1091
I've never been more jealous of a watch (lemmy.world)
submitted 2 years ago by to c/retrogaming@lemmy.world
125 comments fedilink hide all child comments
 
you are viewing a single comment's thread
view the rest of the comments
[–] 87 points 2 years ago (8 children)

Just FYI for whoever needs to read this: If you go into debt for a single investment, it's a mistake. You are supposed to invest your excess, into as many isolated pools as reasonable. If you're part of the majority of the population, which doesn't have an excess, you are not investing - you are gambling.

  • permalink
  • fedilink
  • source
  • hideshow 8 child comments
    •
  • [–] 27 points 2 years ago

    Just FYI for anyone who needs to read this: it doesn't matter how fucking wealthy you are, ranking yourself with a watch is cringe and idiotic. Don't be a fucking sheep if you are poor. Don't be a fucking sheep if you are rich.

  • permalink
  • fedilink
  • source
  • parent
  • [–] 22 points 2 years ago (3 children)

    This is not really applicable and only works if you look at investments pretty naively.

    The most obvious rebuttal to this is home ownership a mortgage is debt and is also a 'single purchase' however for most people, a mortgage is their first step towards financial independence. The next concept of course is TVM (time value of money), having cash available now to invest in worth more than later, and so utilizing leverage to invest money is important.

    Generally, investments that beat interest make it worth it to utilize debt to make them, this is the premise behind investing using margin, utilizing heloc loans, or taking out a loan for a business, education, or tooling that will allow you to earn more.

    Debt isn't inherently bad and there are many ways to use debt to your advantage.

    A good way to look at it is like this, if you have a line of credit available to you that satisfies your emergency fund, let's say a few thousand dollars, instead of sitting on the fund in a low interest savings account, you can move that to something marginally less liquid, like an REIT or an index fund, and use the line of credit to float cash until you can withdraw. Use the credit for the 4-6 days it takes to clear the transaction. You may pay some interest, but the emergency fund will have actually gained significantly more than any interest you would pay.

    Not all investment is the same, buying out of the money long calls on mene stocks is not the same as moving medium or long term savings to high dividend managed funds.

  • permalink
  • fedilink
  • source
  • parent
  • hideshow 3 child comments
    •
  • [–] 16 points 2 years ago (1 child)

    I'd say the mortgage example is special, as it's not just an investment for investment's sake, it's a house you are actually going to use, and your realistic alternative is to rent a place on indefinite terms.

    For most folks, investments that beat the loan interest is a tricky and often outright risky proposition. If you are leveraging yourself too far then you are almost certainly not getting a good rate, and the investment may be assumed to do better, but could go significantly worse.

  • permalink
  • fedilink
  • source
  • parent
  • hideshow 1 child comment
    •
  • [–] 1 point 2 years ago

    Yea I agree, and things like trading on high margin or using standard lines of credit to invest are generally bad unless you really know what you are getting into.

    But it isn't always hard to beat interest, it just depends. HELOCS are a great tool for people and depending on your situation, you can get them significantly lower than typical returns. Yea it's a risk, but so is getting in your car and driving to work everyday. There is no income without some type of risk, opportunity cost, physical/mental health, etc. I think just like most things, there is balance. A student loan for a college degree is not much different than a traditional investment, neither is a note on a truck + lawn care equipment for a fledgling business. They all have risk, but they (along with mortgages) are more tangible for a lot of people.

    My point is mainly that, sometimes it is ok to go into debt for a single purchase. I don't think it's smart to just open a bunch of credit cards and yolo your life savings into long calls, but I also don't think it's smart to squirrel money away in your mattress because all debt is evil.

  • permalink
  • fedilink
  • source
  • parent
  • [–] 6 points 2 years ago

    Thanks for providing the additional clarifications, I think pretty much all of it is valid, I just have a slightly different perspective.

    Most people would likely agree with you that investing into a home through dept is reasonable. I don't disagree.

    I also agree that you can utilize loaned capital in a way that your earnings outperform the debt incurred.

    You're still gambling though. You can not afford to lose your home, or that loaned capital. Maybe you feel like your chances are good, and maybe they really are, but you're relying on your personal prediction of the future to ultimately resolve that debt.

    A "real" investment is just as much gambling, but the fallout from failure is entirely different.

  • permalink
  • fedilink
  • source
  • parent
  • [–] 13 points 2 years ago

    A watch is never a good "investment" anyway. Re-sale value is a nice to have but it's not a buy and hold.

    Anyone telling people to go into debt to buy a watch is at best a fucking moron and potentially actively malicious.

  • permalink
  • fedilink
  • source
  • parent