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Talking stocks, trading, and investing in general - Page 686

post #10276 of 11197
Chinese parking their $ in Van $1M+ market (all detached now, lol) is 10-20% or something. Less of a factor in TO. The media exaggerates the influence tho.

And, yeah, you can live like a king in Winnipeg or Halifax for a fraction of that chart lol
post #10277 of 11197
Quote:
Originally Posted by idfnl View Post

If liquidity is a concern then you're probably extending yourself unnecessarily. Too many people buy more house than they can really afford. There's a risk to owing money on a home, anything can happen to you so it's better to have the property in your name outright asp -way before trying to make it work better for you in an investment account.

It's kind of cool that whenever someone disagrees with you your immediate answer is to insinuate they're poor or making unwise financial decisions.
post #10278 of 11197
Quote:
Originally Posted by Concordia View Post

Risk vs. return-- and some of the risks are conflicting. E.g., there is the risk involving the lack of liquidity created by paying down the mortgage in cash vs. keeping it in your brokerage account.

In theory if one was sure they could do it, it would make sense to set aside all pre-payments in a CD or another insured but interest bearing account and pay it off at the end. 

 

Money pre-provided to the bank essentially gets you nothing except ending the mortgage earlier, since as Piobare points out the amount of the monthly payment is set at the start of the loan and can never change. 

post #10279 of 11197
Quote:
Originally Posted by MSchapiro View Post

In theory if one was sure they could do it, it would make sense to set aside all pre-payments in a CD or another insured but interest bearing account and pay it off at the end. 

Money pre-provided to the bank essentially gets you nothing except ending the mortgage earlier, since as Piobare points out the amount of the monthly payment is set at the start of the loan and can never change. 

I'm not aware of any interest bearing cds that pay more or even equal to the interest savings you'd get paying the mortgage down.

I'm a bit surprised at the lack of enthusiasm at ending a mortgage early. I don't understand why that amounts to nothing. Interest saved is equivalent to interest/income earned in another way. Why anyone wants the liability associated with a mortgage 1 day more than needed is beyond me.
post #10280 of 11197
I'm not currently a homeowner but have a relationship with a mortgage broker I trust (happy to send info to anyone interested). When I was a homeowner , our deal was that he'd take his fee and closing costs including appraisal, doc fees, etc. out of his spread, so it was truly costless to me (not rolled into the loan principal).
Basically he'd ping me when rates moved enough that he could drop me down by at least .375 or so. That would allow me to reduce my monthly nut a bit at the cost of nothing but the time spent on the paperwork and such. When I researched it I figured I could maybe save .15 or so if I did a bunch of legwork myself and paid some closing costs. But going with him meant I didn't have to figure out how long it would take me to recoup the closing costs, etc. so it was basically found money. Of course, to make that a no-brainer you have to be smart about how you use the savings. I'd generally just keep making the same monthly payment so the incremental savings became extra principal reduction. None of the homes I owned were ones I expected to spend the rest of my working life in, which coupled with the slightly accelerated paydown made the extension of the notional term of the loan unimportant to me.
Plus at some point he moved up to Oregon to manage his family's winery, so every year he sends me a bottle or two of OK wine and some homemade barbecue sauce.
post #10281 of 11197
Quote:
Originally Posted by lawyerdad View Post

I'm not currently a homeowner but have a relationship with a mortgage broker I trust (happy to send info to anyone interested). When I was a homeowner , our deal was that he'd take his fee and closing costs including appraisal, doc fees, etc. out of his spread, so it was truly costless to me (not rolled into the loan principal).
Basically he'd ping me when rates moved enough that he could drop me down by at least .375 or so. That would allow me to reduce my monthly nut a bit at the cost of nothing but the time spent on the paperwork and such. When I researched it I figured I could maybe save .15 or so if I did a bunch of legwork myself and paid some closing costs. But going with him meant I didn't have to figure out how long it would take me to recoup the closing costs, etc. so it was basically found money. Of course, to make that a no-brainer you have to be smart about how you use the savings. I'd generally just keep making the same monthly payment so the incremental savings became extra principal reduction. None of the homes I owned were ones I expected to spend the rest of my working life in, which coupled with the slightly accelerated paydown made the extension of the notional term of the loan unimportant to me.
Plus at some point he moved up to Oregon to manage his family's winery, so every year he sends me a bottle or two of OK wine and some homemade barbecue sauce.

 

I might have to hit you up - the guy I know and trust basically only does MN.

 

Quote:
Originally Posted by idfnl View Post


I'm not aware of any interest bearing cds that pay more or even equal to the interest savings you'd get paying the mortgage down.

I'm a bit surprised at the lack of enthusiasm at ending a mortgage early. I don't understand why that amounts to nothing. Interest saved is equivalent to interest/income earned in another way. Why anyone wants the liability associated with a mortgage 1 day more than needed is beyond me.

 

Its because we're all poor and bad with money.

post #10282 of 11197
Quote:
Originally Posted by idfnl View Post


I'm not aware of any interest bearing cds that pay more or even equal to the interest savings you'd get paying the mortgage down.

I'm a bit surprised at the lack of enthusiasm at ending a mortgage early. I don't understand why that amounts to nothing. Interest saved is equivalent to interest/income earned in another way. Why anyone wants the liability associated with a mortgage 1 day more than needed is beyond me.

My point is you get 0 interest saving paying the mortgage down, your payment just ends early. Your payment doesn't decrease with an overpayment. 

 

It makes more sense to stick the overpayment money in a CD, then when you have enough to fully prepay the mortgage you do so. Thereby you have recieved the interest savings and the additional interest that the overpayment money wouldnt have earned if you gave it to the bank early.  

 

The only reason to maintain a mortgage is the tax savings. 


Edited by MSchapiro - 8/22/16 at 8:47am
post #10283 of 11197
I'm looking at GILD as a potential addition to my portfolio.
post #10284 of 11197
Quote:
Originally Posted by GreenFrog View Post

I'm looking at GILD as a potential addition to my portfolio.

What's the bull case?

post #10285 of 11197
good luck !
post #10286 of 11197
Quote:
Originally Posted by MSchapiro View Post

What's the bull case?

I think it will go up.

teacha.gif
post #10287 of 11197
Quote:
Originally Posted by GreenFrog View Post

I think it will go up.

teacha.gif

It will. Its got hammered. It just needs to pull out some good PR and purchase another product for its portfolio.
post #10288 of 11197
go up based on what ? they've never been much of an acquisition firm, have they ? they did just buy an ACC inhibitor though. i know they work like slaves to develop in house. they're too good at curing hep c, nobody will need the pills anymore. pipeline seems filled with bunch of phase 1 & 2 trials, with one pending US & EU submission for HBV which so far is being outperformed by a competitor. never mind that clinton has specifically named gilead in price gouging of drugs and has promised to hunt them all down. whether she does this or not is irrelevant, as just name dropping is enough to induce panic.

pfeizer keeps on buying, first for eczema now Medivation. first biosimilars last year, hopsital products, now cancer lineup bolstering.
post #10289 of 11197
Quote:
Originally Posted by idfnl View Post

I'm not aware of any interest bearing cds that pay more or even equal to the interest savings you'd get paying the mortgage down.

I'm a bit surprised at the lack of enthusiasm at ending a mortgage early. I don't understand why that amounts to nothing. Interest saved is equivalent to interest/income earned in another way. Why anyone wants the liability associated with a mortgage 1 day more than needed is beyond me.

You save a little bit of interest at a large increase in risk.

Many people plan their savings around a multiplier of their monthly expenses and so that means you're increasing the amount of cash or near-cash on hand to offset the larger payment. This is especially critical for people who work in relatively unstable fields.

So there are plenty of reasons why it does not make sense in individual situations. I worked on commission for seven years or so and because it was 60% of my salary I would plan very few monthly expenses.

It's the same reason why someone would take on a mortgage while having cash on hand, they do not want to deplete their cash/income generating assets and so they would rather invest and have the mortgage. It complicates things a bit for some, but others are ok with the monthly payment.

Many people also do not live in areas where one can easily swing a large jump in monthly expenses. Take NYC for example....
post #10290 of 11197
Quote:
Originally Posted by MSchapiro View Post

My point is you get 0 interest saving paying the mortgage down, your payment just ends early. Your payment doesn't decrease with an overpayment. 

It makes more sense to stick the overpayment money in a CD, then when you have enough to fully prepay the mortgage you do so. Thereby you have recieved the interest savings and the additional interest that the overpayment money wouldnt have earned if you gave it to the bank early.  

The only reason to maintain a mortgage is the tax savings. 

A CD at 1.5% will never net you as much as you'd get prepaying on a 4% mortgage.

1m at 4% = $3333 in interest. You pay that down by $1000 and you've saved $4 in interest. A CD would net you $1.50, whose compounding is less than the carryforward in interest savings over time.

It comes down to government intervention making the bad math above palatable with tax deductions. In any event, there is an inflection point where the paydown overrides the tax savings.

Quote:
Originally Posted by SkinnyGoomba View Post

You save a little bit of interest at a large increase in risk.

Many people plan their savings around a multiplier of their monthly expenses and so that means you're increasing the amount of cash or near-cash on hand to offset the larger payment. This is especially critical for people who work in relatively unstable fields.

So there are plenty of reasons why it does not make sense in individual situations. I worked on commission for seven years or so and because it was 60% of my salary I would plan very few monthly expenses.

It's the same reason why someone would take on a mortgage while having cash on hand, they do not want to deplete their cash/income generating assets and so they would rather invest and have the mortgage. It complicates things a bit for some, but others are ok with the monthly payment.

Many people also do not live in areas where one can easily swing a large jump in monthly expenses. Take NYC for example....

If your expenses make that big of a difference, you bought more house than you can really afford. Alternatively, people generally don't save enough and thus don't put a substantive enough amount down to make a monthly payment more palatable in the face of income variance.

An all cash purchase is the way to go. It's a tangible asset you can get an equity loan from in a desperate situation. And the tax deduction will never outweigh the money siphoned off in interest.

Again, not sure why anyone would ever want to be beholden to a bank by choice.
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