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Old 02-23-2015, 08:30 PM   #11
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Re: Investment advice

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"Oy, sorry I meant $200. Multi-tasking."

Seems like a lot of work to just make $200 over a year. I think you are better off just paying the credit card off and then stop using it.
...so, by work you mean putting money in an account once a month? Really?

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If your ordinary tax rate is below 15 percent then I believe you qualify for a zero percent long term gain tax rate. Most people pay a 15 percent long term gain rate and if you hit the AMT then it goes to 20 percent.

I pick stocks a few ways. I'll elaborate more privately if you want, lol.

When stocks merge you get the new company's stock in whatever amount of shares equal the price of the old stock on the day of the merge. This just happened to us. It's a PITA bc of how etrade reports it but it's just a lateral move for your general stock life.
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Old 02-23-2015, 08:41 PM   #12
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We play around and move things now and then but ultimately our portfolio is managed for us, so I can't offer advice on the stock market or perhaps the type of investing you are looking for. We are invested in enjoying our retirement and not having to worry then.
I cannot see a truly "safe" option for using that money on anything other than getting rid of the debt. Once that debt is gone (not so much the mortgage) you could take all your payments, plus the extra $1000 a month and invest without care of worry. You can take more risks without debt, and ultimately achieve higher gains. Take the mortgage out of the debt repayment, pay off the smaller ones, then start investing.
No way on the peer2peer, that's too high risk for this imo, who knows if you would ever see that money again. And even safe mutual funds or CDs require that money to be tided up until a certain date, especially if you want good returns. If you can't pull that money out when you need it to avoid the interest is it worth it?

I can remember sitting down having a very similar conversation with DH when we decided to pay off our debts. He wanted to invest it all, savings, funds, stocks, etc. we ran so many numbers over and over, for a 3 year period and no matter what we invested in, the debt was going to sink what ever we made. Sure we could have "saved/earned" up 60k in those 3 years, but we still would have had 40k in debts (even 4% interest adds up). Or we could pay off all the debts first and then "saved/earned" 40k.

Paying off debts is boring and daunting, I know.. But if you cannot be patient in paying off debts, then investing is going to be painful because it's much more a waiting game.
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Old 02-24-2015, 09:02 AM   #13
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Re: Investment advice

Peer to peer is always IMO way too risky for my taste.

Really it depends on the amount of risk you want to take. Here's what I did when we had extra money:

Really if I was you, I would first pay off the credit card. Even though it's 0% interest and you can play the credit card game, it's peace of mind to not have that bill anymore especially if something else ever happens.

Second, make sure you have about 6 months of expenses in your savings. This is your short term money, money that you should be able to touch in case you ever need it.

Honestly unless your student loans or home loans are variable rates or high interest rates, I say keep it as is for now and don't pay them off, mainly because the interest you are paying is also tax deductible. Ours were variable and we ended up paying it off.

Anything extra, I would still bank about 20% into savings this portion is to still increase my savings while providing extra money for emergencies (hot water tank goes, etc). The rest of it, well that's up to you. We decided to increase 401k contributions by 30% of it, and then 50% goes into another account for when we have enough to start our own business. I wanted some that was "safe" (savings), some that mid-level risk (401) and a good portion of the extra money is risky (business). Even though we haven't started the business yet, we ended up having family obligations and ended up using all the business money and then some but that was our original plan. And it was working well until a family member needed help.

Once we get back our tax money this year, we will be able to pay off all our credit cards which is going to free up money again, and that's still going to be our plan. Hopefully this time we can take the risk and leap of faith and open our business.
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Old 02-24-2015, 11:59 AM   #14
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Re: Investment advice

So earlier when someone said it seemed like "a lot of work" to make $200... that has bothered me all morning. How many threads on here help moms save $10 or $20 on groceries, utilities, etc? How often is that money saved by jumping through hoops, clipping coupons, driving to 3 stores instead of one? How many moms on here do swagbucks? It seems like if someone is looking for ways to cut their costs by even a small amount, everyone is jumping up and down to help. But admitting that I have debt and that I'm looking for ways to maximize my payments? That get's a big ol' booooo and lots of eye rolling as if I don't want to be responsible.

Do you think rich people and wealthy corporations don't have debt? They do. But they make money, even debts, work for them--and what I described is exactly what banks do on a very large scale. They put $400m in an investment for two or three days, then remove it and enjoy a $400k profit.

I'm not ashamed of our debt, because it's allowed us to have good earning potential, great credit, and lots of flexibility in our lives. I don't feel tied down to my debt. I don't feel poor. What I do feel, however, is that there is a lot of money coming in and out of my bank account, and that it seems silly to let that money pass through my fingers without asking, "hey, can this money also be making money?" Which is exactly what this thread was asking. If the answer is ultimately that there are no small-scale, relatively safe investment options that beat inflation, then that's fine. But the indignation that a debtor would even consider putting money anywhere besides toward her debts for even a short time is absolutely absurd and classist.

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Peer to peer is always IMO way too risky for my taste.
The Peer-to-peer sites I read about don't link you to one specific loan. They distribute your investment amongst several loans, and you can pick the "risk" and rate of the borrowers. I've read a couple investment blogs that indicate it's a pretty decent ROI and much less risky than the stock market.

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Really it depends on the amount of risk you want to take. Here's what I did when we had extra money:

Really if I was you, I would first pay off the credit card. Even though it's 0% interest and you can play the credit card game, it's peace of mind to not have that bill anymore especially if something else ever happens.

Second, make sure you have about 6 months of expenses in your savings. This is your short term money, money that you should be able to touch in case you ever need it.

Honestly unless your student loans or home loans are variable rates or high interest rates, I say keep it as is for now and don't pay them off, mainly because the interest you are paying is also tax deductible. Ours were variable and we ended up paying it off.

Anything extra, I would still bank about 20% into savings this portion is to still increase my savings while providing extra money for emergencies (hot water tank goes, etc). The rest of it, well that's up to you. We decided to increase 401k contributions by 30% of it, and then 50% goes into another account for when we have enough to start our own business. I wanted some that was "safe" (savings), some that mid-level risk (401) and a good portion of the extra money is risky (business). Even though we haven't started the business yet, we ended up having family obligations and ended up using all the business money and then some but that was our original plan. And it was working well until a family member needed help.

Once we get back our tax money this year, we will be able to pay off all our credit cards which is going to free up money again, and that's still going to be our plan. Hopefully this time we can take the risk and leap of faith and open our business.
Yeah, some of my hubby's are variable rate, but almost all of mine are very low, averaging about 3 or 4%. The mortgage rate is 4.5%, but we will probably sell in 5 years... I don't know if that changes the answer?

Hope your business gets off the ground soon!

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Old 02-24-2015, 02:07 PM   #15
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Re: Investment advice

I should say, we paid off our student loans it was 7.5% variable, and that was nerve wrecking to me that it could go higher. A lot of times it depends on the amount of risk you are comfortable with. Also how is the housing and job market where you are. Are you already upside down in your mortgage? If the market goes down on your house in 5 years, can you take a hit on mortgage because what happens if you owe more than its worth. Our house isn't paid off and honestly I'm not in too much of a hurry to pay it off, I have a good amount of equity on it but otherwise every extra bit for us to get our business up and running.

I like always having a buffer so I always say not to risk every extra dollar. That's why my percentage was for my extra money 20% safe, 30% midlevel, and 50% risk. Actually technically it's higher risk because in my 401 that one I am at 60% stock for my portfolio, however I also have a lot of money hedged with some pretty good bonds. I'm currently making about 5% on my 401.

I'm one of those people that I don't necessary think debt is a bad thing. I get a little scared with credit cards but I still use them because I like the rewards and honestly I'm bad with cash. I'm better with cards.

The only reason we paid off the student loans was I thought it was too high of an interest rate and it was variable, so we paid them off. Otherwise we would still have them because honestly if you ever do get in a pinch you can usually defer them so that's not too bad plus you get to take interest as a write off.

Companies and people play the market games all the time, yes that's how they make a good amount of money. I think the general trend right now is to pay off everything, the last crash made everyone scared. But if you followed a lot of the advise way back when investors and advisors used to tell people to take a loan out against the equity on your home to buy stock back when the market was good. It was a way for you to get a great return on your investment. Loans were back then around 6-7% and the market was yielding 20+% and people were making GOOD money. However when the market crashed a lot of people lost everything, their job, their homes, etc.

My own risk is 20/30/50 on my "extra money". I like a little bit of risk... with great risk comes great reward. Although it can be great failure too but only you can really decide what your risk level is at.

I'm curious though what peer to peer sites were you looking at? The last ones I saw were just too high risk for my taste.
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Old 02-24-2015, 11:02 PM   #16
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Re: Investment advice

I don't know if this is the best place to get investment advice. This site is great for finding ways to shave $30 off your grocery bill, but I go elsewhere for anything over that. Right now, with interest rates so low, it is rare to find something paying 3% interest over a short period. The stock market is risky if you can't hold out for long term growth. You know you need this money in 11 months, and if your investment goes down what will you do? P2P lending can be great or awful, depending on your own experience. If you want to learn more, I highly recommend theforums on the Mr. Money Mustache site. Just do a search for it. You might get better answers to your other questions as well. I find lots of good info there.
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Old 02-25-2015, 12:08 AM   #17
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Re: Investment advice

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I don't know if this is the best place to get investment advice. This site is great for finding ways to shave $30 off your grocery bill, but I go elsewhere for anything over that. Right now, with interest rates so low, it is rare to find something paying 3% interest over a short period. The stock market is risky if you can't hold out for long term growth. You know you need this money in 11 months, and if your investment goes down what will you do? P2P lending can be great or awful, depending on your own experience. If you want to learn more, I highly recommend theforums on the Mr. Money Mustache site. Just do a search for it. You might get better answers to your other questions as well. I find lots of good info there.
I think she is right.

I know, for me personally, you are talking about amounts of extra money we just never see except at tax time. I have not responded thus far because I have no clue what to suggest you do. What to do with $1000 extra each month is simply a question I have never dreamed of asking. Even before my husband lost his job we never had that kind of money.
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Old 02-25-2015, 06:10 AM   #18
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Re: Investment advice

Right, but some people do have that money and do invest, and can give advice. Not every thread needs to be applicable to every member.
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Old 02-25-2015, 08:14 AM   #19
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Re: Investment advice

Sorry if you were somehow offended but many people follow the Dave Ramsey thing. (Me included.)

I tried to find a "safe" option for short term. I couldn't find one. I finally decided to just put that money it into our savings account. It earns hardly anything. It earns more in our savings than it did in a CD. I called our Insurance and all 4 of the banks/credit unions we have accounts with. Sadly CD's gave worse interest than our savings account.

We are under a rural development program so we won't have to pay State Taxes for 5 years because we moved here from out of state. However if for any reason we move out of this area, we have to pay the tax for that year. We wanted to put it somewhere safe, that would grow, but we could access it in a year if needed. It didn't make sense to us to hand it over to the state and get a refund if we could use it to "earn" something.

As far as stocks... We has some and we would have got screwed had we not got them for free. (a bonus from DH's old job) They did a reverse split. For every 15 we owned, we got 1. With all the ups and downs if we "had" to sell at a certain point, we would have sold possibly at the wrong time and they would have been even more worthless. This company is dependent on certain commodity prices and that makes it fairly unstable.

DH and I are about to start the investing journey. We are planning on doing this long term. We did talk to our financial advisor about a short term (less than 1 year) solution that was "safe". He couldn't give us any good options. BUT he did explain the tax consequences, risks, etc so we felt like we were at least making a choice that was good for our family in the long run (Err rather the short term! LOL!).

If you find any great short term options with low risk, I'd love to hear them.
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Old 02-25-2015, 12:30 PM   #20
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Re: Investment advice

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Right, but some people do have that money and do invest, and can give advice. Not every thread needs to be applicable to every member.
While I don't expect all threads to be applicable to everyone here it seemed as though she wasn't getting that advice. So either those who can give that advice are not responding or no one here really knows what to do. Either way, I agree with the poster I quoted. A forum more investment focused might be a better place to look for the desired advice as it just was not materializing here.
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