Borrow $150k at 2.4% and invest in the market?

[angminas]

Never underestimate the power of cash.

Buy cars at auction, pay a mechanic to get them running, profit. Make a circuit of local estate auctions, pawn shops, flea markets, yard sales; sell stuff on eBay and CL, profit. Make microloans at solid APR, help the needy, profit. Have big cash on hand when your cousin creates the next Google / Facebook / Trivial Pursuit / Apple, profit. A savvy investor can make some serious money doing this kind of thing. Being able to jump on a deal at a moment's notice is a tremendous advantage.

Really, it's a question of how much time and energy you want to put into your money outside of your main job. The more you will put in, the more you should have cash on hand for unpredictable investment opportunities...the more you want to fire and forget, the more you should pay off your mortgage...the more you want max % without spending time on it, the more you might want to follow your idea. Nothing wrong with any of these- pick what works for you.

Speaking of investment opportunities, my car just blew a rod and a gasket, and my mechanic has this nice green Mitsubishi for sale..... ^_^

 

[Engineer]

Yeah, $1 invested 10 years ago would be about $1 right now (not including inflation). 10 years is the general rule of thumb for good returns, 2008 really screwed that up though.

I think of this every single time when looking back at all of the people who burned me at the stake for paying my house off instead of taking the money and investing into the market. It's been pure win (YMMV) for me.

 

[jupiter57]

LOL @ basement dwelling ATOT students speculating!!!111!!!

 

[wwswimming]

borrowing in 2011 dollars and repaying in 2021 dollars is a no-brainer.

but, you have to be disciplined & honest enough to save & invest the money to make 100% sure that you will have the $ for the debt service.

if you're putting the money "into the stock market", you probably are not disciplined enough to pull this off. during part of the term of the mortgage, you will have stocks that are worth pennies on the dollar, and a mortgage that doesn't go away - which won't help you make the payments.

 

[JEDI]

I wouldn't buy in big at this point. Wait until the fed raises rates. 2 Quarters after the fed stops giving away free money you should see how the market is really doing.

Wait for the dive, then buy in.

qe2 ends in june.
why do you expect a correction in 4th quarter 2011/1st quarter 2012?

hell, why not just short now since the market is near it's 52week highs?

 

[alkemyst]

well borrowing any money to invest is fucking stupid...most people that do this end up having to pay it all back against the earnings.

What you are describing though is not 'borrowing' money...

IMHO it makes no sense to rush the payoff of a mortgage, but since your's is only $150k I don't know if you are able to leverage enough of the write offs against your income.

It would make more sense to put that money into retirement now vs throwing it all into principal.

Compound interest for the MFW!

 

[Acanthus]

[/b]

qe2 ends in june.
why do you expect a correction in 4th quarter 2011/1st quarter 2012?

hell, why not just short now since the market is near it's 52week highs?

Because the finance industry will hide their losses until they have to report it under GAAP.

I'm a prudent investor as well. I would wait for the event to happen and profit on the aftermath rather than try to predict the event itself.

 

[JEDI]

Because the finance industry will hide their losses until they have to report it under GAAP.

I'm a prudent investor as well. I would wait for the event to happen and profit on the aftermath rather than try to predict the event itself.

how to profit from the aftermath? and when?
just buy after the market plunges 10% from it's 52week high?

 

[MayorOfAmerica]

You can easily make 10%-20% a year on that $150 if you know how to properly value a company ... In fact I think other people make that same claim in the stock market thread. However, you know your situation best. You really need to consider things like job security and family health before investing in this situation (and anything else that will cause you to hemmorage money).

 

[Engineer]

how to profit from the aftermath? and when?
just buy after the market plunges 10% from it's 52week high?

Just think if you did that late 2007, right after the market dropped it's "first" 10%.

 

[DaveSimmons]

Just think if you did that late 2007, right after the market dropped it's "first" 10%.

On the other hand the S&P 500 index fund shares that I bought in late 2008 through mid 2009 when the index was under 900 have grown nicely since then.

Over the last 10 years I think my only S&P purchase that's a loss (before adding dividends) was August 2007 with the index at 1450.

 

[Engineer]

On the other hand the S&P 500 index fund shares that I bought in late 2008 through mid 2009 when the index was under 900 have grown nicely since then.

Over the last 10 years I think my only S&P purchase that's a loss (before adding dividends) was August 2007 with the index at 1450.

and at the same time, my Roth IRA, which was started 11 years ago and bought month after month since then, has grown a whopping 5.1% total for that entire decade plus one year. It was diversified with 7 different funds including small cap, mid cap, large cap, energy, foreign and bond funds.

Could just be a once in a century decade I suppose....time will tell.

 

[alkemyst]

You can easily make 10%-20% a year on that $150 if you know how to properly value a company

lolz...most can't though and just get lucky.

Fortunately my financial advisor is right here!

never gonna let me down

never gonna give me up.

 

[BurnItDwn]

Can you afford the losses if the market crashes?
Will you have the discipline needed to KEEP your investments when the market crashes?

If you can afford it and you are disciplined and won't sell low, then yes, it would be wise to invest that money rather than put it towards your mortgage given the rate it's at.

 

[ShawnD1]

lolz...most can't though and just get lucky.

Fortunately my financial advisor is right here!

Nah it's easy. Market average is something like 8% growth per year, but you could do 10% if you paid at least some attention to what you were doing. You just need to know how to time the market. When everybody is going "omg the market is going nuts everybody buy!!!!" then you sell. When people are shitting bricks and their stocks are going down and "omg we're fuuuuuuucked" then it's time to buy.
Stocks are just like shoes. You look at one that is nice (familiar, profitable, and pays dividends) then you wait until it goes on sale (share price drops during a recession). The bare basic timing of the market could be done by any retard who can look at a graph and see market trends.


I don't know if I said earlier, but I would not use borrowed money to invest. That's just me.

 

[ultimatebob]

Gaynor got banned again?

WHAT THE FUCK?

Dude hates the mods more than I do!

DAMN!
http://forums.anandtech.com/showpost.php?p=31705132&postcount=23

Fuckin hard core.

Heh... Look at his last 50 posts. I think that 5 of them might have been useful contributions... the rest were just trolling and thread crapping.

I just wish that the mods moved so swiftly on some other trolls around here.

 

[WHAMPOM]

If he had invested in an S&P index fund exactly 10 years ago, would he have been better off? You cannot assume the market will always go up.

Once we remove the profit made by insider trading, does the average that shows the index making money disappear?

 

[ShawnD1]

Once we remove the profit made by insider trading, does the average that shows the index making money disappear?

Yes and no.
If you look at some of the indicies (dow jones) and expand it to show all years tracked, you'll see it has very steady growth from 1971 to 2000. The last decade after that is very sketchy.

It still comes down to market timing. You can't just sell it after 1 year and assume it's up 6%. It's not that simple. It will go down 5%, then it goes 15% the next year, then more random stuff happens. Stocks are always unstable like that and it looks really scary if you just look at short term graphs. On the long term, you get the picture that it really does have an upward trend.

Another thing is that roughly 70% of all stock profit comes from dividends which have nothing to do with stock price. If you buy a company that makes money and pays dividends, you make money even when the stock goes down (as long as you don't sell it while it's down). That is the trick of the stock market. It's not about buy low sell high, it's about buy companies that actually make money and give that money to the share holders. If you happen to buy that stock while the stock price is low and you are able to buy more shares with the same amount of money, that's just an added bonus

 

[MustISO]

I believe in paying off the mortgage early. If by paying it off early you saved more than $100,000 in interest I think it's worth it. Not really the case here but for many people that may be the case.

 

[halik]

There's so much fail in this thread I can barely take it.

 

[ultimatebob]

I believe in paying off the mortgage early. If by paying it off early you saved more than $100,000 in interest I think it's worth it. Not really the case here but for many people that may be the case.

Yeah... when faced with an option like this, I'd go with the sure thing and pay off the house. With my luck, the stocks that I would pick would all tank and I'd have to work until I'm 70 to pay off my mortgage and HELOC. No thanks.

 

[soccerballtux]

I would only pay off the house if you're certain you're in a good part of town that isn't going to be overrun by a minority. Houses are a very illiquid asset and it seems silly to me to dump all of one's income into one. I would much rather diversify into the market.

 

[slayer202]

I voted to invest it, because it would be a stupid idea