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Re: Another reason why BHs pay off mortgage early?

Motivation for this thread: I found in another poll, BHs tend to pay off loans early. I'm trying to explain their behavior. If the poll results are an accurate reflection of the forum in general, there's an even more simple explanation. Forum participants are more financially savvy than average, an...
by acegolfer
Wed Apr 01, 2015 4:49 pm
 
Forum: Personal Finance (Not Investing)
Topic: Another reason why BHs pay off mortgage early?
Replies: 29
Views: 3407

Corporate Finance vs Personal Finance

What are the concepts/principles in corporate finance that should not be applied to personal finance?

If it has been too long since you took corporate finance, here are some topics (but not limited to):

1. Time value of money
2. Risk, Portfolio theory
3. Capital budgeting
4. Financing decisions
by acegolfer
Wed Apr 01, 2015 10:30 am
 
Forum: Personal Finance (Not Investing)
Topic: Corporate Finance vs Personal Finance
Replies: 9
Views: 671

Re: Another reason why BHs pay off mortgage early?

Please note that the subject is "Another reason why BHs pay off mortgage early?"

It's not "Another reason why BHs should pay off mortgage early?" Apparently, several ppl misread the subject.
by acegolfer
Tue Mar 31, 2015 6:28 pm
 
Forum: Personal Finance (Not Investing)
Topic: Another reason why BHs pay off mortgage early?
Replies: 29
Views: 3407

Re: Another reason why BHs pay off mortgage early?

randomguy wrote:yeah but making 10k/month instead of 8k is also better:) Focusing on just one side of the equation is very short sighted.


That's exactly what OP is saying. When investing instead of paying off mortgage, it's not easy to see the income increase.
by acegolfer
Tue Mar 31, 2015 6:15 pm
 
Forum: Personal Finance (Not Investing)
Topic: Another reason why BHs pay off mortgage early?
Replies: 29
Views: 3407

Re: Another reason why BHs pay off mortgage early?

HomerJ wrote:It's real simple...

I used to need $8000 a month.

Now I need $6000 a month.

That's better...

:)


What an excellent summary!
by acegolfer
Tue Mar 31, 2015 6:13 pm
 
Forum: Personal Finance (Not Investing)
Topic: Another reason why BHs pay off mortgage early?
Replies: 29
Views: 3407

Should a true BH visit this forum regularly?

In my mind, BH principles are 1. live below means 2. stay the course 3. capitalize tax advantage space 4. buy and hold low cost index funds and diversify (if I missed anything, please update me) Once one learns how to, he doesn't need to read the threads (especially the ones in Investing forum) regu...
by acegolfer
Tue Mar 31, 2015 5:58 pm
 
Forum: Investing - Theory, News & General
Topic: Should a true BH visit this forum regularly?
Replies: 31
Views: 2501

Another reason why BHs pay off mortgage early?

Update: It seems some misread the subject. I'm not explaining why one should pay off loan early. That's a different matter. Motivation for this thread: I found in another poll, BHs tend to pay off loans early. I'm trying to explain their behavior. To increase the net income in the income/expense rep...
by acegolfer
Tue Mar 31, 2015 12:36 pm
 
Forum: Personal Finance (Not Investing)
Topic: Another reason why BHs pay off mortgage early?
Replies: 29
Views: 3407

Re: Hate where we live, do we make major changes?

Alex Frakt wrote:Remember that each $1 of pension income replaces $25 of savings (assuming a 4% withdrawal rate).


Good point. But the max pension kicks in when she is 58. Given kids age, it could be 20 years from now.
by acegolfer
Mon Mar 30, 2015 11:52 am
 
Forum: Personal Consumer Issues
Topic: Hate where we live, do we make major changes?
Replies: 94
Views: 6786

Re: Hate where we live, do we make major changes?

One thing that I have not seen mentioned is that if you wait until your kids go off to college then they will likely stay in the area. Not living near kids and eventual grand-kids would be hard for some people and when you are older(like in a nursing home) not having any family living nearby can be...
by acegolfer
Mon Mar 30, 2015 11:44 am
 
Forum: Personal Consumer Issues
Topic: Hate where we live, do we make major changes?
Replies: 94
Views: 6786

Re: Mortgage Rate Locks and Options???

If you can find such mortgage program, then it will be the easiest solution for you. Sorry, I don't have such mortgage product infor. Even if it doesn't exist, don't worry. There are financial instruments that will protect against long term interest rate increase in September or December. If you can...
by acegolfer
Sun Mar 29, 2015 12:43 pm
 
Forum: Personal Finance (Not Investing)
Topic: Mortgage Rate Locks and Options???
Replies: 3
Views: 417

Re: What are some common misconceptions found in this forum?

Efficient market hypothesis = market portfolio is efficient.

These 2 are related but not the same. But ppl mistakenly interchange the 2 because both have "market" and "efficient".
by acegolfer
Sun Mar 29, 2015 6:34 am
 
Forum: Personal Finance (Not Investing)
Topic: What are some common misconceptions found in this forum?
Replies: 209
Views: 17348

Re: Google voice

Phone geek here. If you use google service, I can't see any downside but only upside. Here's how I benefited since 2005 Number of google voice number change: 1 Number of phone number change: more than 10 It saved me $10k+ since 2005. My current monthly phone bill for 5 phones (3 are cellular) is <$...
by acegolfer
Thu Mar 26, 2015 1:39 pm
 
Forum: Personal Consumer Issues
Topic: Google voice
Replies: 57
Views: 4377

Re: What Happens When Vanguard Owns Everything?

The numbers in the article are misleading. The market share reported in the article is not the % assets owned (or managed) by Vanguard. It's the Vanguard AUM over all assets managed by funds excluding individual investors. Hence, it's wrong to interpret Vanguard holds 20% of the entire stock, bond m...
by acegolfer
Thu Mar 26, 2015 7:59 am
 
Forum: Investing - Theory, News & General
Topic: What Happens When Vanguard Owns Everything?
Replies: 19
Views: 4727

Re: Google voice

Phone geek here. If you use google service, I can't see any downside but only upside. Here's how I benefited since 2005 Number of google voice number change: 1 Number of phone number change: more than 10 It saved me $10k+ since 2005. My current monthly phone bill for 5 phones (3 are cellular) is <$...
by acegolfer
Thu Mar 26, 2015 7:04 am
 
Forum: Personal Consumer Issues
Topic: Google voice
Replies: 57
Views: 4377

Should a BH investor never use futures/options?

When should a long term buy and hold investor use futures/options?
by acegolfer
Wed Mar 25, 2015 6:50 am
 
Forum: Investing - Theory, News & General
Topic: Should a BH investor never use futures/options?
Replies: 69
Views: 4053

Re: Google voice

Phone geek here. If you use google service, I can't see any downside but only upside. Here's how I benefited since 2005 Number of google voice number change: 1 Number of phone number change: more than 10 It saved me $10k+ since 2005. My current monthly phone bill for 5 phones (3 are cellular) is <$1...
by acegolfer
Sun Mar 22, 2015 5:58 am
 
Forum: Personal Consumer Issues
Topic: Google voice
Replies: 57
Views: 4377

Re: [New Member Observations- Covered Calls, Financial Advis

Kevin's analysis clearly refutes OP's claim that his CC strategy added 2% annual return over SPY. I'm trying to solve the 2% mystery here. Is it possible that 2% S&P500 dividend (approx) is somehow mistreated by OP? I have seen ppl making rookie mistake of comparing his dollar return against una...
by acegolfer
Sat Mar 21, 2015 3:12 pm
 
Forum: Investing - Theory, News & General
Topic: [New Member Observations- Covered Calls, Financial Advisors]
Replies: 227
Views: 16401

Re: Step callable long term CD for fixed income- pros & cons

I think one of the 3 will happen in 20 years.

1. You can't wait 20 years and redeem at under fair value. (bad for you)
2. Market rate goes down and the bank will call CD (bad for you)
3. If neither, you forget the existence of this CD in 2035 (bad for you)
by acegolfer
Sat Mar 21, 2015 6:36 am
 
Forum: Investing - Theory, News & General
Topic: Step callable long term CD for fixed income- pros & cons?
Replies: 17
Views: 932

Re: $600 night guard for teeth grinding, really?

I'm OP and thanks for all the inputs. Honestly, I didn't expect to get this many posts. Here's an update with a good news. Despite what my new dentist said, I suspected that I am not grinding teeth any more. That's why I was hesitant to spend $600 on a device that I don't need any more. So I self-t...
by acegolfer
Fri Mar 20, 2015 6:29 pm
 
Forum: Personal Consumer Issues
Topic: $600 night guard for teeth grinding, really?
Replies: 92
Views: 5771

Re: [New Member Observations- Covered Calls, Financial Advis

Ace Golfer, Yes, your math is correct. I said I will go up to 8%. Sometimes I'll go lower (like now). That measley .6% a quarter has outperformed the index over the past 8 years. Maybe it won't forever, but the compounding of an extra 2% has turned out to work quite well on a larger scale. Historic...
by acegolfer
Fri Mar 20, 2015 6:19 pm
 
Forum: Investing - Theory, News & General
Topic: [New Member Observations- Covered Calls, Financial Advisors]
Replies: 227
Views: 16401

Re: [New Member Observations- Covered Calls, Financial Advis

Hi Kevin If I started a new contract today on a $500k portfolio (SPY = $210.69), I would sell the SPY June 2015 220's in a Roth if possible. That would be 23 contracts at the current bid of $1.25. This would deposit $2,875 into my account not including commission of $25.20. I get free equity trades...
by acegolfer
Fri Mar 20, 2015 5:55 pm
 
Forum: Investing - Theory, News & General
Topic: [New Member Observations- Covered Calls, Financial Advisors]
Replies: 227
Views: 16401

Re: $600 night guard for teeth grinding, really?

I'm OP and thanks for all the inputs. Honestly, I didn't expect to get this many posts. Here's an update with a good news. Despite what my new dentist said, I suspected that I am not grinding teeth any more. That's why I was hesitant to spend $600 on a device that I don't need any more. So I self-te...
by acegolfer
Fri Mar 20, 2015 7:05 am
 
Forum: Personal Consumer Issues
Topic: $600 night guard for teeth grinding, really?
Replies: 92
Views: 5771

Re: Observations from a first time poster, long time reader.

As of today, 8% OTM covered call will only add 0.06% return per 3 months (0.24% annualized, not 2% as OP advertised) 3/19/2015 S&P500 index = 2089. 8% OTM exercise price = 2089 * 1.08 = 2260. 6/19/2015 2260 S&P500 index call (SPX1519F2260-E) bid price = 1.25 (FYI, ask price = 1.85, source: h...
by acegolfer
Thu Mar 19, 2015 5:50 pm
 
Forum: Investing - Theory, News & General
Topic: [New Member Observations- Covered Calls, Financial Advisors]
Replies: 227
Views: 16401

Re: What are some common misconceptions found in this forum?

Fed increasing rate = bond yield increase
by acegolfer
Thu Mar 19, 2015 10:54 am
 
Forum: Personal Finance (Not Investing)
Topic: What are some common misconceptions found in this forum?
Replies: 209
Views: 17348

Re: Anyone concerned about their bond holdings?

No

Fed funds rate hike =/= bond yield increase
by acegolfer
Thu Mar 19, 2015 10:50 am
 
Forum: Investing - Theory, News & General
Topic: Anyone concerned about their bond holdings?
Replies: 58
Views: 5711

Re: Should you hold bonds and a mortgage at the same time?

The fact that you can live in your house is not an advantage, you pay for it by consuming your house's yield (imputed rent). Now that you've taught us what a mortgage is, I think it's someone's turn to teach you (madbrain) what imputed rent is. I nominate Acegolfer :wink: Thanks for the opportunity...
by acegolfer
Wed Mar 18, 2015 9:55 am
 
Forum: Investing - Theory, News & General
Topic: Should you hold bonds and a mortgage at the same time?
Replies: 90
Views: 7181

Re: 15 yr cd, would you?

3%? No.
5%? Yes.
by acegolfer
Tue Mar 17, 2015 9:09 pm
 
Forum: Personal Finance (Not Investing)
Topic: 15 yr cd, would you?
Replies: 17
Views: 2035

Re: Observations from a first time poster, long time reader.

Suppose I own VTI and look at the options for possible sale of a covered call. VTI traded around 108 today, so the June 2015 with strike $116 http://finance.yahoo.com/q?s=VTI150619C00116000 option had a volume of 2 today(?) and an apparent price of $0.40. $0.40 / $108 is about 0.4%, so 4 times a ye...
by acegolfer
Tue Mar 17, 2015 9:01 pm
 
Forum: Investing - Theory, News & General
Topic: [New Member Observations- Covered Calls, Financial Advisors]
Replies: 227
Views: 16401

Re: Should you hold bonds and a mortgage at the same time?

A mortgage is debt - however, it is a specific kind of debt. Writing the word "mortgage" onto this debt note has specific implications - the debt is linked to the house. You can't get a mortgage without also buying a house as collateral. You can't get a mortgage to buy bonds, or stocks, o...
by acegolfer
Tue Mar 17, 2015 8:55 pm
 
Forum: Investing - Theory, News & General
Topic: Should you hold bonds and a mortgage at the same time?
Replies: 90
Views: 7181

Re: Definition of financial independence?

Clearly_Irrational wrote:Your income exceeds your expenditures without the necessity of labor.


Capitalism!
by acegolfer
Tue Mar 17, 2015 6:31 pm
 
Forum: Personal Finance (Not Investing)
Topic: Definition of financial independence?
Replies: 52
Views: 4845

Re: Observations from a first time poster, long time reader.

Great to see a member in the financial industry. Thanks for your input. Why don't BH use covered call? Here's my 2c. Most BHs are long term investors and hence BHs avoid derivatives to make short term gains. The popularity of covered call among fund managers doesn't mean it's a strategy for BHs. Pas...
by acegolfer
Tue Mar 17, 2015 6:25 pm
 
Forum: Investing - Theory, News & General
Topic: [New Member Observations- Covered Calls, Financial Advisors]
Replies: 227
Views: 16401

Re: interest rate increase looming. what you gonna do ?

If you expect the overall rate will increase, then lower the duration of your bond portfolio. But note that Fed Funds rate (overnight rate) increase doesn't necessarily mean long term rates will also increase. I wish the term structure is always flat. Then we will all be bond experts.
by acegolfer
Tue Mar 17, 2015 4:57 pm
 
Forum: Investing - Theory, News & General
Topic: interest rate increase looming. what you gonna do ?
Replies: 65
Views: 6248

Re: Mortgage

EyeDee wrote:.
I marked 10-15 years, although it was only a couple months over 10 years.

What low rate mortgage? We were paying 13.5% + 0.25 PMI.


While you were paying 13.5%, did you also invest with taxable account? I'm curious why you kept the 13.5% mortgage for 10 years without paying off or refinancing?
by acegolfer
Tue Mar 17, 2015 10:51 am
 
Forum: Personal Finance (Not Investing)
Topic: [Poll] How long did you hold primary residence mortgage?
Replies: 34
Views: 2708

Re: [Poll] How long did you hold primary residence mortgage?

I'm surprised to see 47% (54 out of 113) paid off the mortgage early in less than 10 years. (if you exclude paid with cash folks, 42% = 43 out of 102).

I always thought BH would like to keep the low rate mortgage and invest in market.
by acegolfer
Tue Mar 17, 2015 10:13 am
 
Forum: Personal Finance (Not Investing)
Topic: [Poll] How long did you hold primary residence mortgage?
Replies: 34
Views: 2708

Re: Should you hold bonds and a mortgage at the same time?

I'll answer the questions directly instead of talking BS. 1- How much should the investor borrow (how big a mortgage), if any? Getting a mortgage loan is equal to selling an annuity, which is a debt security but may or may not be considered as bonds. If he considers annuity is equivalent to bonds bu...
by acegolfer
Tue Mar 17, 2015 6:51 am
 
Forum: Investing - Theory, News & General
Topic: Should you hold bonds and a mortgage at the same time?
Replies: 90
Views: 7181

Re: Definition of financial independence?

Sounds like BHs don't like how wiki describes financial independence but, as usual, have different definitions.
by acegolfer
Mon Mar 16, 2015 8:35 pm
 
Forum: Personal Finance (Not Investing)
Topic: Definition of financial independence?
Replies: 52
Views: 4845

Re: Should you hold bonds and a mortgage at the same time?

Under the conditions stated by countmein in the original post, financially speaking he should sell bonds to pay for the house. A prudent investor doesn't willfully choose to lose money. (If he takes on the mortgage, he loses money whether he compartmentalizes his investments or not.) So, you actual...
by acegolfer
Mon Mar 16, 2015 7:41 pm
 
Forum: Investing - Theory, News & General
Topic: Should you hold bonds and a mortgage at the same time?
Replies: 90
Views: 7181

Re: Should you hold bonds and a mortgage at the same time?

KlangFool wrote:Johno,

TS has 1 millions in investment asset. Follow your logical thinking, he should sell his bond to pay for the house. So, he has a 400K house and 600K investment. Now, does this make any financial sense??
KlangFool


To others,

Is this financially wrong? Can anyone enlighten me?
by acegolfer
Mon Mar 16, 2015 6:24 pm
 
Forum: Investing - Theory, News & General
Topic: Should you hold bonds and a mortgage at the same time?
Replies: 90
Views: 7181

Definition of financial independence?

From another thread, everyone's goal is financial independence. But what does it mean? From wikipedia, For financially independent people, their assets generate income that is greater than their expenses. For example, a person's quarterly expenses may total $4000. They receive dividends from stocks ...
by acegolfer
Mon Mar 16, 2015 5:50 pm
 
Forum: Personal Finance (Not Investing)
Topic: Definition of financial independence?
Replies: 52
Views: 4845

Did you buy a house because of low interest rate?

I never bought a house because the mortgage rate was low. It was an insignificant factor because I consider these 2 questions separately. 1. Whether to buy or rent, which house to buy is an investment decision (what to buy). 2. Whether to use a mortgage or which mortgage to use is a financing decisi...
by acegolfer
Mon Mar 16, 2015 3:10 pm
 
Forum: Personal Finance (Not Investing)
Topic: Did you buy a house because of low interest rate?
Replies: 25
Views: 1750

Re: Oneplus One phone- experience?

I like everything about 1+1 except for the size. When in pocket, it's not comfy. This is coming from nexus 4. Non replaceable battery and no external storage are 0 issues to me. One not well known benefit is it's non branded so some data only plans work. (I paid $15 for a 6-month Sim card. No longer...
by acegolfer
Fri Mar 13, 2015 3:39 pm
 
Forum: Personal Consumer Issues
Topic: Oneplus One phone- experience?
Replies: 19
Views: 1762

Re: What are some common misconceptions found in this forum?

False as a general proposition. The details depend on how you define risk, but for most definitions consider a long and a short position in the same security. One of these is both higher risk and lower expected return than doing nothing. "high risk, high expected return" usually refers to...
by acegolfer
Thu Mar 12, 2015 6:21 pm
 
Forum: Personal Finance (Not Investing)
Topic: What are some common misconceptions found in this forum?
Replies: 209
Views: 17348

Re: What are some common misconceptions found in this forum?

Even that is unproven. Economics would suggest that the price increases to capture any excess expectation due to risk. An open question is that if it doesn't (i.e. if a positive expected return remains) why? There are varying estimates of how much expected return should remain -- including zero, wh...
by acegolfer
Thu Mar 12, 2015 3:41 pm
 
Forum: Personal Finance (Not Investing)
Topic: What are some common misconceptions found in this forum?
Replies: 209
Views: 17348

[Poll] How long did you hold primary residence mortgage?

1. This is for your current primary residence. But if you prefer, use your previous home. 2. If you are near pay off, or prefer to, select the target years that you plan to pay off. 3. If refinanced, include all years. 4. This may not be great for comparison because every situation is different and ...
by acegolfer
Thu Mar 12, 2015 3:33 pm
 
Forum: Personal Finance (Not Investing)
Topic: [Poll] How long did you hold primary residence mortgage?
Replies: 34
Views: 2708

Re: What are some common misconceptions found in this forum?

Harold wrote:Higher risk means higher expected returns - [i]Past data says yes, economic/financial principles say no


I thought that's the investments principle. What does the economics say?
by acegolfer
Thu Mar 12, 2015 3:01 pm
 
Forum: Personal Finance (Not Investing)
Topic: What are some common misconceptions found in this forum?
Replies: 209
Views: 17348

Re: Poll: Do you consider mortgage payments an investment?

You're only thinking of the loan and its value and not considering whether the asset has any value or how it might change over time. You should recognize that in doing so you've made some idealized assumptions. The statement that paying extra principal to a mortgage is like a purchasing a CD is onl...
by acegolfer
Thu Mar 12, 2015 2:41 pm
 
Forum: Personal Finance (Not Investing)
Topic: Poll: Do you consider mortgage payments an investment?
Replies: 58
Views: 3704

Re: Poll: Do you consider mortgage payments an investment?

acegolfer, #4 Scheduled mortgage pmt is a mandatory expense. So the principal pmt of this pmt is not an investment. The extra principal pmt is not an investment either. It is not savings either since it is illiquid. So, in my view, it disappear into a black hole. Now, if you count extra principal p...
by acegolfer
Thu Mar 12, 2015 2:16 pm
 
Forum: Personal Finance (Not Investing)
Topic: Poll: Do you consider mortgage payments an investment?
Replies: 58
Views: 3704

Re: What are some common misconceptions found in this forum?

I posted this in PF forum because I thought the misconceptions in PF would be less opinionated than those in Investing. Nevertheless, some posts are about investing topics involving "must" "should" "always", etc. It reminds me of professors trying to make a false state...
by acegolfer
Thu Mar 12, 2015 1:18 pm
 
Forum: Personal Finance (Not Investing)
Topic: What are some common misconceptions found in this forum?
Replies: 209
Views: 17348

Re: What are some common misconceptions found in this forum?

Twins and Fallible, or anyone

Thanks for the suggestions. PM me your definitions of misconceptions. Then I'll add your definitions to OP.
by acegolfer
Thu Mar 12, 2015 12:51 pm
 
Forum: Personal Finance (Not Investing)
Topic: What are some common misconceptions found in this forum?
Replies: 209
Views: 17348

Re: Poll: Do you consider mortgage payments an investment?

I'll try to summarize 4 different views in this thread regarding principal payment. #1. Principal pmt is a transfer between accounts (not an expense). Since it lowers future interest expense, it's an investment. #2. Principal pmt is an investment in house. If house value declines, then it can be a b...
by acegolfer
Thu Mar 12, 2015 12:35 pm
 
Forum: Personal Finance (Not Investing)
Topic: Poll: Do you consider mortgage payments an investment?
Replies: 58
Views: 3704
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