Student loan payments: Actual numbers

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smaug
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Re: Student loan payments: Actual numbers

Postby smaug » Tue Nov 17, 2015 5:26 pm

Are common bond's rates crappy generally? Not impressed with what they offered me.

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Danger Zone
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Re: Student loan payments: Actual numbers

Postby Danger Zone » Tue Nov 17, 2015 5:28 pm

Anonymous User wrote:
Danger Zone wrote:
Anonymous User wrote:wasn't the market averaging 5% in recent years? This year it's shit.

...No??

Eta: well this year yes but first part is totally wrong


So what have they been averaging?

And what should I be investing on Vanguard?

If you invested solely in the S&P 500 on 1/1/2009, your yearly returns would be:

2009: 25.94%
2010: 14.82%
2011: 2.10%
2012: 15.89%
2013: 32.15%
2014: 13.48%

Sauce

Anonymous User
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Re: Student loan payments: Actual numbers

Postby Anonymous User » Tue Nov 17, 2015 5:30 pm

Danger Zone wrote:
Anonymous User wrote:
Danger Zone wrote:
Anonymous User wrote:wasn't the market averaging 5% in recent years? This year it's shit.

...No??

Eta: well this year yes but first part is totally wrong


So what have they been averaging?

And what should I be investing on Vanguard?

If you invested solely in the S&P 500 on 1/1/2009, your yearly returns would be:

2009: 25.94%
2010: 14.82%
2011: 2.10%
2012: 15.89%
2013: 32.15%
2014: 13.48%

Sauce


Worth to buy in now?

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Danger Zone
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Re: Student loan payments: Actual numbers

Postby Danger Zone » Tue Nov 17, 2015 5:31 pm

For retirement? Absolutely.

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lacrossebrother
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Re: Student loan payments: Actual numbers

Postby lacrossebrother » Tue Nov 17, 2015 6:01 pm

Those numbers look dubious.
First, you don't just directly buy the S&P 500. Vanguard VOO is considered a very good approximation with very minimal fees.
Price of VOO 1/1/2014 at open: $168.53.
Price of VOO 12/31/2014 at close: $180.40 + $3.49 in dividends
2014 annual return is thus (183.89-168.53)/168.53 = 9.11%.

How exactly did you (that article) get 13% for that year?

edit: added dividends.
Last edited by lacrossebrother on Tue Nov 17, 2015 6:09 pm, edited 1 time in total.

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fats provolone
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Re: Student loan payments: Actual numbers

Postby fats provolone » Tue Nov 17, 2015 6:03 pm

lacrossebrother wrote:Those numbers look dubious.
First, you don't just directly buy the S&P 500. Vanguard VOO is considered a very good approximation with very minimal fees.
Price of VOO 1/1/2014 at open: $168.53.
Price of VOO 12/31/2014 at close: $180.40
2014 annual return is thus (180.40-168.53)/168.53 = 7.04%.

How exactly did you (that article) get 13% for that year?

Dividend reinvestment

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JenDarby
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Re: Student loan payments: Actual numbers

Postby JenDarby » Tue Nov 17, 2015 6:08 pm

smaug wrote:Are common bond's rates crappy generally? Not impressed with what they offered me.

I did commonbond. Was impressed enough to commit to a ten year costly relationship.

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smaug
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Re: Student loan payments: Actual numbers

Postby smaug » Tue Nov 17, 2015 6:10 pm

The fixed figure they offered me was nearly 5% on the 10 year fixed. I don't know if it's worth refinancing at that point. :/

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lacrossebrother
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Re: Student loan payments: Actual numbers

Postby lacrossebrother » Tue Nov 17, 2015 6:15 pm

fats provolone wrote:Dividend reinvestment

ok i added the ~3.50 in dividends in at the end of the year. still missing 4%

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fats provolone
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Re: Student loan payments: Actual numbers

Postby fats provolone » Tue Nov 17, 2015 6:17 pm

lacrossebrother wrote:
fats provolone wrote:Dividend reinvestment

ok i added the ~3.50 in dividends in at the end of the year. still missing 4%

I'm not sure that's the right adjustment. But anyway you answered it with your own question. That chart is S&P500 returns, not an S&P500 index.

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JohannDeMann
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Re: Student loan payments: Actual numbers

Postby JohannDeMann » Tue Nov 17, 2015 6:18 pm

lacrossebrother wrote:
fats provolone wrote:Dividend reinvestment

ok i added the ~3.50 in dividends in at the end of the year. still missing 4%


stop using vanguard. use SPY ticker.

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Danger Zone
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Re: Student loan payments: Actual numbers

Postby Danger Zone » Tue Nov 17, 2015 6:19 pm

fats provolone wrote:
lacrossebrother wrote:
fats provolone wrote:Dividend reinvestment

ok i added the ~3.50 in dividends in at the end of the year. still missing 4%

I'm not sure that's the right adjustment. But anyway you answered it with your own question. That chart is S&P500 returns, not an S&P500 index.

Exactly. Also the page has right on there where they got the data so if you're having trouble googling it's from the Fed: https://research.stlouisfed.org/fred2/series/SP500

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UnfrozenCaveman
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Re: Student loan payments: Actual numbers

Postby UnfrozenCaveman » Tue Nov 17, 2015 7:07 pm

Savings on paying down a loan early do not equal returns on investments. So even if you could only get returns equivalent with the interest rates on your loans, you'd still be better off investing not taking into account any other factors.

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lacrossebrother
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Re: Student loan payments: Actual numbers

Postby lacrossebrother » Tue Nov 17, 2015 7:11 pm

Danger Zone wrote:
fats provolone wrote:
lacrossebrother wrote:
fats provolone wrote:Dividend reinvestment

ok i added the ~3.50 in dividends in at the end of the year. still missing 4%

I'm not sure that's the right adjustment. But anyway you answered it with your own question. That chart is S&P500 returns, not an S&P500 index.

Exactly. Also the page has right on there where they got the data so if you're having trouble googling it's from the Fed: https://research.stlouisfed.org/fred2/series/SP500

i mean it's ex of dividend growth. so if you wanna call it 6 months worth of 10% of $3.50 and increase it another ~20 cents...be my guest.

anyways, ya in 2014 the S&P 500 (which you probably can't personally trade...so probably isn't the best indicator??) increased 10.3% from its jan 2 open to its dec. 31 close.

and you're gonna give me shit about being bad at google when you're the one who cited a study that gave a shitty approximation of the answer to the dude's question about recent S&P annual returns?

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JenDarby
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Re: Student loan payments: Actual numbers

Postby JenDarby » Tue Nov 17, 2015 7:14 pm

UnfrozenCaveman wrote:Savings on paying down a loan early do not equal returns on investments. So even if you could only get returns equivalent with the interest rates on your loans, you'd still be better off investing not taking into account any other factors.

pre refinancing my monthly payment was $600 (and would have gone up soon), and post refinancing it's $1800. I currently accrue $600 less on interest a month.

It's not like I would have tons of money to throw into the market anyways. I think the higher payments and lower interest definitely make sense for my situation.

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Danger Zone
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Re: Student loan payments: Actual numbers

Postby Danger Zone » Tue Nov 17, 2015 7:26 pm

UnfrozenCaveman wrote:Savings on paying down a loan early do not equal returns on investments.

How do you figure

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lacrossebrother
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Re: Student loan payments: Actual numbers

Postby lacrossebrother » Tue Nov 17, 2015 7:31 pm

UnfrozenCaveman wrote:even if you could only get returns equivalent with the interest rates on your loans, you'd still be better off investing not taking into account any other factors.

DZ didn't quote this part, but this is also equally confusing.

dixiecupdrinking
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Re: Student loan payments: Actual numbers

Postby dixiecupdrinking » Tue Nov 17, 2015 7:36 pm

lacrossebrother wrote:
UnfrozenCaveman wrote:even if you could only get returns equivalent with the interest rates on your loans, you'd still be better off investing not taking into account any other factors.

DZ didn't quote this part, but this is also equally confusing.

Yeah it's also exactly backwards? To the extent they are not the same thing you're better off paying your loans because it's risk free and no taxes (assuming we're talking about a post-tax brokerage account here and not a 401(k) or whatever).

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fats provolone
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Re: Student loan payments: Actual numbers

Postby fats provolone » Tue Nov 17, 2015 7:50 pm

lacrossebrother wrote:
Danger Zone wrote:
fats provolone wrote:
lacrossebrother wrote:
fats provolone wrote:Dividend reinvestment

ok i added the ~3.50 in dividends in at the end of the year. still missing 4%

I'm not sure that's the right adjustment. But anyway you answered it with your own question. That chart is S&P500 returns, not an S&P500 index.

Exactly. Also the page has right on there where they got the data so if you're having trouble googling it's from the Fed: https://research.stlouisfed.org/fred2/series/SP500

i mean it's ex of dividend growth. so if you wanna call it 6 months worth of 10% of $3.50 and increase it another ~20 cents...be my guest.

anyways, ya in 2014 the S&P 500 (which you probably can't personally trade...so probably isn't the best indicator??) increased 10.3% from its jan 2 open to its dec. 31 close.

and you're gonna give me shit about being bad at google when you're the one who cited a study that gave a shitty approximation of the answer to the dude's question about recent S&P annual returns?

It was in response to a dude who said "hasn't the market returned like 5% in recent years?" so weird choice of nitpick

Anonymous User
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Re: Student loan payments: Actual numbers

Postby Anonymous User » Tue Nov 17, 2015 7:56 pm

dixiecupdrinking wrote:
lacrossebrother wrote:
UnfrozenCaveman wrote:even if you could only get returns equivalent with the interest rates on your loans, you'd still be better off investing not taking into account any other factors.

DZ didn't quote this part, but this is also equally confusing.

Yeah it's also exactly backwards? To the extent they are not the same thing you're better off paying your loans because it's risk free and no taxes (assuming we're talking about a post-tax brokerage account here and not a 401(k) or whatever).


Valid point about the taxes.

Honestly, if you have high interest rate loans (like most fed loans), I still think it's better to pay them back than to invest....plus you can't get a good mortgage for a house with massive student loans.

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JohannDeMann
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Re: Student loan payments: Actual numbers

Postby JohannDeMann » Tue Nov 17, 2015 8:03 pm

Anonymous User wrote:
dixiecupdrinking wrote:
lacrossebrother wrote:
UnfrozenCaveman wrote:even if you could only get returns equivalent with the interest rates on your loans, you'd still be better off investing not taking into account any other factors.

DZ didn't quote this part, but this is also equally confusing.

Yeah it's also exactly backwards? To the extent they are not the same thing you're better off paying your loans because it's risk free and no taxes (assuming we're talking about a post-tax brokerage account here and not a 401(k) or whatever).


Valid point about the taxes.

Honestly, if you have high interest rate loans (like most fed loans), I still think it's better to pay them back than to invest....plus you can't get a good mortgage for a house with massive student loans.


cant save up for a downpayment paying back loans aggressively too.

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fats provolone
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Re: Student loan payments: Actual numbers

Postby fats provolone » Tue Nov 17, 2015 8:09 pm

I'm not a finance masterman so maybe someone can point out the obvious flaw here but aren't these comparisons wrong?

Like, if I pay the minimums on my loans and save or invest money or w/e, I have $X after some period of time. I have some loan debt but it's not negative income. It's a series of cash flows out over time. Doesn't that have to be discounted?

I guess that's what the interest rate is and maybe I just answered my own question.

Anonymous User
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Re: Student loan payments: Actual numbers

Postby Anonymous User » Tue Nov 17, 2015 8:50 pm

I see a lot of people here with "manageable" debt loads and their plans. Is it any different for someone with around $250K in debt? I'm a 3L with a biglaw offer in NYC and I'm starting to worry a bit about paying everything back...

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UnfrozenCaveman
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Re: Student loan payments: Actual numbers

Postby UnfrozenCaveman » Tue Nov 17, 2015 9:08 pm

Danger Zone wrote:
UnfrozenCaveman wrote:Savings on paying down a loan early do not equal returns on investments.

How do you figure

Heh, sorry that was confusing. Just trying to say that it's not as simple as just comparing expected returns to the interest rate on your loans because of things like compounding interest.

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fats provolone
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Re: Student loan payments: Actual numbers

Postby fats provolone » Tue Nov 17, 2015 9:09 pm

Anonymous User wrote:I see a lot of people here with "manageable" debt loads and their plans. Is it any different for someone with around $250K in debt? I'm a 3L with a biglaw offer in NYC and I'm starting to worry a bit about paying everything back...

Yolo PAYE imo




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