Too Hot Investment Thread

I wear a gold chain and a gold ring...gold also has many uses in manufacturing and electronics. Digital currency, not so much

 

As we diversify, I was wondering if anyone had ever heard of things like Fundrise. I see more and more of these direct, crowd-type investment websites and wondered if they are scams and putting money into them will get me on the next season of American Greed, or if they are legit? Never been brave enough to try any of them because I do not like handing out my social security number.

https://fundrise.com/?utm_source=go...3OM-yRCrXARJvkiOprTAlGA5xo-FkcQRoCsWIQAvD_BwE

 

To each his or her own. The best investment you can make is to not spend in my mind, particularly on items you don't need. PMI isn't even your insurance. It is mitigating the bank's risk who loaned you the money.

There's a lot of things you can do if you have a lock on a 10% return, but I would be very leery of any that guarantees such a return. Plugging into a online calculator, you would end up paying $4.5K over ~8 years of PMI payments alone on a 100K. Add in about $3K(a guess) for the added mortgage interest from the 20K over that time and you are paying ~$7K over 8 years to invest that 20K initially. I submit many wouldn't have the discipline to actually invest all that 20K.

But yes, if you intend the PMI to be short term loan, then it can make sense by the numbers. There is risk however and you also need to factor in taxes if doing any short term investments with the 20K. I have no doubt there are some savvy investors that can make it work for them. For the rest of us, it is best avoided.

 

I was telling my daughter last week that I’d love to have the money back from stupid purchases. I’d be glad for just the face value spent in the 70s and 80s. Why did I need a 3-ft diameter inflatable basketball I bought in the 11th grade?

 

I have looked at this and other similar things. I don’t think they are scams but haven’t taken the leap yet on this type of investment vehicle since I’m still unsure of the real risk

 

I was using stocks as an example. Effectively using a “PMI” loan to invest is not a sound financial strategy

 

Having spent a career in the mortgage biz, PMI can be used for good and for evil. I've personally witnessed both sides. On one hand, when boys and girls play nice, play fair (and obey the law), it can be a good thing. It is a good fee generator for the service providers though. It can also be a fraud machine when boys and girls do NOT play nice, play fair, and wipe their rear ends with the law--and I have personally witnessed it in board rooms, court rooms, and regulatory hearing rooms- real people get really hurt in real time.

Be careful out there boys and girls.

 

It's just a matter of risk tolerance.

If you can handle the extra $50 - $100 a month payment and want to take a shot at improving your financial situation then you have better opportunities than paying off PMI.

If you have $20k cash sitting around you could potentially change your life with some risk.

Reduce the risk and you can still make your life more comfortable with a good probability of paying off your $100k house sooner rather than later.

My personal risk tolerance is pretty high and if $50 - $100 a month is going to change the way I live that month, I shouldn't be buying a house in the first place....so I will gladly pay the PMI and take the risk. $20k in itself is not life changing money. Taking that $20k and making some calculated investments could indeed change your life a lot more than paying down PMI ever will.

 

Ok we can look at it a different way...

Will you loan me $20k on a 30 year loan at 1.5% interest? Do we have a deal?

I already know your answer and there is very little difference.

 

Love the idea of this thread. Mostly in private equity, but like the OP I bought some Carnival stock with speculative / fun money.

People that love cruises, simply love cruises and the industry will return. Also, bought their 3 year secured bonds back in April 2020. 11.5% ain’t too bad, but didn’t buy the unsecured ones issues in November.

Goldman has been crushing it. Not sure how to value a financial institution of that scale, but since my wife is an employee we have plenty of unvested options.

 

Sorry, I don't follow. PMI is against the total loan amount, not the 20% difference. So, aren't you effectively paying 7.5% interest for that 20K you held for investment in this example?

 

I’m not following what this has to do with the discussion. Is PMI something you can “shop around” for if you plan on putting less than 20% down on a house purchase?

 

Typically you get PMI if you put less than 20% down. As far as I know you can't get around it. In some cases you may be able to do 80% mortgage and have an additional home equity loan, which you would try to pay off first and as quickly as possible.

 

We did that with our last house. We got a HELOC at 1% higher than the mortgage and avoided PMI. I’m not sure it’s a strategy you can employ through a local credit union but may require a broker to package it.

Anyway, for us it allowed us to avoid PMI and jumbo mortgage rates.

 

VA loans don’t require PMI but they do require a funding fee. Some loan programs have lender paid MI, or you can take out a second to cover it.
But most of the time, a loan over 80 has it.

 

Wow, that sure jumped in one day!

 

nice...big question is the exit strategy. Right now i'm hoping to be able stick around for the long run

 

Bond prices are starting to climb, so spooking the market.
Not a reason to panic yet, but something to watch, it’s one of the few things that can pop the bubble right now.