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Talking stocks, trading, and investing in general

Discussion in 'Business, Careers & Education' started by mikeman, Feb 2, 2011.

  1. Piobaire

    Piobaire Not left of center?

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    The main thing is his first “point” demonstrates he does not understand how a standard mortgage works. Think about what he said. He thinks paying the principle down doesn’t save interest every single month going forward.
     

  2. Texasmade

    Texasmade Distinguished Member

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    Yep, he's pretty stupid. Extra payments are applied towards the principle which is how you're able to save more money by paying quicker. At least that's how my mortgage works. Maybe this guy signed a really stupid mortgage that applies extra payments to future interest. In that case then he really is that stupid.
     

  3. brokencycle

    brokencycle Stylish Dinosaur Moderator

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    If I remember correctly, you can cut a few years off of your mortgage by paying every 2 weeks rather than monthly because it is the equivalent of paying one extra payment per year. EXPLAIN THAT!
     

  4. jcman311

    jcman311 Distinguished Member

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    Yeah I know. The whole article is disjointed and mumbles and fumbles through the workings of a mortgage. He makes is sound as though your mortgage balance goes from $100k (original loan) to $200k because $100k in interest is tacked on right away. Anyone who has seen a statement knows this isn't true.

    Like I said, his credibility sucks when he is showing how to "save" by doubling up on payments. Sounds feasible to the average American. :rolleyes:
     

  5. Piobaire

    Piobaire Not left of center?

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    So my analysis says I can consider myself FI September 2022. Not FI enough to support the life I want but FI enough to lead a solid middle class life and maintain the Piob Palace on an indefinite level. FIREcalc gives me a 97% probability of maintaining a spending rate to achieve this through age 95. No more douchemobiles, wine purchases would be greatly curtailed, and we'd not be flying first class. I shall keep working.
     

  6. concealed

    concealed Distinguished Member

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  7. venividivicibj

    venividivicibj Stylish Dinosaur

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    Where/what are these calcs?
     

  8. jbarwick

    jbarwick Distinguished Member

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    FIREcalc is a website where you can enter your portfolio and withdraw rate then it goes through simulations going back to the 1800s to see if your portfolio will survive the withdraw rate. For instance retiring in 1929, would your portfolio survive? What about starting 1938, 1953, and so on. The base case uses a 75/25 stock/bond portfolio but you can adjust it.

    I worry about cognitive ability decreasing when you retire. I would have to figure out a way to stay sharp in addition to being physically active. Bullshitting with you guys won't be enough.
     

  9. Piobaire

    Piobaire Not left of center?

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    Yup, it runs the scenario based on many historical years so helps you consider SORR, sequence of return risks. It's a basic calc though in that it doesn't let you do things like add in SS, pensions, monetizing and asset like a home, etc. It's just, this is your pile of money, this is how many years you want it to last, at this spending rate.
     

  10. stimulacra

    stimulacra Senior Member

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    I get paid biweekly at work. There's 26 pay periods per year, or in practical terms there are two months each year where I receive 3 paychecks instead of two. It took awhile to get used to… mainly I just set my monthly budget assuming two pay periods and banking (hopefully) the occasional extra paycheck.

    Who reads MSN anymore?
     

  11. Lionel Hutz

    Lionel Hutz Distinguished Member

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    google "monte carlo simulator" or "monte carlo simulation"
     

  12. otc

    otc Stylish Dinosaur

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    Or someone could just link you to the damn thing Piob is talking about:

    https://www.firecalc.com/
    http://www.cfiresim.com/ is very similar but a slightly cleaner website.

    The general form of FIREcalc is not actually doing a monte carlo simulation (although I think they have an option buried in there that does a random returns model). It is actually taking real 30-year periods of the market and literally trying them all to see how you would fare. A monte carlo simulation has similar results (can make a bunch of spaghetti charts showing how different hypothetical portfolios would fare), but is based on randomized inputs rather than historical data.

    In some ways, that's kinda silly since many aspects of the market have changed since 1871 (which is when they start the first period of the simulation IIRC). On the other hand, doing a pure monte carlo sim can be wonky too. You probably shouldn't just take random draws from a distribution (or choose random annual returns) since annual total market returns aren't independent events (recessions can last a couple of years, as can booms, both of which drive the market, so there's some autocorrelation that needs to be corrected for.
     

  13. venividivicibj

    venividivicibj Stylish Dinosaur

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    Weird, it keeps telling me never to retire.
     

  14. jbarwick

    jbarwick Distinguished Member

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    All the FIRE guys took the route of retire now and be a lifestyle blogger. Here is my N=1 on life which means you should take it as a universal truth.
     

  15. otc

    otc Stylish Dinosaur

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    Yeah, it is like the joke about the magazine classifieds scam (send $5 for "get rich" instructions, get back pamphlet about how to place ads in magazines)...except they don't even let you in on the scam in the end.

    One of the big reasons I've always liked Ramit at I Will Teach You To Be Rich (although I don't read him as regularly anymore after he became more and more small-time entrepreneur focused). He is honest that his job is being an advice blogger/author. He's not pretending that he's living off his prior savings or something...his fancy lifestyle is entirely financed by his readers. And at least there it is also mostly financed by book and course sales...not advertising and sneaky affiliate links.
     

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