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Cha-ching, it's the [Financial Literacy] thread

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Posts

  • PhyphorPhyphor Building Planet Busters Tasting FruitRegistered User regular
    edited October 2019
    moniker wrote: »
    If you put it all on red you have a ~48% chance of doubling your money.

    If you're going to do that, the best basic casino bet is craps, don't pass, lay maximum odds with a double chance of 49.9% or better with high odds radios

    Phyphor on
  • JragghenJragghen Registered User regular
    Friendly reminder to submit your proof of coverage in the Experian claim.

    Just did mine, all I had to do was give them the name of the service that I have. Surprisingly easy, honestly.

  • thatassemblyguythatassemblyguy Janitor of Technical Debt .Registered User regular
    So it seems the commission wars have started again. $0 commissions on all the things on the US stock exchanges? Yes please.

  • firewaterwordfirewaterword Satchitananda Pais Vasco to San FranciscoRegistered User regular
    Yeah I feel like once Robinhood hit the scene it was just a matter of time before the big guys went zero com as well. Which I'm glad for since Robinhood is pretty trash sometimes.

    Lokah Samastah Sukhino Bhavantu
  • KakodaimonosKakodaimonos Code fondler Helping the 1% get richerRegistered User regular
    The brokers get plenty of money from selling the customer flow first look to the big hedge funds nowadays. Adding commissions was just adding insult to injury.

  • CauldCauld Registered User regular
    Just got an email that robinhood will start offering interest now. 2.05% APY to start apparently. That seems pretty good for a brokerage acct. Hope this competition keeps improving things for consumers.

  • thatassemblyguythatassemblyguy Janitor of Technical Debt .Registered User regular
    Cauld wrote: »
    Just got an email that robinhood will start offering interest now. 2.05% APY to start apparently. That seems pretty good for a brokerage acct. Hope this competition keeps improving things for consumers.

    Sadly, it was less than the 3% they were originally touting.

  • firewaterwordfirewaterword Satchitananda Pais Vasco to San FranciscoRegistered User regular
    Looks like Schwab is still charging $0.65 per option contract; not a huge number obviously, but more than $0.00 so I guess I have to stick with RH for my degenerate gambling habits certain investment choices.

    Lokah Samastah Sukhino Bhavantu
  • QuantumTurkQuantumTurk Registered User regular
    As long as you aren't doing something SUPER foolish like buying on margin or shorting, is robin hood alright, so far as the rich person lotto goes? This will only be with some side income, my standard 401k and tossing money into index funds won't change.

  • CauldCauld Registered User regular
    As long as you aren't doing something SUPER foolish like buying on margin or shorting, is robin hood alright, so far as the rich person lotto goes? This will only be with some side income, my standard 401k and tossing money into index funds won't change.

    Yeah, works fine. In most ways it's worse than my TD account, but it's free.

  • firewaterwordfirewaterword Satchitananda Pais Vasco to San FranciscoRegistered User regular
    It's nowhere near a proper trading platform like thinkorswim or smartedge but it works well enough for what it is. I have read about people having issues with complicated stuff like put credit spreads, but if you're just buying weekly OTM lottery tickets or whatever it does the job. I've also heard customer support is near non-existent, but I've never had cause to need it so who knows.

    Lokah Samastah Sukhino Bhavantu
  • DisruptedCapitalistDisruptedCapitalist I swear! Registered User regular
    My credit union just announced that it's merging with another credit union. Knowing all the bs mergers that have been happening in the banking sector over the past decade, is this something I should be worried about?

    "Simple, real stupidity beats artificial intelligence every time." -Mustrum Ridcully in Terry Pratchett's Hogfather p. 142 (HarperPrism 1996)
  • khainkhain Registered User regular
    My credit union just announced that it's merging with another credit union. Knowing all the bs mergers that have been happening in the banking sector over the past decade, is this something I should be worried about?

    If it's still a credit union I wouldn't be worried though they may close branches if the areas served overlap.

  • SmrtnikSmrtnik job boli zub Registered User regular
    edited December 2019
    Question about borrowing from my 401k equivalent to pay off a portion of my mortgage:
    - i have a little over 200k remaining in principal on my mortgage, with 21 years to go on regular schedule.
    - mortgage rate is 4.875%
    - i can borrow from my 401k equivalent 50k at 1.875% to be repaid over 1-5 years
    - i have a little over 400k in 401k equivalent
    - my 401k equivalent 12 month rate of return is 5.2%, and my personal investment performance (wth is the difference??) over the same period is 12.81%


    Does it make sense to borrow the 50k and apply to mortgage principal since the rates delta is 3%? Or does it mean doing that i forgo 4-11% growth i could have had in the 50k instead so should not do it? It maybe it is a good time to borrow now because the evening is about to crash any minute now?

    I'm also assuming my monthly mortgage payment would go down due to lowered interest but I'd have a second payment to upkeep for the new loan.

    Smrtnik on
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  • Phoenix-DPhoenix-D Registered User regular
    edited December 2019
    Your mortgage interest rate is less than your 401k gain rate. Unless you time the market (protip: don't) you'll lose money doing that

    Phoenix-D on
  • milskimilski Poyo! Registered User regular
    It sounds like the correct option is refinancing your loan given your interest rates are super high for somebody with 2x the savings as mortgage outstanding

    I ate an engineer
  • SmrtnikSmrtnik job boli zub Registered User regular
    milski wrote: »
    It sounds like the correct option is refinancing your loan given your interest rates are super high for somebody with 2x the savings as mortgage outstanding

    My mortgage company "doesn't do refinancing" so I'm assuming I'd need to go somewhere else to do so. Also last time i checked it was really 2010s and my house was "underwater". I'm guessing first step would be to get a current appraisal on the house, then go shopping for mortgage refinance terms?

    steam_sig.png
  • monikermoniker Registered User regular
    Smrtnik wrote: »
    Question about borrowing from my 401k equivalent to pay off a portion of my mortgage:
    - i have a little over 200k remaining in principal on my mortgage, with 21 years to go on regular schedule.
    - mortgage rate is 4.875%
    - i can borrow from my 401k equivalent 50k at 1.875% to be repaid over 1-5 years
    - i have a little over 400k in 401k equivalent
    - my 401k equivalent 12 month rate of return is 5.2%, and my personal investment performance (wth is the difference??) over the same period is 12.81%


    Does it make sense to borrow the 50k and apply to mortgage principal since the rates delta is 3%? Or does it mean doing that i forgo 4-11% growth i could have had in the 50k instead so should not do it? It maybe it is a good time to borrow now because the evening is about to crash any minute now?

    I'm also assuming my monthly mortgage payment would go down due to lowered interest but I'd have a second payment to upkeep for the new loan.

    Additional payments on your mortgage does not alter your subsequent monthly payment amount unless you refinance. It shortens the effective term of your mortgage by ___ months (We are paying an extra $100/month and it should knock about 5 years off if we don't change), but doesn't change anything about the underlying agreement.

    The total amount of interest you pay will be less once you finish paying it off, but if your monthly is $1,200 today it will be $1,200 next month even after reducing the principle by $50k. Plus paying back the $50k to your retirement.

  • MegaMan001MegaMan001 CRNA Rochester, MNRegistered User regular
    Smrtnik wrote: »
    milski wrote: »
    It sounds like the correct option is refinancing your loan given your interest rates are super high for somebody with 2x the savings as mortgage outstanding

    My mortgage company "doesn't do refinancing" so I'm assuming I'd need to go somewhere else to do so. Also last time i checked it was really 2010s and my house was "underwater". I'm guessing first step would be to get a current appraisal on the house, then go shopping for mortgage refinance terms?

    Correct, though some local places will come out an do the appraisal for you or there what my credit union did.

    I am in the business of saving lives.
  • tbloxhamtbloxham Registered User regular
    Burnage wrote: »
    a5ehren wrote: »
    https://engaging-data.com/market-timing-game/

    Go ahead, give it a shot!

    (you will lose)
    Congratulations, you outperformed the market by $685

    pVjTzGN.jpg?1

    Congratulations, you outperformed the market by $9,886

    Investing is EASY. 2/2 times, you win every time!

    "That is cool" - Abraham Lincoln
  • MugsleyMugsley DelawareRegistered User regular
    Smrtnik wrote: »
    milski wrote: »
    It sounds like the correct option is refinancing your loan given your interest rates are super high for somebody with 2x the savings as mortgage outstanding

    My mortgage company "doesn't do refinancing" so I'm assuming I'd need to go somewhere else to do so. Also last time i checked it was really 2010s and my house was "underwater". I'm guessing first step would be to get a current appraisal on the house, then go shopping for mortgage refinance terms?

    4.875% is very very good, especially if it's fixed. The last time I tried to refinance (to get out of Wells Fargo; admittedly about 3 years ago, now), I couldn't find anything lower. And banking rates have generally stagnated the last 3-4 years.

  • thatassemblyguythatassemblyguy Janitor of Technical Debt .Registered User regular
    Smrtnik wrote: »
    Question about borrowing from my 401k equivalent to pay off a portion of my mortgage:
    - i have a little over 200k remaining in principal on my mortgage, with 21 years to go on regular schedule.
    - mortgage rate is 4.875%
    - i can borrow from my 401k equivalent 50k at 1.875% to be repaid over 1-5 years
    - i have a little over 400k in 401k equivalent
    - my 401k equivalent 12 month rate of return is 5.2%, and my personal investment performance (wth is the difference??) over the same period is 12.81%


    Does it make sense to borrow the 50k and apply to mortgage principal since the rates delta is 3%? Or does it mean doing that i forgo 4-11% growth i could have had in the 50k instead so should not do it? It maybe it is a good time to borrow now because the evening is about to crash any minute now?

    I'm also assuming my monthly mortgage payment would go down due to lowered interest but I'd have a second payment to upkeep for the new loan.

    @Smrtnik - unless you’re facing a massive financial hardship it’s usually never a good idea to issue a loan from your 401k.

    1) The money is growing taxed deferred so the principle grows quickly.
    2) Any money you remove will negatively impact your progress in compound interest.

    Definitely agree with milski - go refinance shopping and drop your rate - put the saved money into the after tax brokerage accounts.

  • MugsleyMugsley DelawareRegistered User regular
    Correct me if I'm wrong because I never investigated 401k loans. Does the loan not count as income (ie for taxes)? Or is that only if you don't pay it all back?

  • SmrtnikSmrtnik job boli zub Registered User regular
    Oh good point, this is not a IRA style so i would assume it counts as income.

    steam_sig.png
  • PhyphorPhyphor Building Planet Busters Tasting FruitRegistered User regular
    It should not count as income as it's not a withdrawal per-se, you are selling your 401k an asset (your mortgage) which you are typically allowed to do

  • asurasur Registered User regular
    If you can predicted when a stock market crash will occur
    Mugsley wrote: »
    Smrtnik wrote: »
    milski wrote: »
    It sounds like the correct option is refinancing your loan given your interest rates are super high for somebody with 2x the savings as mortgage outstanding

    My mortgage company "doesn't do refinancing" so I'm assuming I'd need to go somewhere else to do so. Also last time i checked it was really 2010s and my house was "underwater". I'm guessing first step would be to get a current appraisal on the house, then go shopping for mortgage refinance terms?

    4.875% is very very good, especially if it's fixed. The last time I tried to refinance (to get out of Wells Fargo; admittedly about 3 years ago, now), I couldn't find anything lower. And banking rates have generally stagnated the last 3-4 years.

    That's at least a full point over a good rate if not higher.

  • milskimilski Poyo! Registered User regular
    Mugsley wrote: »
    Smrtnik wrote: »
    milski wrote: »
    It sounds like the correct option is refinancing your loan given your interest rates are super high for somebody with 2x the savings as mortgage outstanding

    My mortgage company "doesn't do refinancing" so I'm assuming I'd need to go somewhere else to do so. Also last time i checked it was really 2010s and my house was "underwater". I'm guessing first step would be to get a current appraisal on the house, then go shopping for mortgage refinance terms?

    4.875% is very very good, especially if it's fixed. The last time I tried to refinance (to get out of Wells Fargo; admittedly about 3 years ago, now), I couldn't find anything lower. And banking rates have generally stagnated the last 3-4 years.

    4.875% seems like a pretty awful rate to me. It's like a half point higher than the rate I got with no meaningful credit history besides signing an affidavit about my salary, and more than a full point higher than my current 15-year loan rate (which was refinanced after a couple years of credit history).

    I'm not saying it's guaranteed a lower rate exists depending on whatever factors, and I'm not saying that refinancing is necessarily going to be economical given both the financial costs of re-closing and the personal costs of putting a lot of effort into it, but it seems like a potential option, especially given the fact that 9 years into a 30 year loan is probably, what, sub-25% of the (non-down-payment) principal paid off?

    I ate an engineer
  • SmrtnikSmrtnik job boli zub Registered User regular
    edited December 2019
    It was a weird 35 year (first 5 pay interest only) fixed rate in the heady days of 2005. 300k+closing so about 1/3 into it.

    Hindsight and all, but at the time there was a "oh shit quick buy a house before the process go even higher" thing in the air. The smart play would have been too rent until 2011ish but oh well.

    Smrtnik on
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  • JragghenJragghen Registered User regular
    I refinanced in 2016 and got a *tries to remember* 3.375, I think. Low 3s. Now, I've got pretty damn good credit, and the refi put us out of mortgage insurance rates (value of house had pushed us over 20% down), but yeah - I'd see if you can find better than 4.875%. Just glancing at my credit union, even with no points purchased, they seem to be at 3.750 at the high end right now. And...wow, maybe I should look into going to a 15 year with them. Those rates are finally dropping into the range of "wow, this might be worthwhile."

    I'd recommend getting quotes from two local banks/credit unions. They can do a soft pull of your credit and give a good ballpark of what they can do for you. Or alternatively, I can point you to the online "we streamline the process!" thing that we ended up using, largely because they only worked with 3 banks who had a good history of customer service (who then turned around and sold it to Wells Fargo, so....). However, the website seems to have been rebranded under a completely different "shortened silicon valley name" thing, so I have no idea if they're at all similar to what we used anymore.

  • a5ehrena5ehren AtlantaRegistered User regular
    edited December 2019
    My recommendation for refinances:
    1) Get a guess of your current value by looking at your address in Redfin and Zillow and see which one feels better for your area. For my area, the Redfin estimate is far more realistic.
    2) Go to aimloan.com and use that number to generate their current rate sheet for your LTV situation.
    3) If you like what you see, go for it (or contact a local CU). There isn't any reason for you to pay for an appraisal before starting the process, since the re-fi house will probably make you pay for another one with their preferred vendor in your area as part of the process.

    If you can swing the higher monthly payments, I recommend a 15- or 20-year fixed rate over a 30.

    The refinancing bank will handle paying off your previous loan and all that as part of the process. If I were your current bank I wouldn't "do refinances" on 4.9% loans either, but fortunately they can't stop you.

    a5ehren on
  • SimpsoniaSimpsonia Registered User regular
    I think Zillow estimates are widly inaccurate, and have always found Redfin to be much better. I think it's partially because they have access to MLS and can pull all of the past actual transactions and sale prices and work that in the the formula. For reference I just bought a building in June. Redfin estimate is now about 70k more than I paid for the property. Probably a little on the high side, but it is a gentrifying neighborhood. Zillow's Zestimate(tm) range, on the other hand, is $210k-100k lower than the actual purchase price.

  • a5ehrena5ehren AtlantaRegistered User regular
    edited December 2019
    Yeah, my "Zestimate" is actually off the other way - about 15% higher then my Redfin estimate. But they aren't present in every market, etc, so it's always good to check both just to see which is better in your location.

    a5ehren on
  • DoodmannDoodmann Registered User regular
    Redfin has to be more accurate, it's an actual MLS pull. The only reason to look at zillow is because redfin isn't established in the area.

    Whippy wrote: »
    nope nope nope nope abort abort talk about anime
    Sometimes I sell my stuff on Ebay
  • HedgethornHedgethorn Associate Professor of Historical Hobby Horses In the Lions' DenRegistered User regular
    I refinanced a few months ago and got a 15-year loan for 3.125%. That was when interest rates tanked in the middle of last year, so the best rates now are probably a bit higher, but still around 3.5%, I'd think.

    (Funny story: my parents, who paid 26% on an adjustable-rate mortgage in the early 1980s, actually hung up on me when I called to tell them about my mortgage rate.)

  • DoodmannDoodmann Registered User regular
    Hedgethorn wrote: »
    I refinanced a few months ago and got a 15-year loan for 3.125%. That was when interest rates tanked in the middle of last year, so the best rates now are probably a bit higher, but still around 3.5%, I'd think.

    (Funny story: my parents, who paid 26% on an adjustable-rate mortgage in the early 1980s, actually hung up on me when I called to tell them about my mortgage rate.)

    Yeah but their home price was probably 1/5 to 1/10 yours so it usually washes out.

    Whippy wrote: »
    nope nope nope nope abort abort talk about anime
    Sometimes I sell my stuff on Ebay
  • VishNubVishNub Registered User regular
    Several of my fiancées aging relatives have decided to try to reduce our eventual tax burden by distributing their estates preemptively in the form of cash gifts to her/us.

    I know there’s a cap on gifts before it becomes taxable, and think they’re all individually below that, but do we have to consider if the total from the different sources might exceed that limit?

  • JragghenJragghen Registered User regular
    Probably best to talk to someone whose business it is, but I think it's a cap of $15k from individual to individual, per year.

    So one parent could give you $15k and your fiancee $15k, and the OTHER parent could do the same (so a total contribution of $60k?) without it kicking in, I think.
    The annual gift exclusion limit applies on a per-recipient basis. This gift tax limit isn’t a cap on the total sum of all your gifts for the year. You can make individual $15,000 gifts to as many people as you want. You just cannot gift any one recipient more than $15,000 within one year. If you’re married, you and your spouse can each gift up to $15,000 to any one recipient.

    https://smartasset.com/retirement/gift-tax-limits

  • a5ehrena5ehren AtlantaRegistered User regular
    edited December 2019
    IRS says the receiver doesn't have to pay taxes on received gifts: https://www.irs.gov/businesses/small-businesses-self-employed/frequently-asked-questions-on-gift-taxes

    As long as the givers don't give you (each) more than $15k, then there shouldn't be anything to report.

    That said, if their estates are large enough to hit the current US estate tax threshold ($11,180,000 since 2017), they can afford an attorney/accountant to make sure everything is above-board. They also probably won't be able to give you enough tax-free money before they die to get under the limit, since even if they're extremely conservatively invested their returns will outstrip their giving unless there are a lot of heirs.

    a5ehren on
  • VishNubVishNub Registered User regular
    Uh. Hm. Do you not even pay simple income tax on inheritance?

    Sounds like we’re in the clear for now, and maybe I’m misunderstanding the estate situations.

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