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| 5/17 |
| 2006/10/23-25 [Reference/RealEstate] UID:44929 Activity:high |
10/23 I have like ~$200k sitting around that I've been ignoring because I'm
incredibly lazy and money management is boring. What should I do with
it? I guess I should buy a house? Or dump it in an index fund? It's
been sitting in... a checking account. Go me.
\_ I'm lazy and risk-averse, so I keep most of my money in CDs
(currently earning 5.94%). Not optimal, but it's really easy
and safe. If I were less lazy, I'd use multiple banks or
joint accounts to get FDIC insurance for the whole amount.
\_ Where do you get that 5.94 at?
\_ Cal State 9 Credit Union, with 5-year $5000 variable-rate CDs.
http://www.calstate9.com/web/Rates/certificate_rates.asp
\_ Wow, I don't think checking accounts are even FDIC insured
above 100K. Anyway, how long term? Very long term an index
fund is probably the best idea. Short term, CDs or ING.
\_ Yeah, long term I guess. The only reason I'd use this cash is
for real estate or maybe starting my hot new business idea but
I've no plans for those atm...
\_ They're insured at $100K per account holder. If you get a
joint account, it's therefore insured at up to $200K. The
money also could be spread across multiple accounts.
\_ As the above says, they're not insured above 100k (for all that's
worth anyway). Are you married? Do you have a girlfriend? If not,
go into a bank office run by some hottie bank manager and explain
your situation to her. You are guaranteed to get very very personal
attention and she'll help you manager your money better, too.
\_ op didn't say "in one account" I have a similar situation, I
just divide it amongst more than one acct (at different banks).
http://www.fdic.gov/deposit/deposits/insured/faq.html #10
\_ um, yeah it's in one account right now... yeah... -op
OK i'll do this first. Too bad ING direct doesn't have
offices with hotties helping you. Or does it?
Actually screw ING, emigrantdirect has better rates.
\_ That's the problem with electronic transactions: you lose
out on the personal touch and you may want that in both
senses. You'll get the same advice no matter where you go
so pick a place where you'll get hottie service.
\_ http://secure02.principal.com/bank/apps/rates/index.do
5.26% from Principal Bank vs. 5.05% at ED
ED also has the hokiest website once you actually start
digging into it
\_ Well now I found 5.75% CDs at http://e-loan.com. I can't find
5.94 like the guy above though. Maybe an "intro" rate
somewhere.
\_ The B of A branch at 909 E. Hillsdale Blvd, Foster City,
does have many hotties at the counter and the cust srv
desks in the morning shift. The problem is that there are
also one or two fat ones, so there's a small chance you end
up with one of those. I did when I went last time. :-(
\_ Any money manager will tell you to diversify. Take at least half of
that and split it into socks, bonds, commoddieites, etc. Go to any
investment company and ask for help. Or better yet, ask anyone you
know who does manage his money better for a recommendation of
someone.
\_ My investment plan is to buy a house. No it isn't optimal, but it's
a decent investment (if you don't have one already) and it is
an investment you are going to make every damn month, no slipping
up and forgetting to invest.
Lots of mutual funds let you auto invest once a month. Do a bit
of reading, pick a few mutual funds, set them up to auto invest
some amount that is reasonable and forget about them for a year.
You won't do worse than bank account intrest, that's for sure.
\_ well, buying a house now is like buying socks in early 2000.
On margin! Be careful what you invest in.
\_ A house that you live in is a home, not an 'investment'.
Don't confuse the two. However, if you are renting right
now and can afford the mortgage on a house, then what
are you waiting for? You are throwing money away by
renting.
\_ A home that gains in value. Maybe not at the insane
rates that it has the last few years, but still, it's
an investment. Consider person A who lets his money
sit around getting 1% intrest in a checking account
and who pays rent vs person B who gets a home, pays
his mortgage, etc. 5 years later if B sells his place
(and the housing market hasn't tanked like some people
think it will) then person B will have significantly more
money than A. If A invests intelligently that is much
less of a given, but the OP already admitted he isn't
a good investor.
\_ No, it's not an investment if it's your primary
residence. It's a cost. However, it's still a good idea
because you are fixing the cost of one of your
biggest expenses over the next 30 years.
\_ What makes it different?
\_ For one, when you sell it (or if you lose it)
then you are homeless.
\_ When I sell it I'm in the exact same place
that the renter is at. It isn't a very
liquid investment, but I still think of
it as an investment.
\_ If you buy it at $700K and it falls to
$400K then you are not where the renter
is at and you can't sell it either.
So why buy it? Because even at $400K it
has value as a home. Most people buy
another house when they sell one, so
it's not really money they have invested.
The government agrees, hence the cap
gains exclusion for the first $500K.
Two good questions gleaned from the WWW:
1. What if it's a good investment but
doesn't work out as a home? Would you
stay there anyway, or sell for less
than you'd get by waiting?
2. Suppose it's a good home but turns into
a lousy investment? Would you cut your
losses and move? Or would you take the
financial hit and stay?
\_ 1. You can lose money on any investment.
Houses do have a bit of risk because you
are buying on margine, but it's very
rare for a housing market to drop for a
significant amount of time. (Yes, I know
about Tokyo.) I'm not saying there
isn't a bubble right now, but I don't
think prices are going to fall much
further if at all in some areas.
2. As to the questions you asked, you
can always rent your place if you want
to move (I know people who own, rent
their house, and themselves live in a
rented apartment, for just the reasons
you gave.) The second question you ask
is valid, but I don't think that makes
it not an investment. It just makes it
a bit more complicated of an investment.
\_ Can you write it off as a loss if
you lose money when you sell? What if
you rent it for less than the
mortgage? With investment property,
you can write it off a loss. With
your primary residence, you can't.
You might treat it like an investment,
but it's not. It's an asset, but
so is a car or a dishwasher. Those
aren't investments either. To
treat your primary residence like
an investment is folly.
\_ You're splitting hairs. The
dictionary definition of
"investement" is "that with which
one is invested." It's obvious
that a home is an investment by
that definition. A home has
different characteristics than
other investments, but you're
still invested in it and expecting
a positive return on the money
you put into it. -tom
\_ No, you should not be expecting
a positive return. You should
be expecting a place to live.
You are invested in it only
to the extent that you're
invested in that new stereo
that you bought. Historically,
return on houses is about
the rate of inflation (i.e. 0).
Even if your house does go
up in value, what good does
it do when you can't sell w/o
being homeless?
\_ So you're claiming that a
renter is better off in the
long term financially than
a home owner? They get a
place to live, don't pay for
repairs, can leave any time
with only moving costs, and
can choose to pay less/month
than a home owner. Sounds
like home owning is moronic
and renting is a brilliant
path to financial success.
Except we know that isn't
true.
\_ I am not claiming a
renter is better off
financially. I said
that fixing the cost
of housing is a smart
thing. However, that
doesn't make it an
investment.
\_ Making money by reducing
costs is somehow
different than making
money by increasing
income? A penny saved
is a penny earned.
There are two sides to
the cash flow equation.
\_ Not reducing costs.
Fixing costs.
If you move
from a $1600
apartment to a
$1200 apartment
does that mean
you are investing
$400 month? Not
if you are keeping
that $400 under your
mattress you aren't.
\_ If the total value of a
leveraged investment
increases at the rate of
inflation, your investment
increases at greater than
the rate of inflation.
Also, zero return is a lot
better than what you get
on rent money. -tom
\_ For sake of argument,
assume you are not
leveraged. I, like
you and most other
people who bought a
house more than 3
years ago, have a lot
of equity on paper.
However, it does me
no good, because if I
use it (say for law
school or to start a
business or to buy a
Ferrari) then I am
homeless. I am not
saying not to buy a
home. I am saying
that a home is not an
investment - not even
an illiquid investment.
It's a cost. Fixing that
cost over 30 years is a
good thing, but it's
still a cost. An
investor expects to
make cash on cash,
not fork over $4K each
month for 30 years with
no return.
\_ Why would you assume
I am not leveraged,
when practically every
home is leveraged?
You can sell the home
at any time; you won't
be homeless, you'll
just be renting, which
is the alternative
to owning a home.
It may make sense to
rent in some
situations, but there
is no investment which
has returned anything
close to what my home
has in the past 7
years (something like
1000% return on
investment). -tom
\_ Right, so when
are you selling
and quitting
your job to
live on your
"investments"?
\_ How is that
relevant? I
certainly could
sell if I wanted
to get the cash
out and go back
to renting. -tom
\_ That's not
really an
option for
most
homeowners.
I wouldn't
do it and
neither
would you.
_/
If I had reason to do
so--if my home were
no longer a good
investment--I would
definitely sell it.
I am almost certain to
sell it at some point
in my life. And again,
whether I would sell it
or not is not what
qualifies it as an
investment. I
have stocks I wouldn't
sell unless there's
a fundamental change
in the marketplace;
same with my house.
-tom
\_ I assume your
stocks are producing
dividends. If
not, you'd be a
fool to hold
them forever.
As for your
home not being
a good investment,
I don't buy it.
It will probably
go down in value
next year. You
gonna sell? You
would if it was
a stock.
_/
You are now bordering on being not
worth responding to. Point 1: Only
an idiot would sell a stock just
because it went down. I sell my stocks
either because I need money (rarely),
or because the fundamentals of the
business have changed. Do I think,
long-term, that a home near Piedmont
Avenue in Oakland is going to lose
value? No, so it would be foolish
to sell, especially in a down market.
Point 2: Stocks are not the only
kind of investment, and not all
investments behave like stocks.
You will not see anywhere in any
definition of the term "investment"
that the object invested in must
be bought and sold regularly. In
fact, that's closer to the antithesis
of investing than it is to the
definition. -tom
\_ Point 1: If I told you with 100%
certainty that your house would
drop 15% next year would you
sell it? What if I told you with
100% certainty that a particular
stock would drop 15% next year?
Point 2: I never said stocks were
the only kind of investment. Red
herring. Houses certainly can be.
Just not your primary residence,
unless you like being homeless.
The vast majority of homeowners
would not go back to renting, even
when sitting on huge gains. Most
investments return cash on cash.
Your primary residence, with you
living in it, say, 30 years isn't
returning anything to you. I realize
the average person sells after 7
years, but they also turn around
and buy another house with the
proceeds. At what point does one
profit from that? When you die and
your heirs sell it off?
\_ Warren Buffett buys companies
all the time, with no intention
of selling them. Is he not
an investor? Your understanding
of the word "investment" is
completely wrong. -tom
\_ So Buffet isn't making
any profit from these
companies? He just buys
them with no intention of
selling and considers the
money he put into them
lost forever? My idea of
investing involves a
return, often called a
profit. Buying a house
and sitting on $700K in
paper money while paying
$4K/month until one dies is
not a great way to profit and
not a very good investment.
\_ Yes, Buffett buys companies
with no intention of doing
anything other than
holding them. Just
because you haven't sold
something doesn't mean
you haven't gotten a
return on it. -tom
I know two different people who sold -/
a place in the last couple of years
and went back to renting. In both cases
they felt the market was due for a downturn and
they weren't happy with where they lived at the time.
The sold their places, are renting for a few years
and may buy again if they think the market has
corrected. Taxwise they got hit a bit hard, but
it was a choice they both made. Take it as you will.
\_ It's not very common. Did they have a lot of
gains? Are they happy renting? How long did they
own? Most homeowners value their houses as homes
first and foremost. Any possible gains are
secondary and almost incidental. You could have
made a lot of money buying in South Central
over the last 2 years. You gonna live there to
profit from it? I know a lot of real estate
investors and they have all said that one's
primary residence should be paid off so that that
cash flow (going into the mortgage) can be put to
good use and never to touch the main house after
that. Buy 10 houses in Watts if you want, but the
primary residence isn't even part of the
portfolio. It's an expense to be paid as quickly
as possible and a place to retreat to to lick
your wounds when/if things go bad.
\_ One person did very well (San Diego, crummy
nieghborhood, got in and out at the perfect time)
The other had a very low intrest loan (teacher)
and did fairly well. I'm amused how you deny that
you can go back to renting if you want to cash
out of your house on the premise that most people
won't want to. If you don't want to sell your
house it is because it is worth more to you than
the money could get out of it. If your house is
worth more than what you could get out of it
(with a bit of fudge for pain in the ass factor,
but people have already admitted a house isn't
the most liquid investment) than isn't that good
way to invest your money? A house isn't like
a car or a stero or most material goods that
make your life better because unlike most of
those a house goes up in value (maybe not much,
but up) rather than down like almost everything
else. And if you are the kind of person who
doesn't like investing money and can't be bothered
to stop letting your money lose value by sitting
around in a checking account doing nothing a
house is a very good way to invest money AND
improve your life. (Stupid buyers who buy more
than they can afford as a few threads above not
included.)
\_ Not to mention a lot
better than what you
get on money sitting in
your checking account.
And let's not forget all
the mortgage deduction
tax law issues as well.
\_ There's a pretty
simple calculation
you can do to tell if
renting or buying is
better in a given
market. Of course,
it ignores
significant changes
in home value.
-!pp
\_ I rent therefore
renters are smarter and
home owners are all
evil for pricing me out
of the market.
\_ If you contact me, I will put you in touch with my broker. -ausman |
| 5/17 |
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Historically, the FDIC pays insurance within a few days after a bank closing either by establishing an account at another insured bank or by providing a check. Deposits purchased through a broker may take longer to be paid because the FDIC may need to obtain the broker's records to determine insurance coverage. Customers with uninsured deposits receive the insured portion of their account as described above. They will wait longer to receive payment for some or all of their uninsured funds. The amount of uninsured funds they may receive, if any, is based on the sale of the failed banks assets. Depending on the quality and value of these assets, it may take several years to sell the assets. As assets are sold, uninsured depositors receive periodic payment on their uninsured deposit claim. If a depositor holds one or more of these items from an insured bank, and the insured bank fails before the item is cleared, the FDIC will add the item to any other deposits held in the same ownership category at the same insured bank. For example, an outstanding interest check payable to a depositor will be added to their other single ownership accounts, if any, and the total insured up to $100,000. The FDIC does not insure safe deposit boxes or their contents. In the event of a bank failure, the FDIC in most cases arranges for an acquiring bank to take over the failed banks offices, including locations with safe deposit boxes. If no acquirer is found, boxholders would be sent instructions for removing the contents of their boxes. The FDIC presumes that funds are owned as shown on the deposit account records of the insured bank. The deposit account records of an insured bank include account ledgers, signature cards, certificates of deposit, passbooks, and certain computer records. Account statements, deposit slips and cancelled checks are not considered deposit account records for purposes of determining deposit insurance coverage. If an insured bank fails, the FDIC would look to the account title to determine whether an account is held by a living trust. The FDIC would then ask the owner to provide a copy of the trust document, which the FDIC would review to identify the beneficiaries and determine their interests in the account. The owner also may be required to complete an affidavit attesting to the relationship of the beneficiaries to the trust owner. Note that to qualify for coverage in the revocable trust account category, the account title must indicate the existence of a trust relationship. This requirement may be met by including the terms living trust, family trust or similar language in the account title, or by including other words or acronyms indicating that the account is held by a trust. 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