Taking out a prosper loan to buy stocks

[Shoe]

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But I only need a 6% return to break even on my 12% loan. See my original post in this thread. Ok, that is not counting taxes. After taxes, I need an 8-10% return to break even on my 12% loan, depending on if I pay my 15% long-term captial gains tax or short-term ordinary income tax.

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so what if you break even or even beat it by a small margin. The point is you'll be making close to nada while taking a lot of risk. Why even post if your not going to listen to ppl with more experience. gbye.

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Because I am confident I can get a 25%+ RETURN on my money, which will be much more than a nada-gain. 10k+ is a lot to me, maybe not to you. The risk is virtually nada to me.

[captZEEbo]

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But I only need a 6% return to break even on my 12% loan. See my original post in this thread. Ok, that is not counting taxes. After taxes, I need an 8-10% return to break even on my 12% loan, depending on if I pay my 15% long-term captial gains tax or short-term ordinary income tax.

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so what if you break even or even beat it by a small margin. The point is you'll be making close to nada while taking a lot of risk. Why even post if your not going to listen to ppl with more experience. gbye.

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Because I am confident I can get a 25%+ RETURN on my money, which will be much more than a nada-gain. 10k+ is a lot to me, maybe not to you. The risk is virtually nada to me.

[/ QUOTE ]Are you confident you can get a 25% return on your money if the market nosedives? Basically the reason that everyone is laughing in your face is because we have no reason to believe you can get 25% and no rational person would ever think you could, based on your posts. Just the mere fact that you didn't factor in taxes to your original plan and that you don't know whether margin interest is tax deductible or not but plan on using it (from a different thread) makes people think that you likely aren't the good stock picker you think you are.

[Jeffmet3]

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Because I am confident I can get a 25%+ RETURN on my money, which will be much more than a nada-gain

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what people are trying to tell you, is that achieving this, especially in the next 3 years is infinitely harder than you're making it out to be, and that you will be in for a rude awakening.

edit: im too slow

[Shoe]

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Even if my stocks stay stagnent, at a 0% return, I will have $25k in 3 years.
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But you paid $29,893.32 for that 25k.

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But I only need a 6% return to break even on my 12% loan. See my original post in this thread. Ok, that is not counting taxes. After taxes, I need an 8-10% return to break even on my 12% loan, depending on if I pay my 15% long-term captial gains tax or short-term ordinary income tax.


[/ QUOTE ]Okay, you need 8-10% to "break even", but that's not realistically breaking even. You need to "break even" with what you could have used the money for. You have to get 8-10% returns on the market (historical averages that most investors don't even get) to break even with STICKING YOUR MONEY UNDER THE MATTRESS.

Let's just say you could have deposited those prosper payments into hsbc and got 5%. Now you have to break even with THAT. So with your 8-10% investing abilities, you are still lagging sticking it in a savings account and earning 5% risk free AND no work income. (It's work to pick stocks and pay off prosper loans, set up prosper accounts, etc).

But since you are a stock guy, you have to be able to "break even" with a DCA strategy of just making those payments directly into the market instead of through the prosper middle man.

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I don't completely undestand your post. But please elaborate (I am being completely serious here, I want to learn).

The way I interpreted your post is this. The market on average returns 8-10%, but you are better off investing in an online savings account that returns only 5%. Please explain how this is better. Even if I am a complete idiot, if i invest in anything in the stock market, i will earn 8+%, no?

[Evan]

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But I only need a 6% return to break even on my 12% loan.

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I'd just like to point out that having the same amount of money in X years that you paid out over the previous X years doesn't mean you broke even. If you pay out $30k over the next 3 years and then end up with $30k at the end of the third year you lost money. Suggesting anything else is laughable.

[Jeffmet3]

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The way I interpreted your post is this. The market on average returns 8-10%, but you are better off investing in an online savings account that returns only 5%. Please explain how this is better. Even if I am a complete idiot, if i invest in anything in the stock market, i will earn 8+%, no?

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He's talking about the opportunity cost of making 0% over 3 years. You could've had the money in an account earning 5% a year. You didn't lose it in real terms, but in what you could've potentially been making it gets subtracted from what you're making.

The 8% average is over a long-term with a diversified portfolio. Picking random stocks isn't going to cut it. I'd suggest you do some reading on economics and basic investing strategies as you appear to be in a little over your head here. Trying to be honest, not condescending.

If you're a complete idiot with investing, your returns for next year can be anything. At the same time, if you're the smartest investor in the world, your returns for next year could be anything. You could put up the best returns in the world for next year. It's highly improbable, but possible.

No rate is set in stone, but people use history and analysis of trends to help try and predict future returns

[captZEEbo]

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Even if my stocks stay stagnent, at a 0% return, I will have $25k in 3 years.
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But you paid $29,893.32 for that 25k.

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But I only need a 6% return to break even on my 12% loan. See my original post in this thread. Ok, that is not counting taxes. After taxes, I need an 8-10% return to break even on my 12% loan, depending on if I pay my 15% long-term captial gains tax or short-term ordinary income tax.


[/ QUOTE ]Okay, you need 8-10% to "break even", but that's not realistically breaking even. You need to "break even" with what you could have used the money for. You have to get 8-10% returns on the market (historical averages that most investors don't even get) to break even with STICKING YOUR MONEY UNDER THE MATTRESS.

Let's just say you could have deposited those prosper payments into hsbc and got 5%. Now you have to break even with THAT. So with your 8-10% investing abilities, you are still lagging sticking it in a savings account and earning 5% risk free AND no work income. (It's work to pick stocks and pay off prosper loans, set up prosper accounts, etc).

But since you are a stock guy, you have to be able to "break even" with a DCA strategy of just making those payments directly into the market instead of through the prosper middle man.

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I don't completely undestand your post. But please elaborate (I am being completely serious here, I want to learn).

The way I interpreted your post is this. The market on average returns 8-10%, but you are better off investing in an online savings account that returns only 5%. Please explain how this is better. Even if I am a complete idiot, if i invest in anything in the stock market, i will earn 8+%, no?

[/ QUOTE ]Okay. You can't look at investing like well I made money or well I lost money. You have to compare it to all of YOUR options (varies person to person).

So let's say you could get a prosper loan at 1% somehow, this would be a no brainer to take as much money as possible, because even an idiot could use the money and get 5% at hsbc (which is effective let's say 3% after tax dollars) so it's netting +2% on your entire borrow.

You are borrowing at 12% to get money to invest in the market and hopefully achieve 16%+ (pretax) to break even on the move. When you say, "well all I need to get is 8% to break even" that isn't true. Because you didn't break even with what you would have used your money for. You need to break even with your alternate methods. The TRUE break-even point is 12% after tax dollar return on stocks.

Breaking even with the prosper loan is a complete failure, because you end up being BEHIND if you had never taken out the prosper loan and simply put the money you would have used to pay off the prosper loan straight into hsbc.

[Pokeraddict]

I still don't understand why you would not at least use margin. Do you even know what it is? You're saying you are buying blue chips. If you only borrowed 2/3 of your original amount you could get a better rate on the other 1/3 and deduct it.

Honestly I think you are a fool. Do you know remember or have never read about corrections or crashing? There was one earlier this decade and the market looks pretty pricey now. Of course your plan might work, then again you could bring all $25,000 to a craps table and put it all on don't pass and the shooter could toss snakeeyes on the come out.

[geormiet]

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I feel I am the T.J. Cloutier of the stock market.

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yes!

[Reef]

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Because I am confident I can get a 25%+ RETURN on my money, which will be much more than a nada-gain

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what people are trying to tell you, is that achieving this, especially in the next 3 years is infinitely harder than you're making it out to be, and that you will be in for a rude awakening.



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I dont know why people make posts like OP's .. where they ask for advice but then brush off any advice given and not even consider changing their perspective