ChemEng1642 wrote: starry eyed wrote: ChemEng1642 wrote: starry eyed wrote:
This quote alone is enough to make me weary of anything you say with regard to finances. Judging the future returns of a portfolio based on the past couple of years is asinine. Just ask the c/o 2008, which you are so terrified of ending up like. The 7% average returns of the market is an average. Some years it's down 20% some years it up 20%. How nice would it be to know that, beginning school you had enough to cover tuition, then a year later you have a 20% shortfall? Of course the opposite could happen, but then you might as well just take the tuition money and bet it all on black, or red for that matter.
agree mostly about the short term fluctuations, but 7% is a shitty return historically
more like 8-9% and north of 10% if you reninvest dividends
you don't have to start a hedge fund to get a 7 % return lol. just buy the ^gspc index fund. if any of y'all have real assets, then you shouldn't be investing yourself let an investment bank do it, they have time to actively research and pick stocks
my assets have doubled since late 2010 from this method (investment bank in chicago and beating the market too)
Yeah see I don't know what this means/won't have time to research this before I make a decision/have no real assets - so I am leaning towards the path of least resistance which is minimizing debt.
a gspc index fund is basically a way to buy ALL the stocks in the S and P 500 (500 publicly traded companies). Therefor it minimizes risk. (through diversification). It's a way to have an average return on investment, and is the best option for those who have don't have time to actively manage a portfolio. The percent on return i would be VERY safe saying would be greater than 7%. The interest you would be paying would be less than 7% (long-term). So logic dictates that you should not mimize debt. (bc you would pay be paying more and you wouldn't be able to take advantage of LRAP)
Err I have no idea what that first part means which is definitely part of the problem. And I guess since I don't really know what that means, it doesn't seem "very safe" to me. And now that I think about it, how relatively safe is it? Is it as "very safe" as expecting a Biglaw job out of H? If the market crashes, will I have the same ROI?
Although again I'm not sure my situation is the same because my parents are giving me interest free $$ to pay for law school, NOT to invest (as in if I said - hey mom and dad can I have that money to invest instead they would say lol no). My personal assets are very minimal. So my options are really - take out a loan with my little personal $$ making interest (or investing it or whatever), or use my parent's $$ which is an interest free loan...and still have my personal $$ to do whatever with.
Yikes. There’s a lot of faulty financial advice here. Consider this:
1. The general idea that you should follow the higher number between returns and interest rates is right. This matters, though, only if you have capital to use. If you don’t, then this simply doesn’t apply. (The argument is that one should allocate capital as efficiently as possible. And that means to either pay down high interest if your expected returns are low, or vice versa.)
2. That leads to the second, really important point: Never, ever assume that your returns will be high. Particularly not in the current market, which many people believe stands on stilts. I know various folks in the financial industry with impressive historical returns that are holding a lot of money in cash because they don’t believe the market can go much higher (i.e., correction if not crash ahead). Assuming an index fund (any of them) will return a yield greater than 7% is, in my opinion, foolish (over 1, 2, or even 5 years). That’s not to say it won’t happen – it very well might – but it’s just really dangerous to assume.
In the end, such a move is a financial bet. And it’s a risky one at that. Please do some research before going this route.