Investing
- Thread starter Tmac
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Do you really need 9k in savings for a nest egg right now? I have always been a fan of knocking out the debt ASAP. A nest egg is important depending on your situation. If your job is stable and you see no major changes in the next few years, I would take 5k from the nest egg, put it on the loan and then you should have that shit paid off in a year or two, while still having 4k to fall back on just in case.
Being debt free is such a feeling of freedom. I personally used the snowball method, paid off smallest debt first, then applied that freed up capital to the next smallest and so on. It took me around 6 years to get rid of all my debt, school loans, credit cards and medical bills. I will never buy anything (minus real estate and vehicles) that I cannot pay cash for again. Having experienced both being in debt and now being debt free I have learned my lesson!!
Being debt free is such a feeling of freedom. I personally used the snowball method, paid off smallest debt first, then applied that freed up capital to the next smallest and so on. It took me around 6 years to get rid of all my debt, school loans, credit cards and medical bills. I will never buy anything (minus real estate and vehicles) that I cannot pay cash for again. Having experienced both being in debt and now being debt free I have learned my lesson!!
6-12 months of bare minimum living expenses is your most important asset.
After you have that, throw anything extra at the loans, with the exception of the matched percentage of your 401k contribution.
You can probably have it paid off in 1-3 years if you are diligent, the extra interest will be inconsequential long term.
After you have that, throw anything extra at the loans, with the exception of the matched percentage of your 401k contribution.
You can probably have it paid off in 1-3 years if you are diligent, the extra interest will be inconsequential long term.
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Ever been unemployed Crazily? It's hard to accurately predict when that might happen. Or you can see it coming, but because you're tied to the area(family, rent lease, mortgage, whatever) or there's a lack of other prospects, there's nothing you can do about it.
I think having a 3-6 months of post-tax income in the bank is a good idea so you can take the unforeseen without it crippling you financially.
I think having a 3-6 months of post-tax income in the bank is a good idea so you can take the unforeseen without it crippling you financially.
Loftish, this may not apply to you, but I cut out starbucks in the morning, instead waking up 15 minutes earlier to make coffee at home. That ended up saving me $30 a week, which I put into savings.
French pressed coffee tastes better than starcrap anyway.
French pressed coffee tastes better than starcrap anyway.
Great advice for anyone. I love coffee, but try to limit my intake so as to not wind up as one of those people that complain that they aren't actually a functioning human being until they've gotten their first cup of the day.
Is that loan interest tax deductible? If it is that's probably the only thing that would sway a decision one way or another. In which case you'd want to pay it off as slow as possible.
Tmac
Adventurer
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:O $30 a week!
I love coffee and spend about $15 per month on a pound of beans that are roasted locally and come from a single coffee-bean farm. I wake up, grind them and then use a pour-over to get my daily cup.
It tastes better than any cup of coffee I've had. Keurig and any restaurant coffee can't touch it
Citz
Silver Squire
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I'm a fan of the emergency fund strategy but I've always found the 6-12 months number to be overdoing it. That's a lot of money doing nothing for a big IF over a long period of time. I'd say keep 3-4 months of minimum living expenses and pay off the debt with what's left. Of course, as rinthe said, if the loan interest is tax deductible, don't change anything unless you really really hate having debt.
Furious
Ahn'Qiraj Raider
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Crazily hit the nail on the head. Any good investor will try and remove all debt burdens first. You can never guarantee a return on an investment but you can guarantee that visa will take that 20%
I just picked up my Canadian stocks for 2014. Last years return was 55% not including dividends.
The Top 200 Canadian Stocks
Also a good link if youre a value investor in the US of A isStingy Investor: 6 Graham Stocks for 2013
681% return compared with the SaP 500 at like 30%
Also also, having 10 grand sitting in cash in a bank is nuts. Have it in a money market fund or even a s&p indexed etf. I turned my first year TFSA of 5 grand into 15,000 in a very short time following Buffets move on BoA and GE during the 07 crash. That 5 grand is just under 50,000 today. 3 baged GE and Seaspan.
Rabkorik
Silver Knight of the Realm
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There have been a few book recommendations thrown around in this thread. I'm 24 and know relatively nothing about investing but would like to start learning. Which of the 3 would you guys recommend the most to start:
The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Books. Big Profits)
The Bogleheads' Guide to Investing
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition
The Little Book of Common Sense Investing: The Only Way to Guarantee Your Fair Share of Stock Market Returns (Little Books. Big Profits)
The Bogleheads' Guide to Investing
The Intelligent Investor: The Definitive Book on Value Investing. A Book of Practical Counsel (Revised Edition
Furious
Ahn'Qiraj Raider
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Um, the Intelligent investor is hands down the best investing book ever written. Obviously, the author Ben Graham taught Buffet the things that made hime the richest man in the world. I have given away more copies of that book.
I also like "A random walk down wall street" and "Security Analysis". The later one is a bit academic.
Eomer
Trakanon Raider
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Definitely read the first. It'll take you a max of 4-6 hours I would think, it's very short and concise and will clearly explain why trying to beat the market is most likely going to result in you getting beaten by it. You aren't Warren Buffet, don't try to be.
Furious
Ahn'Qiraj Raider
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On those links I provided we have not only beaten the market but have crushed it for 10 years. I agree most people can't beat the market, something like 80% don't but that's because they are doing it wrong. "A random walk down wall street" a great book telling you why to buy etfs if you just want to match the market. You can just index and get the same result as any market. Vanguard is the cheapest but I've used ishares if you want huge volume.
I'm sure you can outperform the market if you invest a lot of time in research -- the problem is that there's a cost to doing that. If you want to keep up with the pros, this is essentially a full-time job (or close to it). If you make $100k at your current job, do you beat the market by at least that much annually? You'd need a pretty large account for this to be feasible. If you make an extra 10 percentage points on $100k savings (already far more than most people have), that's really awesome, but doesn't make spending 30 hours a week trying to accomplish it worthwhile. In terms of hourly wages, you'd be better off picking up a shift at McDonald's.
Harfle
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Furious
Ahn'Qiraj Raider
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If you compound it, it makes a lot of sense. 10k per year at your 10% = %164,000 after 10 years. At this point you are earning 16k a year off just the money's interest not including a dividend. So you $100,000 dollar investment is now $264,000 and your total return is $26,000 on interest alone.
Money that money makes, makes money.
It's okay McDonald's seems like a nice company.
$26k is still not a livable wage, especially after adjusting for inflation. My point is that you'd be better off working those hours, saving the money, and putting it into an index fund. It takes substantial savings before the genius investments beat even a minimum wage job, given all the hours it takes to beat average market performance.
