I point this out because this represents the incredible battle going on between consumers and industry. Today, their is another war underway that would absolutely DWARF this 1974 stampede. Butch `````````````````````````````````````` Butch what war are you talking about here? lb59 but once they do, they realize the "need" to start investing and regularly putting away money for retirement. humblemarc =========================== They also need to know where to find this money to invest. Anybody have any suggestions as to where that money might be? LB59
I have a question for anyone. If you borrow $20000 with a 20 year mortgage type loan at 10% and invest the $20000 in a side fund paying a steady 10% will you make money lose money or break even over the life of the loan BUDGET HOMES CO.
From some financial calculators I found online: 20k 20yr 10% mortgage = $193/mo payments 20K invested @10% for 20yr = $146,151.47 same investment w/ $193/mo withdrawls = $0 at end. This doesn't take into account taxes and possibly some trickiness as to when payments are due/posted. 0
So the total pay out on the loan is $46320.00. And the value on the insvestment is $146,151.47. Next question why is there such a big difference between the 2 when both are at 10% ???
BUMP So the total pay out on the loan is $46320.00. And the value on the insvestment is $146,151.47. Next question why is there such a big difference between the 2 when both are at 10% ??? quote: -------------------------------------------------------------------------------- Originally posted by zerodown From some financial calculators I found online: 20k 20yr 10% mortgage = $193/mo payments 20K invested @10% for 20yr = $146,151.47 same investment w/ $193/mo withdrawls = $0 at end. This doesn't take into account taxes and possibly some trickiness as to when payments are due/posted. 0 -------------------------------------------------------------------------------- BACKGROUND: 1*Asset Management 18Years 2*Financial Services 18 Years 3*Insurance 18 Years 4*Stock Market 18 Years 5*Business Owner-Housing Company. 29 Years LB 59
The short answer is - it's one of the ways how the Enron/Worldcom types pretend to make money. Actually, that's a trick question or just comparing apples to oranges. With the investment you are withdrawing something from the principle (plus the interest earned) each month, therefore you are not getting the full value of compounding over the 20 years. Likewise, with the mortgage you are paying off part of the principle of the loan each month (plus paying some interest due) so you are not paying compounded interest on the 20K for 20 years. 0
2*Simply put the interest is calculated on a declining balance on the loan and the interest is calculated on an increasing balance on the investment. BUDGET HOMES CO. 1* clarification on this item: In my question there is no withdrawal against the investment therefore the investment is getting full value of compounding the 20K for 20 years. I thought 146K for the investment sounded a little low but I attributed it to the 10%return as I'm used to calculating higher intrest rates.
I point this out because this represents the incredible battle going on between consumers and industry. Today, their is another war underway that would absolutely DWARF this 1974 stampede. Butch `````````````````````````````````````` Butch what war are you talking about here? lb59
2. I didn't know fancy investment language 1. You implied a closed system in your original construct since you didn't mention an additional outside revenue stream of $193/mo to pay the mortgage. But adding that makes the comparison of the two options really unfair. A fairer comparison would be: You have $193/mo to invest. Should you deposit it at 10% or should you get a 20k 20yr mortgage/loan at 10%? One gives you a balance of $146,558.19. The other gives you a $20,000.00 piece of whatever. Which is pretty amazing! Thanks for pointing this out. p.s. - Just looked at the flip side of the coin. For all us credit junkies: If you defer the purchase and invest the $193/mo you would have enough to make the 20k purchase in 7yr 4mo instead of paying for it for 20yrs. If you wait 8mo's longer (total of 8 years) you will have an extra 3.5K! 0
I heard ya IB. "Every creditor in business is hell bent on charging you the HIGHEST possible interest rate they can in order to "acquire" your hard earned money. Your job is to demand the lowest possible rate you can get. Make no mistake, WWIII is well under way, and the battle is over money, YOUR money."
And if you pay this amount in 2 parts each month ie.$45 one the 1st (assuming your payment is due the 2nd assuming that you pay this amount even when the minimum is smaller) you pay it off even faster.
An interesting reading list for those interested in a self taught MBA in finance and investing can be found here:http://www.bobbrinker.com/books.asp One I recommend highly is: Directory of Finance and Investment Terms(Barrons Financial Guides)
Folks the rule of 72 and the astonishing ramifications of high interest rates explains; 1) Why there is an enormous conspiracy between CRA's and creditors to TRASH your score, so that the highest possible interest rates can be charged, yielding the highest possible profits for the creditors, (the CRA's customer base). TRILLIONS of dollars over the next 15 years were moved from the "old" kind of life insurance to the "new" kind. 1*I point this out because this represents the incredible battle going on between consumers and industry. Today, their is another war underway that would absolutely DWARF this 1974 stampede. 2*Every creditor in business is hell bent on charging you the HIGHEST possible interest rate they can in order to "acquire" your hard earned money. Your job is to demand the lowest possible rate you can get. Make no mistake, WWIII is well under way, and the battle is over money, YOUR money. Butch *********============************** lbrown59, you've convinced me with your powerful arguments! FICO is a carefully orchestrated plot to fleece honest Americans and to deprive us of our God-given right to due process! FICO is the worst scourge on the American financial system since perhaps the 1920s when Charles Ponzi purveyed foreign postal coupons to the unwitting masses. FICO is an attempt to keep us from becoming home buyers and credit card customers so that somebody -- Mr. FICO, perhaps -- can make money somehow at our expense -- not sure how, but lbrown59 has that part figured out, and I'm hopping mad about it! FICO as a social force is far more harmful than drug abuse, sexual harassment, or even mid-century Communism. Stamp out FICO! Doc
but once they do, they realize the "need" to start investing and regularly putting away money for retirement. humblemarc =========================== They also need to know where to find this money to invest. Anybody have any suggestions as to where that money might be? LB59 ************************************** Any one know why 8 out of ten people retire in poverty? LB 59 ******************************************************* LB 59
Click here: CREDITNET | Straight Talk | | My copy NOT like creditors' copy http://consumers.creditnet.com/straighttalk/board/showthread.php?s=&pgnum=1&postid=290519#post290519 If after reading this thread you don't grasp what the following statements mean then you just plain aren't ever gonna get it. *********************************** ~~~~~~~~~~~~~~~~~~~~~~~~ CREDITNET | Straight Talk | | Rule of "72" And Your Score http://consumers.creditnet.com/straighttalk/board/showthread.php?s=&pgnum=5&postid=289645#post289645 TRILLIONS of dollars over the next 15 years were moved from the "old" kind of life insurance to the "new" kind. 1*I point this out because this represents the incredible battle going on between consumers and industry. Today, their is another war underway that would absolutely DWARF this 1974 stampede. 2*Every creditor in business is hell bent on charging you the HIGHEST possible interest rate they can in order to "acquire" your hard earned money. Your job is to demand the lowest possible rate you can get. Make no mistake, WWIII is well under way, and the battle is over money, YOUR money. Folks the rule of 72 and the astonishing ramifications of high interest rates explains; 1) Why there is an enormous conspiracy between CRA's and creditors to TRASH your score, so that the highest possible interest rates can be charged, yielding the highest possible profits for the creditors, (the CRA's customer base). B U T C H =====================
But as you can see getting from a 580 score to a 680 score is worth 200 a month of your payments. oz ======================= But when you take into considerstion the rule of 72 it's over 4.5 million dollars or $12500 per month. LB 59
That's good LB. The next level of discussion is; what the $200 a month savings TODAY is worth TOMORROW. You're right.
The 4.5 million is for just one person. Now when you multiply this by the hundreds of thousands of people this kind of thing is happening to the total figure is so astronomical it becomes mind boggling. From this the implications of the following comments become quite clear! ******************* ********************* TRILLIONS of dollars over the next 15 years were moved from the "old" kind of life insurance to the "new" kind. 1*I point this out because this represents the incredible battle going on between consumers and industry. Today, their is another war underway that would absolutely DWARF this 1974 stampede. 2*Every creditor in business is hell bent on charging you the HIGHEST possible interest rate they can in order to "acquire" your hard earned money. Make no mistake, WWIII is well under way, and the battle is over money, YOUR money. Butch ----------------======= Folks the rule of 72 and the astonishing ramifications of high interest rates explains; 1) Why there is an enormous conspiracy between CRA's and creditors to TRASH your score, so that the highest possible interest rates can be charged, yielding the highest possible profits for the creditors, (the CRA's customer base). B U T C H ===================== FICO is Bigger than whole life isn't it Butch ? LB59
