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birb_cromble  4d ago (text post)   937 thread views

Weekly Finance Thread

Since a lot of us here have expressed interest in not starving to death in a gutter, I figured I'd start a weekly thread to discuss financial matters.

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The 0 down/0% APR is great if there's no prepayment penalty and you're 100% certain you can pay it off in time. A lot of people take that deal, then don't pay it back and get hit with back interest.

I don't know if I'd recommend an index fund though, you can lose principal in a down market.

The prepayment wouldnt be an issue as the whole point is to stretch it out as much as possible. And theres no back interest, its simply a loan at 0%, if its in arrears it goes to collections/repo. Our intent is to have our finance guy create a separate account that we put $60k in and have monthy payments pulled out of, with the remaining principle invested. Naturally theres risk of losing principle, but thats true of all investing. The exact investment profile is TBD, i was just using S&P for some back of envelope calcs.

Naturally theres risk of losing principle, but thats true of all investing. The exact investment profile is TBD, i was just using S&P for some back of envelope calcs.

Well, even FDIC-insured accounts have some risk of the principal being lost, but if I were executing the plan you were, I'd put most/all of the principal into a savings account for very low risk 3.2-4% return instead of a low risk 8-10% in an index fund. In a 1-72 month time horizon, I think the difference in risk is sufficiently high as to be worth the lower returns, personally.

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