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Easy Orange - The Mortgage for Savers
Great 5-year fixed rate loan (3.88% rate, 3.890% APR)
Get a low rate with payments that are based on repaying over 30 years.
The payments are based on 30 years. The loan is based on 5 years.
I'm a saver. I owe nothing on my house. Let's see how I could abuse this.
I could take out a mortgage and invest the difference somewhere. Let's assume the tax break on the mortgage offsets the taxes on the alternative investment. I'd therefore only need to make 3.89% on the money to break even. Any more than that is just pure gravy. At the end of the 5 years I could pay off the loan and pocket the difference.
Now all I need to do is figure out where to safely park the money to earn more than 3.89% over the next 5 years. How hard could it be? The bar is so low.
How about 5-Year Treasuries? I can earn 2.37%. That's not good enough.
How about 5-Year TIPS. They yield 0.35%. If inflation averages over 3.54% then I'd be doing fairly well. Call me skeptical though. What if the inflation never arrives?
How about the stock market? No matter how high it goes, the experts assure me that it's always good for another 10%. I think I shall pass on that. Further, this is supposed to be a mortgage for "savers", not for "investors".
Gold? Can't do it. Some might argue it is a form of savings, but let's get real here. It's a speculation. It might pay off big. It might lose big. It's just too volatile to bet the house on.
Oil? Yeah, I'm going to bet my house on that roller coaster ride. $11 to $140+ to $30+ to $80. While I am at it, I'll put a third of it on the number 22 in Las Vegas. I'm feeling really lucky!
How about ING Direct? I consider it to be a pretty good place for savers. I've got money parked there. I just recommended it today. Unfortunately, they only pay 1.25% on savings. That's clearly not going to work.
I'm stumped. I can't seem to find a "sure thing" that will appreciate by at least 3.89% per year over the next 5 years. I guess I shall pass. I don't want to risk my house if some sure thing turns into a sure flop.
There is some good news though. I sure don't feel the need to brace for hyperinflation right now. Maybe others shouldn't either?
Real Estate Newsletter Articles this Week: Existing-Home Sales Increased to
4.15 million SAAR in November
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At the Calculated Risk Real Estate Newsletter this week:
[image: Existing Home Sales]*Click on graph for larger image.*
• NAR: Existing-Home Sales Increase...
14 hours ago
8 comments:
Mark,
obviously if you bet 16 at the table you will meet your goals! 16 is my lucky number!
May I suggest $20 in scratch tickest every friday? You cannot win if you do not play!
Any one asset is a tough call for 4% year in year out. Sometimnes you have to move around a bit to meet your yearly targets for return.
GYSC,
16! It does sound lucky!
You know what I really like about it? It's the same sort of confidence that we saw back in '16 (1916).
http://www.friedgold.co.uk/battles.html
The battle of the Somme began on the morning of the 1st of July 1916. British generals had decided that the attritional trench war on Europe's Western front could be won with a 'big push' after an enormous artillery bombardment designed to destroy German trenches and defences. So confident were they in their stratagem that troops were advised to walk across no-man's-land from the British to the German side rather than dash between cover (as the French generals had advised their men to do). The plan was flawed as the German defenders had much stronger and well-built defences than the British generals believed possible, when the attack came it was met by a huge barrage of machine gun and artillery fire. By the end of the 1st of July almost 20,000 British troops were dead (almost 60,000 total casualties). It is estimated that, over the course of the next 3 months of the Somme campaign, there were nearly half a million casualties on each of the German and British sides. British forces did succeed in conquering almost 10 miles of French territory back from the Germans, but the loss of life incurred (the greatest loss of life on a single day in the entire history of the British army) leaves no one in any doubt that this was a disaster for Britain and its army. Indeed not even our friends the little-Englanders claim Somme as a victory, the loss of life being too great even for them.
Good frickin' grief! Let's find a better number than 16.
Surely 29 must work. I'm picking it out of my hat at random on the hopes that 1929 was actually a much better year.
Porcelain figurines is your best bet.
The baby boomers are retiring and will easily support 6 - 8% growth in this area for years to come.
Your welcome, although if you feel the need to donate a small percentage of your new found profits to the 'watchtower fund' I wouldn't object.
watchtower,
You are once again in top form, lol.
I think someone already beat you to the punch though. Check out Betsy Bubbles.
http://www.beaconsglow.com/marie-osmond-dolls/2009-marie-osmond-dolls/betsy-bubbles-doll-marie-osmond-dolls.html
Stag,
I've been playing the spread game, BIG time!
It's all about collateral and CONnections these days. Access to the "independent" Fed is key.
I gathered up a bunch of my old "assets" and swapped them for cash at the Fed. I then took the dough and loaned it to the Government at ~ 1% to 3.7% interest. And get this. I was able to leverage some of my assets 6 to 1 through alphabet soup programs such as the PPIP. What could be better than free leverage on free money?
It's not as easy as it sounds though. The Fed played "hard ball" and made me agree to haircuts on the swap deals even though all my "assets" were unencumbered and better than new.
Take my old leisure suits. These gems are mint, yet they still "insisted" on haircuts. They even made me take haircuts on my polyester shirts with coast to coast butterfly collars. What gives? They don't even make those anymore!
Beeny Babies, Pet Rocks, Snorkels - it's all good. And for those that think these asset swaps are shams, they're not. Preventing deflation and creating inflation is absolutely critical to wealth preservation and creation. It's our growth industry.
There might not be such a thing as a free lunch, but there is definitely such a thing as free money. I'm gettin mine (just like Ross Gittens). As you can imagine, I'm all for Fed "independence"!
p.s.
For the uninititated, Fed independence = no accountability for Wall St.
mab,
"They even made me take haircuts on my polyester shirts with coast to coast butterfly collars."
Oh the humanity!!
Somebody needs to stop the insanity!
Somebody needs to stop the insanity!
Stag,
Agreed. What should be stopped first first - the Fed's zero interest rate policy or the Fed's zero accountability policy?
mab,
Couldn't we just merge them into one policy? Think of the synergy!
Oh wait. Maybe that's already the case. I know. Let's take the Fed quasi-private, use debt to extract all the good stuff, then allow the Fed to go quasi-public again?
How to Achieve Energizing Synergy in Work and Career
http://www.ehow.com/how_2323261_achieve-energizing-synergy-work-career.html
Step 6: Hold on to your sense of humor (and if you don't have one, develop it quickly). This will help you to keep things in perspective.
Here's my perspective. We're screwed. Synergy, baby. Synergy. Hahaha! ;)
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