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Should I pay student debt or buy stocks?
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Date: December 14th, 2017 2:46 PM Author: insane trip place of business I make ~100k in a chill midwest job
50k student debt at weighted average 5.8%. Some of the accounts are around 6.5%.
Options:
1) Start paying off the 6.5% loans ASAP. Since these are after tax dollars, it is the equivalent of making 7.5-8% in the stock market before capital gains taxes. 0 risk, 0 effort, 0 correlation to the stock market. Credit score immediately goes up. Refinance the rest at a lower rate.
2) Put the money into my portfolio (BOFI+covered calls, INBK, ALLY, AER) which I think should make 15-20% a year in the long run
3) Use half of new income to pay loans, half into stocks
What would you do? ty |
Date: December 14th, 2017 2:51 PM Author: insane trip place of business bump (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919175) |
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Date: December 14th, 2017 2:51 PM Author: curious abusive skinny woman Buy ETH (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919182) |
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Date: December 14th, 2017 2:51 PM Author: Narrow-minded swashbuckling theatre (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919183) |
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Date: December 14th, 2017 2:56 PM Author: flirting orange regret (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919220) |
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Date: December 14th, 2017 3:09 PM Author: fear-inspiring brunch cumskin (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919327) |
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Date: December 14th, 2017 3:22 PM Author: Vibrant laser beams dilemma (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919432) |
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Date: December 14th, 2017 2:52 PM Author: Indigo Harsh Stag Film I'd probably pay off debt. No reason to expect that stock market will continue to go up more than 5.8% annually, even though it has been going up over twice that in recent years. (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919191) |
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Date: December 14th, 2017 2:53 PM Author: outnumbered insanely creepy crotch patrolman Are you stupid? Pay the debt until you get down to 4.5% interest or less. (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919193) |
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Date: December 14th, 2017 2:55 PM Author: insane trip place of business What? The idea is that I'm fairly confident I can pick value stocks that can make 15% a year, even in this market.
The problem is to evaluate the risk/return tradeoff of doing this given that the alternative (paying down debt) is so attractive.
Since I am ~30 years old, even a small misstep here can have huge effects down the road. |
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Date: December 14th, 2017 2:56 PM Author: razzle-dazzle indian lodge why are you confident (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919228) |
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Date: December 14th, 2017 2:59 PM Author: insane trip place of business If you study those 4 stocks, I should be able to get 8-10% from the earnings yield alone.
If the internet banks continue to grow at their current clip, Then 15-20% is very doable.
As for Aercap, they have a very simple business. Buy a plane, lease it out at a 7-8% yield. Use 4:1 leverage to enhance returns. Their next 5 years of earnings growth are pretty much already guaranteed, because the leases are already signed. When you buy AER, you are just buying a bunch of aircraft at their book/appraised value. |
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Date: December 14th, 2017 3:12 PM Author: yapping saffron azn Why not start a hedge fund if you're so confident! 15-20% would make you a star! (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919350) |
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Date: December 14th, 2017 3:30 PM Author: green house lmao dude
Why 4:1? Why not 40:1?? Juice up those returns!! |
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Date: December 14th, 2017 3:32 PM Author: insane trip place of business Haha
BELIEVE
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Date: December 14th, 2017 3:34 PM Author: insane trip place of business The company itself is 4:1 on the planes, just like a mortgage
I myself am 2:1 with 2.5% margin debt |
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Date: December 14th, 2017 3:37 PM Author: green house I’m giving you shit because picking stocks is a fool’s errand. Maybe you’re the next Buffet, but I doubt it. (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919575) |
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Date: December 14th, 2017 2:53 PM Author: green house #1
Number two is hilarious. Just do 15-20% returns bro |
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Date: December 14th, 2017 3:30 PM Author: Mahogany Depressive Agreed.
Assuming it's true, he's basically asking if he should invest in A or B where B makes ~100% greater returns in a year. |
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Date: December 14th, 2017 3:37 PM Author: insane trip place of business Dude
You have to attach a probability distribution to the returns
Say, the continuously compounded return is Normal with mean 15% and standard deviation of like 20-25%
It's not a stupid question |
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Date: December 14th, 2017 3:47 PM Author: Mahogany Depressive agreed man, agreed. i thought you were saying that 15% - 20% IRR was a pretty sure thing? (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919671) |
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Date: December 14th, 2017 2:58 PM Author: carmine headpube I would pay off that debt. Investing is a long term thing. Paying off debt will help increase your cash flow in the much shorter term. (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919237) |
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Date: December 14th, 2017 2:59 PM Author: big weed whacker associate Crypto (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919252) |
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Date: December 14th, 2017 3:00 PM Author: alcoholic gaping stage It seems like you're taking compounding into account for your stock investment but not your debt. Pay off your debt first. (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919259) |
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Date: December 14th, 2017 3:02 PM Author: fishy mischievous shitlib buy ETH (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919273) |
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Date: December 14th, 2017 3:08 PM Author: insane trip place of business Okay, what is the investment thesis for ETH? Where do I buy it? Coinbase or the Winklevoss Gemini thing? How much into Ether? Ty (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919318) |
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Date: December 14th, 2017 3:08 PM Author: flirting orange regret JFC -- how did you totally miss this train 10 months ago? (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919325) |
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Date: December 14th, 2017 3:09 PM Author: insane trip place of business Was in grad school with no income
Did not pay much attention to threads here
Thought all that crap had topped out
From a fundamental value perspective, which crypto is the best? I don't like that crap about it needing 6 days worth of home electricity consumption to verify a single transaction. |
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Date: December 14th, 2017 3:23 PM Author: flirting orange regret Couldnt afford $500 bucks? (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919434) |
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Date: December 14th, 2017 3:25 PM Author: insane trip place of business Crypto seemed like bullshit at the time (it still does now) (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919457) |
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Date: December 14th, 2017 3:26 PM Author: big weed whacker associate Yet you paid $50k for graduate school to land a $100k job (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919466) |
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Date: December 14th, 2017 3:34 PM Author: fishy mischievous shitlib (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919543) |
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Date: December 14th, 2017 3:38 PM Author: green house Devastating (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919593) |
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Date: December 14th, 2017 3:58 PM Author: Vibrant laser beams dilemma (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919800) |
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Date: December 14th, 2017 3:24 PM Author: big weed whacker associate Tezos Cosmos |
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Date: December 14th, 2017 3:27 PM Author: purple laughsome institution hominid Wait and buy Cosmos (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919482) |
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Date: December 14th, 2017 3:29 PM Author: big weed whacker associate (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919497) |
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Date: December 14th, 2017 3:55 PM Author: purple laughsome institution hominid hell yeah brother. it's going to be glorious (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919762) |
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Date: December 14th, 2017 5:47 PM Author: angry sex offender gaming laptop wait until when? (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34920686) |
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Date: December 14th, 2017 3:29 PM Author: Passionate Khaki Sanctuary 100k law? (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919502) |
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Date: December 14th, 2017 3:29 PM Author: insane trip place of business Non law (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919506) |
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Date: December 14th, 2017 3:39 PM Author: spectacular flickering senate police squad Cop ETH, LTC, some Iota (invest like a grand), sliver of BTC, and go! (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919607) |
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Date: December 14th, 2017 3:41 PM Author: alcoholic gaping stage Put it all in Iota :))) (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919626) |
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Date: December 14th, 2017 3:50 PM Author: hateful contagious brethren Buy ZRX (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919706) |
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Date: December 14th, 2017 3:55 PM Author: alcoholic gaping stage option 3: refinance loans. (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919767) |
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Date: December 14th, 2017 3:56 PM Author: spectacular flickering senate police squad If you sell a kidney, I think you get like 8k. That would cover a few months of payments. (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919777) |
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Date: December 14th, 2017 4:02 PM Author: sooty bespoke garrison I would pay the debt ASAP if the rate is that high. The odds are against the market beating that on a risk and tax adjusted basis. (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919841) |
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Date: December 14th, 2017 4:02 PM Author: Multi-colored Parlor professional investor here. you're an idiot. (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34919846) |
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Date: December 14th, 2017 5:36 PM Author: motley community account 1. Discount what you think is a fixed debt cost by the chance that millenials will eventually vote into office politicians who reduce / forgive / provide preferential tax treatment to education debt. And inflation.
2. Discount your 15% to 20% ROI estimate by reality.
3. Compare the returns. |
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Date: December 14th, 2017 5:45 PM Author: alcoholic gaping stage Just do discount by reality.
(Don't disagree just thought it amusing). |
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Date: December 14th, 2017 5:37 PM Author: fuchsia federal whorehouse The interest rate is high enough such that, if you can't refinance, you should focus on paying your loans off first. Thanks. (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34920617) |
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Date: December 14th, 2017 5:44 PM Author: hairless twinkling goal in life PAYE and crypto (http://www.autoadmit.com/thread.php?thread_id=3828996&forum_id=2#34920656) |