Talking stocks, trading, and investing in general

[patrickBOOTH]

I'll give you 18.00%

 

[Piobaire]

Well, today was a good day in the market...the bond market.

 

[jbarwick]

3.5% in my area. I keep reminding my BIL and SIL of loan rates...maybe when they refi their mortgage from the one they got during the December highs, I'll get a nice bottle of wine.

 

[venividivicibj]

lost ~7% over the past few days

 

[patrickBOOTH]

I started throwing a couple bucks in my Company's stock plan. Never did that in the past and kick myself for it.

 

[Piobaire]

lost ~7% over the past few days

It's not been pretty for my equities but that big move I made into bonds I posted about several months ago has helped balance that a bit.

 

[Piobaire]

Gave some more thought to analysis of FIRE, paying off mortgage vs. having emergency fund, etc. this morning on the drive to work. He's part of what my limited brain power contemplated:

1) Long term posters here know I've been saying for years that I define "rich" as having enough assets you can continue to live the lifestyle you desire indefinitely without having to work. This is actually what FIRE people are doing.

2) Say you have a 1k mortgage a month with a balance of 150k. That's 12k a year to service that mortgage, so if you were FIRE'd with a 4% spend rate, you would need a 300k income producing asset to cover that 1k. Therefore you could actually FIRE sooner by paying off the 150k mortgage in cash.

 

[jbarwick]

I know there are various levels of FIRE'd such as retired forever to various levels of part time or freelance work. As for the 2nd part, would the FIRE community even consider FIRE'ing with a mortgage? I fee like that would be frowned upon.

 

[Piobaire]

From the browsing I've done it seems the FIRE community is highly conflicted on mortgages and housing in general. You've got the couple from Toronto that are so against owning a house they mock people that do. I get it's because of where they grew up, GTA, but it's funny how black and white their thinking is over that.

 

[venividivicibj]

I started throwing a couple bucks in my Company's stock plan. Never did that in the past and kick myself for it.

Do they sell it to you at a discount? (And is there a required holding period)

 

[patrickBOOTH]

Yes, and 1 year.

 

[Piobaire]

In case someone has not seen their introductory Youtube enjoy the personal anecdotes.

 

[UnFacconable]

2) Say you have a 1k mortgage a month with a balance of 150k. That's 12k a year to service that mortgage, so if you were FIRE'd with a 4% spend rate, you would need a 300k income producing asset to cover that 1k. Therefore you could actually FIRE sooner by paying off the 150k mortgage in cash.

This is just a math question. First - how much of that $1k per month is principal vs interest? Second - if the interest component (after taxes) is lower than your withdrawal rate (marginal after taxes) multiplied by the size of the note, it would be more efficient to carry a mortgage.

If you check a mortgage calculator, with a 150k mortgage at 4% interest that you were paying $1k per month on, you would only have 10 years left and would only pay a total of $30k in interest over that 10 years. 4% of $150k is $6k per year. If I felt like 4% was a safe withdrawal rate, I would keep the mortgage.

ps, this is more of the less back of the envelope so please let me know if I have it wrong.

EDIT: My math was off - more like 16 years and $50k total interest.

 

[Piobaire]

This is just a math question. First - how much of that $1k per month is principal vs interest? Second - if the interest component (after taxes) is lower than your withdrawal rate (marginal after taxes) multiplied by the size of the note, it would be more efficient to carry a mortgage.

If you check a mortgage calculator, with a 150k mortgage at 4% interest that you were paying $1k per month on, you would only have 10 years left and would only pay a total of $30k in interest over that 10 years. 4% of $150k is $6k per year. If I felt like 4% was a safe withdrawal rate, I would keep the mortgage.

ps, this is more of the less back of the envelope so please let me know if I have it wrong.

I had not thought about it from the POV of how much interest was being charged on the mortgage but rather just servicing the monthly nut with a spend rate as that's largely what FIRE is all about. Your way should maximize the balance sheet over the long term but I was looking at it strictly from a cash flow perspective and then realizing the principal could be paid off with far less money than what it would take to accumulate an asset of 300k with a 4% withdrawal rate.

 

[brokencycle]

I hate the phrase "monthly nut"