price or better.
Your question only contains one price so I'm wondering if you meant a limit order to sell rather than a ...
1
For speculation, which just means that someone is buying something solely for the purpose of selling it later, and zero intention of ever consuming that thing. There are certainly hybrid cases where a user accumulates and stores the resources and may either use them or sell them later.
Speculation serves two purposes:
Allow the speculator to gamble, and ...
7
Why and how would anyone store them for an indefinite period of time?
You wouldn't (well, there are some market conditions where you might, but it's not the norm). Commodities themselves are not traded on exchanges - what is traded are derivatives such as futures and options. And the physical delivery depends on the type of derivative that you trade.
There ...
3
Yes, you can use FHA loan for an investment property, as long as you live there as your primary residence. This is called duplex investing or house-hacking:
https://www.millionacres.com/real-estate-financing/articles/how-i-used-fha-loan-buy-my-first-investment-property/
https://www.mrmoneymustache.com/2020/10/23/house-hacking/
5
I want to invest in real estate for the purpose of renting or using as
an Airbnb to help establish future financial freedom. I'm trying to
understand if it would be a wise financial decision if I were to get
an FHA loan on an investment property while my girlfriend were to get
a loan on another property where we would live.
You will be required to live in ...
5
"Wise" is very subjective. Some on this site (me included) would not call going into debt for $250K ($500k between the two of you) to buy an investment property "wise". Especially before you graduate and have a good job.
I would call it "very risky". You might be okay and end up with two great properties that make you a ton of ...
5
Yes, you have it right.
Both traditional mutual funds and ETFs pass on the capital gains generated by selling the fund’s assets to the holders of the fund in the form of capital gain distributions. The fund holder will receive these distributions usually once per year, and they are paid either in cash or by issuing additional fund shares (reinvestment), in a ...
answered Sep 20 at 14:35
Ben Miller - Remember Monica
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